Technology has become a tipping point for enabling and driving major transformation in the supply chain. Expert Jake Barr, CEO of Blueworld Supply Chain Consulting, explains how technology is reshaping the paradigm for undertaking changes in business processes and how your company should invest in its supply chain.
Q: How does technology impact business processes in the area of supply chain?
BARR: In the past, slow, incremental modifications were the order of the day on how you would either initiate or implement process change. But recent breakthroughs in a number of areas — demand sensing, concurrent planning, the use of IoT sensor-based feedback loops, and the capability of big data applications to sort, interrogate and identify issues in massive quantities of data — have enabled step changes.
Properly combined, such technology capabilities are allowing companies to leap frog [stages that] previously would have taken five to 10 years to accomplish. It’s allowing the concurrent combination of process and technology, as well as major organizational model changes in how work is done.
I view this in many ways as an “arms race.” The capabilities make it possible to collapse organizing models while simultaneously offering deeper process control of the work that is proactive exception management and trade-off option-based. Leading-edge firms understand this as a “tipping point,” where you can leverage capabilities to outflank competitors while better serving the market and locking in stronger financial results at the same time.
Q: How have solution and service providers adapted their offerings to meet new demands and trends?
BARR: We are witnessing two key trends playing out. First, providers are starting to embrace the idea of interoperability and problem solving across an end-to-end supply chain process. This, honestly, was merely lip service when promised in the past. The architecture and limitations of the solutions essentially facilitated modular-based problem solving, offering little ability to interject information updates or changes that might be occurring (in “near time”) in an upstream or downstream process and then change how you calculate an option for completing a step of work or scheduling activity, etc.
But this has changed dramatically. Best-in-class providers now deliver solutions that let you continually interrogate your current business situation (based on the data flows you can provide) and both monitor and offer intelligent solutions to consider offsetting issues and take advantage of selling opportunities. I’m especially encouraged by how providers are redefining what they see as the boundaries of your supply chain — more specifically, allowing the live incorporation of data flows from suppliers, contract manufacturers, distributors and customers into your problem-solving equations.
The second trend is among firms who can’t do this. They are quickly undertaking M&A activities to provide more complete end-to-end supply chain process coverage. I expect this to accelerate.
Q: Recent research finds that IT budgets have increased slightly for the first time in many years. What are the most strategic technology investments that a consumer goods company can make today in the supply chain?
BARR: I’m a firm believer that technology investments must follow a clear decision about what step change you’re attempting to deliver. I also strongly believe that you layer on capabilities incrementally — typically best following a “crawl, walk, run” approach.
Unfortunately, I see a lot of tactical investments in supply chain technology. This is often due to one of two things. It might be a situation where the company doesn’t have a real supply chain organization with a clear strategy yet. Or, it has a functional desire to address a real near-term need, but doesn’t ask the necessary follow-up questions about how the capability will have to function in a larger context as the business develops the broader capabilities it needs to succeed.
Much is made today of supply chain visibility products. But the fact remains that a company that’s blind to where materials, ingredients, co-manufactured items, finished product, etc., are at any given moment in time is really at a major competitive risk. Knowing the information in advance is simply a foundational item in today’s chaotic business environment.
Concurrent dynamic planning capability is also a must. Knowing where everything is or that there’s an issue with supply is great, but not being able to spin up and compare trade-off options and solutions, or to involve leadership in these critical business decisions, is an opportunity for a giant “Going Out of Business” scenario over time.
Finally, whether you want to admit it or not, cloud-based solutions — both for the first two needs and a myriad of others — are here to stay. They are a smart, effective way to both drop infrastructure and capital expense and concurrently enable a dramatic reduction in the organizational costs to execute processes with excellence.
Solution providers recognized in this article: Amber Road, Aspen Technology, Centric Software, Dassault Systemes, Datalliance, E2open, Exceedra, HighJump, Infor Global Solutions (GT Nexus), JDA Software Group, Logility, Manhattan Associates, Microsoft, Oracle, PTC, QAD, SAP, Selerant, Siemens PLM Software, Sopheon