Opportunities New Technologies Present for Supply Chain and Operations and How to Avoid the Pitfalls
Your questions answered
In our first article on this subject, we looked at the business case for the digitally enabled supply chain and operations and considered what businesses can hope to achieve when they set out on their transformation journey. This time, we'd like to take a closer look at the benefits derived from 'going digital'. We ask why some companies are reluctant to adopt new technologies and consider some of the most common mistakes businesses make when taking the leap.
What's holding companies back from digital supply chain initiatives and what are some of the common mistakes they make when implementing them?
The shift to digitalization was underway before COVID-19, but for many organizations the pace of change was leisurely. The pandemic has altered that, bringing the potential risks of not having a digitally enabled supply chain and operations into sharp focus. As companies begin to rebalance, the race to digitize has shifted up a gear.
The success of these initiatives, and how quickly they can be implemented, depends very much on where the business is starting from. When it comes to the ability to quickly realign the supply chain, we are seeing a significant difference between businesses that have just started to digitize and those who are further down the line. There are several interrelated factors which need to be orchestrated to enable a digital end-to-end system. However, the biggest success factor is culture. Most organizations have a good process, but struggle with cultural aspects of integration across sales & operations planning (S&OP) across the supply chain and operations ecosystem. Ways of overcoming this issue include introducing processes like a mutually beneficial reward system. In addition, leadership need to actively encourage all stakeholders to think beyond their own roles to understand the greater end-to-end value chain to enhance the customer experience. This drives value to the end-to-end system.
What are the benefits of a digitally enabled supply chain and what new opportunities does it present?
"Going digital" is not the answer to all your problems, but here's the good, the bad and the ugly: A digitally enabled supply chain helps your people and your suppliers get closer to the customer in real time and enhance the overall customer experience. It gives you end-to-end visibility into your supply chain and provides leadership with the ability to make data-led decisions about what, how, when and where they manufacture and distribute products.
However, it can also create complexity and confusion or even accelerate some of the bad habits we saw in past technology deployments. Ultimately, despite these potential pitfalls, the digitally-led recovery will only be a positive influence for industry. On the data side, we can now analyze things we have not been able to scrutinize before and better predict the future, rather than just assessing the past. This is critical as, if recent events have taught us anything, it's that we can't forecast the future base on what has happened in the past. A data-driven approach will create new opportunities for scale, cost reduction, cash release, growth, improved quality and competitive advantage -- but you need to start the journey in a pragmatic step-by-step way.
In the next part of this series, we look more closely at the step-by-step implementation plan. We ask how executives can best ensure digital supply chain implementation delivers accelerated results, and consider why some digital transformation projects fail.
Alternatively, click here to read our FAQ: The Resilient, Agile, Digitally Enabled Supply Chain and Operations of The Future: Your Questions Answered
Maine Pointe, a member of the SGS Group is a global supply chain and operations consulting firm trusted by many chief executives and private equity firms to drive compelling economic returns for their companies. We achieve this by delivering accelerated, sustainable improvements in EBITDA, cash and growth across their procurement, logistics, operations and data analytics. Our hands-on implementation experts work with executives and their teams to rapidly break through functional silos and transform the plan-buy-make-move-fulfill digital supply chain to deliver the greatest value to customers and stakeholders at the lowest cost and risk to business. We call this Total Value Optimization (TVO)™. Maine Pointe's engagements are results-driven and deliver between 4:1-8:1 ROI. We are so confident in our work and our processes that we provide a unique 100% guarantee of engagement fees based on annualized savings. www.mainepointe.com