Supply Chains Need to be Agile and Fast

Stephen DeAngelis

March 25, 2020

Ten years doesn’t seem like a long time; however, in today’s rapidly changing business environment, a decade can seem like a lifetime. Joe Terino, who leads Bain & Company’s supply chain work in the Americas, insists, “The consolidated supply chain of 10 years ago can no longer meet today’s business needs.”[1] He believes supply chains need to be more flexible and responsive and, to make that happen, you need to begin with strategy. He explains, “You need to understand the business strategy. What is it your business is going to need to win five years from now? That is what your supply chain needs to be providing.” Sean Galea-Pace (@JournoSeanGP) insists, “The supply chain industry is in a period of transformation.”[2] He also insists technology is going to play a primary transformation role. “Over the past few years,” he writes, “the sector has accelerated and it’s fundamental to embrace the latest trends or risk falling behind.” As Terino points out, things are changing rapidly and falling behind can occur faster than many business leaders imagine. Gakea-Pace adds, “It’s clear technology is showing no signs of slowing.” Supply chain expert Dave Food (@davefood) insists a failure to transform won’t leave companies in the dust of their competitors, it will leave them in the dustbin of history. “To continue to exist,” he predicts, “enterprises today must incorporate [a] new kind of [emerging] management: the age of ‘Agile’.”[3] He asks, “Are you willing to take on the mastery it implies to transform your company [supply chain]?”

Agile supply chains

Whether you call it flexibility (like Terino) or agility (like Food), experts are calling for less rigidity in supply chain networks. Food explains, “To be agile emphasizes searching out opportunities, finding solutions through rapid experimentation, and achieving agility through determination. By pulling out the full capacities of those doing the work, firms generating constant new value for customers, thus creating a virtuous circle of value creation, always driven by the agile mindset.” He continues, “Enterprises need a high degree of agility, flexibility, and capability to … deal with the transformation happening in our marketplace driven by the customer.” George Bailey, Managing Director of the Digital Supply Chain Institute, agrees customers are driving supply chain transformation. “Over the next ten years,” he writes, “we are going to see incredible changes that will refocus supply chains on a new mission, with new people and technology. The driving force behind these dramatic changes will be the New Customer.”[4]

When Bailey talks about “the new customer,” he means a customer who behaves in a different way and/or has different expectations. He explains, “The New Customer doesn’t mean getting a different company or person to buy what you sell. It means that the individuals and companies that you sell to have a new set of demands, expectations and requirements. The New Customer did not exist, in sufficient numbers, five years ago. But the New Customer is dominating markets today and demanding companies rewrite their supply chain strategy to meet their needs.” Cognitive technologies are required to help companies understand how customers are changing. The Enterra Shopper Marketing and Consumer Insights Intelligence System™, powered by the Enterra Cognitive Core™, can leverage all types of consumer data to provide high-dimensional consumer, retailer, and marketing insights. It’s part of the Enterra Supply Chain Intelligence System™ that can help stakeholders optimize operations and make supply chains more agile and flexible.

The need for speed

Agile supply chains must also operate at the speed of business. Food explains, “[Supply chain] flexibility is defined as ‘the speed in which it responds to changes in demand and the business environment, to either create or preserve a competitive advantage.’ … [Supply chains] will require two types of Flexibility: Dynamic Flexibility — the capability to act in response to changes in demand, typified by the efficient-lean Agile reactions; [and] organizational Flexibility — the capability to deeply adapt or transform the [supply chain] scheme to adjust to worldwide-supply or demand approaches.” Henry Canitz, Product Marketing & Business Development Director at Logility, writes, “The amount of change in supply chain management practices since I first became a practitioner more than 25 years ago is eye watering. Today supply chain practitioners operate in a world of ever increasing complexity, data is doubling every 18 months and there’s a wealth of knowledge in social media ready to be utilized. … All of this leads to ‘Time Compression’ which I believe is one of the biggest challenges facing businesses today. It also offers one of the biggest strategic opportunities.”[5] He adds, “As Maverick said in the movie Top Gun, ‘I feel the need, the need for speed.’ Do you feel the need to speed up your supply chain? Today the need to speed up your supply chain by a factor of 10 isn’t a dream or even a movie, it’s reality, it’s a necessity. Now, you must take the next step forward.”

Supply chain speed is enhanced by new technologies. Yasaman Kazemi, an Industry Strategy Lead for the Supply Chain department at Esri, explains, “There are several new and emerging ways that businesses are transforming their supply chains to meet modern customer demands. Cutting-edge technologies like artificial intelligence (AI), blockchain, and automation are being integrated into the digital supply network, which integrates data and information from different sources to drive distribution of manufactured goods along the value chain.”[6]

Concluding thoughts

Bailey concludes, “We have entered the decade of the demand side economy where consumers define the product or service expectations. Companies that focus on making the New Customer happy will win.” Inevitably, a winning strategy requires leveraging technology. Kazemi explains, “As supply chains evolve, they are moving from a purely functional, physical system to a global and interconnected network of assets, data and processes. This digital supply network will be made up of many different new technologies, but they will all be connected by location intelligence. AI, automated vehicles, blockchain, and other transformative advances will be given the power of geographic context with spatial analytics, and this allows the digital supply network to function as a digital model of the entire supply chain. It is this dynamic, always moving, real-time representation that will allow businesses to have complete situational awareness and predictive control of all aspects of their organizations in the future.” In other words, transformed supply chains will be agile and fast.

Footnotes
[1] Joe Terino, “Strategy First: Reimagining Your Supply Chain,” Bain & Company, 16 December 2019.
[2] Sean Galea-Pace, “The future of the supply chain – what does it hold for 2020?Supply Chain Digital, 7 January 2020.
[3] Dave Food, “An Agile Supply Chain is needed to survive,” Prophetic Technology Blog, January 2019.
[4] George Bailey, “The New Customer Decade: Transforming Supply Chains,” Forbes, 29 January 2020.
[5] Henry Canitz, “Supply Chain Transformation – The Need for Speed,” Supply Chain Digest, 30 January 2020.
[6] Yasaman Kazemi, “How The Modern Supply Chain Is Evolving,” Forbes, 27 June 2019.