In the digital age, leading companies recognize the potential for supply chains to act as strategic drivers that disrupt their industries.
By Regenia Sanders and Vasu Yedavalli
Supply chain is often viewed as little more than a standard operating function, particularly for business-to-business (B2B) organizations. Yes, it’s been subject to continuous improvement, but largely for cost reductions or operational efficiencies. Even if you’ve relentlessly optimized your supply chain, how could it possibly be better?
Wrong question. In the digital age, it’s not just about making your supply chain work better. It’s more about making it work differently. Leading companies see their supply chains as competitive differentiators and strategic drivers — as disruptors that leave competitors racing to catch up.
How can your company embrace risk and evolve your supply chain into a disruptive force? Start with these considerations.
It’s All About the Customer
Today’s customers have higher expectations. They’ve had high-end customer experiences as consumers; now they want it in their business environment, even when they’re ordering widgets or raw steel.
Delivering high-end experiences can be challenging for a B2B-oriented organization accustomed to just moving product. But upskilling your sales and supply chain organization supports dramatic changes to your value proposition to give your company a significant competitive advantage. Focusing on the end customer can help you implement new business models, like turning your product into a service or converting your after-sales maintenance program to a subscription model. Successful processes involve everything from assessing the customer-segmentation strategy to evaluating alternative fulfillment for greater customer-centricity enterprise-wide. Companies should also evaluate their supporting IT systems for possible leverage of digital enablers such as blockchain and predictive analytics.
Even formerly cost-driven decisions can be “customerized.” For instance, instead of locating facilities near the most cost-efficient labor resources, strategically locate them to raise customer-fulfillment performance and build customer loyalty.
Your Supply Chain is a Hotbed of Data
Look upstream. Once attuned to nuances in customer buying patterns, your sales organization can identify under-the-radar opportunities that spark innovation in product design, co-marketing initiatives or how go-to-market timing can turn into a hot customer segment. Your planning department can produce market forecasts that are more timely, accurate — and strategically powerful.
Look downstream. New levels of inventory data can help you rethink your sales, inventory and operations planning process, and ultimately your production schedule. Customer experience data can be built into product design that’s more tightly tailored to specific regions and customer segments.
Even if everything worked when all your functions operated in semi-autonomous silos, when you sew a digital thread all the way through and start sharing data between functions, untold synergies can arise for you to leverage into impressive opportunities. Using data analytics can help companies investigate and resolve inventory build-up, which requires looking cross-functionally at sales, material planning, production scheduling, quality control and logistics.
Make Technology Decisions for the Right Reasons
It’s not about doing digital, but being digital. It used to just be about automation. Now it’s about telemetry, machine learning, sensors and artificial intelligence. It used to be about operational excellence. Now it’s about developing new strategic assets. To navigate the Transformative Age, you must make technology investments that leverage connectivity and generate data to enhance your agility and customer responsiveness. There’s a strong business case to be made for these investments.
Take blockchain, for instance. It’s revolutionizing logistics through increased visibility, secure information sharing and real-time decision-making. Or take 3-D printing, which is not just about manufacturing agility, but also about inventory and warehouse management, quality control, mass customization, speed to market and customer loyalty.
You have to evaluate technology through a different lens. What do you want to accomplish? How do you want to work differently? What specific data will be most valuable in supporting those objectives? When you let business strategy drive your technology decisions, you can leverage new technologies for real competitive advantage, integrating them to break entirely new ground in the marketplace.
Change Your Game to Continuous Innovation
Applying a continuous-improvement approach to your supply chain is not enough anymore. Now, you want to work from a continuous-innovation mindset: what can I do to disrupt rather than merely sustain incrementally higher levels?
You want to drive disruption, not react to the disruptors introduced by competitors — or companies you didn’t even realize were competitors until it was too late. That means breaking down operational silos and looking at processes holistically.
You have to strategically embrace risk and change your approach to supply chain transformation. When you look at your supply chain holistically, you see how disruption at one end can have promising ripple effects at the other. You can start making investments that can lead to a truly integrated supply chain — one that is able to help meet your ROI and differentiating competitive advantage goals.
Regenia Sanders is the Americas Supply Chain Leader for the industrial products sector. She has 20 years of experience delivering supply chain assessment and transformation projects spanning sourcing and procurement and planning to fulfillment for Fortune 500 and private equity portfolio companies. Vasu Yedavalli is a senior partner/principal in Ernst & Young’s Advisory practice with more than 25 years in CFO focused consulting and business solutions. He currently serves as the Northeast region Robotics Process Automation leader and Americas leader for intelligent automation within the diversified industrials products sector.