The digital supply chain’s missing link: focus

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Supply chains have moved from being merely cost centres to being enablers of competitive advantage

The pace of digital disruption is ever increasing, and digitisation of the supply chain is one of the major value and growth opportunities for businesses today – supply chains have moved from being merely cost centres to being enablers of competitive advantage. But, are organisations able to turn this significant opportunity into reality and deliver a return on investment?

A new report from the Capgemini Research Institute “The digital supply chain’s missing link: focus”, has identified a clear gap between expectations of what supply chain digitisation can deliver, and the reality of what companies are currently achieving. While 58% of UK organisations surveyed consider supply chain digitisation to be one of their top three corporate priorities, most lack strategic focus and, as a result, fail to scale up effectively

The findings highlight that companies looking to make progress should focus on three key areas:

1. Strategise and plan for the digitisation of your supply chain

Progressive businesses recognise the need to stop treating supply chain as a necessary cost centre and instead use it to drive competitive advantage.  When they do this, then supply chain teams can more easily join the common business narrative that puts the customer at the centre of decision making.  This allows them to collaborate across the business (and with themselves) and with suppliers and allows the opportunity for end to end thinking, providing the basis for digitisation and innovation.   The business needs energizing around this strategy and that is well described in the paper as requiring a top down narrative with a clear and simple vision that resonates with all players in the supply chain.

2. Build an ecosystem to support the digitisation of your supply chain

An ecosystem of partners is essential to facilitate collaboration and joint ventures.  We regularly run events to connect clients interested in exploring new innovations and opportunities.   This regularly involves Capgemini assets (such as our AIE and of course our design thinkers in Idean and F212).  We recently ran events on the themes of Connected Retailer and Human Loyalty. We have also organised cross-sector roundtables at the request of clients, and host monthly ‘What’s Now’ events on emerging technology.  With certain clients, we have run long-term partnerships with them to take new products and service offerings to market. We recently created a new end-to-end offer with an electricity provider by combining our assets and running co-R&D projects with them at a global level.

3. Enable the digitisation of the supply chain

Digitisation allows end to end thinking and collaboration.  But this depends on one version of the truth and it is essential to ensure this is established as soon as possible as a critical first step on the digital journey.  To achieve this, we often see Supply Chain Visibility tools that span across one or multiple enterprises playing a vital role.  They give an end to end picture of supply chain performance combined with advanced predictive analytics to forecast and prioritise issues.  They provide the basic platform for digitisation and may also be combined with a control tower implementation.  A culture shift is often also required as teams will need to have more belief and trust in data.  A move from operational heroics to data driven decision making is essential for digitisation to become successful.

This resulting shift towards One Supply Chain helps to lay the right foundations for digitisation.  This ensures change will land and stick, driving meaningful and scalable benefits to differentiate performance.

Once this foundation is in place, and a clear vision and an ecosystem of partners has been established, then an implementation framework provides governance and prioritisation allowing tailored initiatives to be delivered in a rapid and agile fashion.

An example framework is shown above, although these are typically tailored to specific business needs.  A first review of all initiatives and ideas capture the current thinking and culminates in a review event where a digital pipeline is built.  This prioritises the work to focus resources on a critical few opportunities that can be trialled (hothoused).  On completion of the first round of hothousing subsequent pipeline ideas can be tackled through hothousing.  A rollout phase is designed for those successful innovations that can built and deployed at scale.  Through this process there is focus on not just what the digital solution is but also (and critically) how the business will use it (operating model and business case) to make sure that it is tangible, scalable and will deliver significant returns.

Successful organisations will have clear frameworks to identify the right digital initiatives that are aligned with their goals, learn fast from their pilot implementations, and be determined and able to reach scale.

 

Simon Mardle
Principal – Retail Supply Chain

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