The constrained CIO—case study 1— unique supply chain challenges on a global scale

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How can a unique global supply chain address some of the constraints of the past to achieve some of the benefits of the future under unique market conditions?

In my recent blog on the challenges of the Constrained CIO, I identified three constraint areas and six specific constraints that currently inhibit organizations’ ability to accelerate their journey to digital excellence and beyond. I recently visited a company—let’s call it Global Supply (GS)—that, while needing to change to adopt a more digital way of working, is constrained across the areas identified.

GS operates a supply chain to some very diverse locations with a product range that is broad but essential to its customers. Expected lead times range from days to months but, at certain times, responsiveness expectations shoot up significantly. GS exhibits typical constraints of an organization that has been in existence for many years, including:

  • Infrastructure constraints—GS is constrained by security restrictions that drive it towards on-premise infrastructure. In addition, challenges stemming from the use of mobile technologies restrict the ability to achieve true digital transformation.
  • Application constraints—Years of enhancement upon enhancement have led to an ageing, fragmented application portfolio. Many business processes are broken because they exist across multiple applications that should be fully integrated. When applications are replaced, the previous forms-based processes are often reimplemented in the latest technology, leading to a sub-optimal solution.
  • Project/support approaches—Waterfall project delivery is the only way. Primarily based on history, but also because of the perceived rigour and control, a step-by-step approach to project delivery is used, with no consideration of agile methods. Integration with support is heavily gated, with little integration to project delivery to speed up the transition while reducing the risk of implementing defects. From a measurement perspective, support service levels are internally focused and lack proper alignment to the organization’s expectations or outcomes, resulting in low customer satisfaction.
  • Business processes—Many challenges exist in this area. With processes spread across different applications, there are many swivel-chair integration points that add inertia and increase the risk of error. The age of the applications means that their usability does not meet the requirements of modern systems, relying instead on many character-based screens and no mobile options. A lack of system usability encourages the user to create off-system workarounds that exacerbate a data-quality issue that is already a significant constraint.
  • Commercial Models—Fragmentation of applications and business processes has led to sub-optimal contractual arrangements with suppliers. Moreover, using input measures to gauge performance as opposed to anything that is aligned to an outcome or benefit means that it is difficult to identify transformational initiatives that deliver the most value to the business and drive suppliers to deliver those initiatives successfully.

Addressing these constraints, especially with the prevailing market conditions that GS faces, will be challenging. However, three key areas can turn the situation around:

–       Application Tiering—Not all applications are the same. Whether it be the segregation of record, integration, innovation, engagement, etc., it is important to apply logic to decide how to approach applications differently. An alternative approach, more relevant for support, could be to decide what the business impact of the losing certain applications or business processes would be so appropriate support levels can be applied. If intelligence is applied to how important different applications are to the organization, redundant applications and processes can be removed and greater priority is given to those applications and processes that deliver the most value.

–       Self-funding model—Whether it be cost or resources, a reason I frequently hear about inaction is insufficient money or people. Sometimes, it is a huge challenge, but there are specific areas that can be used to release funds or resources in order to reinvest in transformational activities. Examples include:

o  Cloud migration—Whether it be IaaS, PaaS, or SaaS, migrating these activities can release tied-up funds for reinvestment in transformation. Frequently, an IaaS migration can be combined with rationalization, releasing additional funding from a CAPEX and resource perspective.

o  Robotic process automation (RPA)—In order to address skill shortages or release staff from non-value-adding tasks, RPA can automate transactions so little or no human intervention is required. While not a replacement for the optimization of business processes, it is a way to tactically improve processes in order to deliver cost savings for reinvestment in other areas.

o  Usability improvements—Creating new screens that combine many old screens or changing the screen flow of a laborious transaction can significantly increase user productivity, sometimes by up to 80%. Using a UI layer to abstract the user from the underlying application layer ensures that an attractive, easy-to-use interface frees up time and, potentially, cost either for more value-adding activities or for reinvestment in other transformational initiatives.

–       Incremental approaches—The days of the big transformation are over. Projects are becoming agiler, support is becoming more DevOps, and business cases are becoming the enablers that drive value-based, evolutionary portfolios. Identifying what piece of work will deliver the value fastest and minimize the time to value, is essential. Implementing lean management techniques and a continuous improvement culture is essential to reducing constraints as well as delivering value.

So, while it is clear that the GS supply chain continues to function and get the product to the user when required, opportunities are lost and resources and costs unnecessarily tied up. In this organization, the CIO has a clear view of some of the constraints that exist. The challenge, as ever, is to focus on the initial enablers that will underpin a far wider, yet sustainable, transformational change—an approach based on the “Excel. Enhance. Innovate” paradigm of Capgemini’s ADMnext that delivers evolutionary change at a pace that is acceptable to the secure environment in which GS operates.

 

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