What's the digital supply chain going to look like in 2020? It depends on what companies start doing now.
For sure, there will be even more data from an increasing number of sources that will needed to analyzed, managed, reacted to and protected. More mobile apps will help companies and remote smartphones users capture demand and read the pulse of their customers faster while integrating more accurate supply-side data. Internet of Things-style connectivity and new technology platforms and solutions will automate aspects of the decision-making process, and, obviously, digital dynamics will influence the ability to reduce costs and increase revenue.
However, while conversations about digital supply chains are pervasive, many executives and supply chain teams are not sure how to scale their initiatives beyond piecemeal tools addressing only slivers of their activity.
The Center for Global Enterprise (CEG)’s Digital Supply Chain initiative (DSCi) recently released new research about the practicalities companies may want to consider as they move in this direction.
DSCi’s white paper, Digital Supply Chains: A Frontside Flip, presents evidence from 24 top executives running the world’s largest supply chains across multiple industries. According to the paper, which was funded by SAP with the support of CREATE.org, the enterprise supply chain changes underway now could be companies’ most important transformation over the next five years.
The firm’s research suggests improved enterprise digital supply chains may lead to a 20% reduction in procurement costs, a 50% reduction in supply chain costs, and an increase in revenue of 10%.
The organization and paper talk about a new approach to enterprise supply chain management. They suggest focusing on the customer and maximizing demand. That is, flip the focus to the customer-facing side – the frontside – of the business, according to the press release .
Supply chains have already done a good job at tracking suppliers, inbound materials, manufacturing and delivery. To take full advantage of what lies ahead, digital supply chains must also become sharply focused on customers’ demand and changing demand patterns.
The way DSCi sees it:
A Digital Supply Chain (DSC) is a customer-centric platform model that captures and maximizes utilization of real-time data coming from a variety of sources. It enables demand stimulation, matching, sensing and management to optimize performance and minimize risk.
Achieving this will require, among other things, a new supply chain strategy, new people, and skills and new technologies, the paper noted.
This will be reflective in the new key performance indicators companies will be expected to measure themselves against. While product quality and cost have long been and will remain two of the most important measurements, many of the executives cited in the report said they expect “moderate-to-extreme change to their supply chain Key Performance Indicators (KPIs) over the next five years,” New KPIs may include metrics for product design, demand stimulation and real-time customization.
As a way to tackle and manage the digital supply chain transition, the DSCi’s execution framework and roadmap puts customers in the center of the approach, with four prongs of support—demand, people, technology and risk.
The customer-centric approach, which encourages greater interaction and engagement with customers, raises new questions executives will want to consider these next few years as they roll out new practices and tools. From a demand side, for instance, it will be important to know how the company is currently capturing current demand, how it is performing demand assessments in real-time, and whether supply chain teams have a role in determining and analyzing demand. The people-side of the equation will mean looking at the companies existing organizational structure and boundaries; determining what skills and gaps there are in creating a customer-centered digital supply chain; and deciding if you have the right people who can lead this switch from supplier-focused to customer-focused supply chain.
Technology considerations including examining how demand data is currently collected; how new data from non-traditional sources such as new mobile apps, social media, drones, 3D printing opportunities, and big-data feeds are integrated into current supply chains, and developing criteria for measuring the company's technology return on investment.
On the risk side, the paper recommends executives identify where their companies’ biggest performance or compliance risks may be these coming years; understand how digital supply chains can reduce risks, and define ways to measure their supply chain’s integrity and authenticity.
What areas are you focusing on in creating a digital supply chain? What will your digital supply chain look like in 2020?