Supply chain disruption has been a recurring topic in 2016. Along with "disruption," we've all heard terms like "leveraging data," or acquiring "visibility and transparency" via a necessary "digital transformation."
It's often frustrating to come across these terms through marketing material on a vendor's website, or articles by "industry thought leaders" that never offer a clear definition. Let's take a look and try to dissect some of these trending buzzwords.
Data is the sum of multiple facts and statistics collected together for reference or analysis.
For an organization, the ability to access its own data and visualize the status and performance of increasingly complex supply chain operations is a critical need. These indicators include the status of a requested quote, the historical pricing of a specific component, the ratio of on-time shipments versus late deliveries, the levels of excess inventory, and compliance indicators.
Transparency and visibility matter, so organizations are striving to collect, aggregate, and immediately visualize these analytics. The end result, ideally, is the ability to make better informed strategic decisions, to proactively resolve potential problems before they occur, and to lower the response time to unpredictable disruption like the Fukushima accident or the Hanjin shipping fiasco. With this type of information, organizations can remain competitive and prevent huge financial losses.
A new generation of software now allow businesses to monitor events in their supply chain workflows and turn raw data into actionable insights. There isn't anything truly innovative behind the concept of visibility, but for a long time the industry has been lacking solutions to enable it. In this time, with the technology that is available, visibility and transparency should be seen as table stakes.
Organizations should look beyond simply utilizing and leveraging their own data. We're only as smart as our own skills and experience, and there is a lot to learn from the outside world.
Navigating global, fast-paced, and incredibly competitive markets implies that:
- Companies need to move quickly in one direction and can't afford to A/B test to see which decision is in their best interest. No organization can give business to a supplier for ten years and decide if it was the right choice afterwards.
- Coming up with pricing benchmarks in a vacuum isn't a feasible task.
- Analyzing a company's position in the market is impossible without context.
Hubs vs. silos
Relying on hubs and mutualizing information is the next big step.
Think about finding new suppliers in a specific niche. Today, this demands weeding through dozens of search engine pages and, in most cases, failing to retrieve any sort of review or ratings. There is no Yelp for suppliers in the electronics manufacturing industry. However, a marketplace that analyzes billions of dollars in quote traffic every year can actually do the vetting by looking at service quality, customer satisfaction, and other indicators. Then it can recommend what the best match for a specific need is, the same way Amazon optimizes results for the product you're looking for.
Discovering trustworthy vendors outside of an existing network, finding alternatives to high-risk components, addressing compliance issues before having to face them internally, benchmarking prices, and finding where you stand in the market makes a big difference. But there is no possible way to generate this knowledge internally. This is why silos need to become hubs.
The amount of vertical-specific intelligence an organization can get from a marketplace is invaluable. The ability to analyze and compare data with the rest of the world enables businesses to accurately understand where their energy and focus should be spent.
For quoting teams, it means requesting bids from hundreds or thousands of suppliers from a single launch point and understanding within seconds if they're getting competitive prices in comparison to the rest of the industry. It also means moving the cursor and seeing that getting a part delivered one day later leads to a 2% price reduction. It informs decisions in a way that we can't begin to imagine until our approach shifts from micro to macro.
Connected platforms also become highly valuable for suppliers. We tend to blame vendors for their lack of transparency and view them as a unidimensional price-point application program interface (API) with very little added value apart from PPV negotiation. Suppliers should be rewarded for delivering good business and customer satisfaction. They should be more visible than borderline scam vendors that inject counterfeit components in the supply chain. This is not the case today and we need it to happen for the sake of the whole industry.
After being exposed to the value proposition of these changes and witnessing the early adoption of new workflows throughout the year, 2017 will see this transformation happen at scale. And it's an exciting new set of perspectives and challenges that stand before us.