At the #IndustrialDataSummit I hosted a discussion table on the topic of “Supply Chain Insights”. There were five rounds of discussion in a “World Cafe” format (everyone rotates around the different tables with different topics, but the table hosts stay at their table). This meant that, over the course of the day, I had the opportunity to talk to 30 different businesses of varying maturity, scale, and complexity. Something they all had in common was a willingness to share experiences – good and bad!
Because of the variety of viewpoints at the table, the discussions were diverse, vibrant, and thought provoking – exploring a wide range of scenarios from making pizzas to making warships. However, there were common themes:
- Sales and Operations Planning (S&OP)
- Data flow
- Time to value
- Automation/ Artificial Intelligence (AI)
The conversations exposed real concerns and some real beacons – organisations that were doing the best they could, not knowing that their best was much better than that of other organisations, which may have many more available resources but lack the actionable insights from their data and the agility to do something about it. Scale is not everything!
So, what were the issues that made these the four top topics?
1. Sales and Operations Planning (S&OP)
Many organisations seek to improve the performance of their external supply chain to create a competitive edge. It’s plain to me that the functional barriers within an organisation are as much a factor in market competitiveness as those barriers between organisations in the external supply chain. “Why would I, as sales professional, have anything to learn from discussing my sales pipeline with manufacturing? If I sell it, you should be able to make it!” – several participants recognised this sort of entrenched attitude.
Those companies find it impossible to forecast accurately due to inaccurate data flowing into the business through the sales channel. Combine this with poor supply data coming via procurement or supply chain and the result is easy to predict: poor performance towards the customer, over or under stocking which affects working capital, cashflow and profitability. Some companies were able to highlight how they connected across their functions and improved data sharing – to the benefit of all stakeholders – reinforcing the view that the wider company goals take priority over personal, department and divisional goals.
S&OP isn’t necessarily a hugely expensive technology-driven process. It’s often about the heads of sales, production, procurement, and supply chain sitting down together, sharing a common dataset, and agreeing a common view. Barriers to effective and efficient sharing of data include poorly integrated systems where data was not shared effectively, as well as misaligned KPIs for those roles that play a key part in effective S&OP.
A classic example is where procurement managers and buyers are incentivised on achieving the lowest unit price and therefore buy in large volumes; whereas manufacturing can only consume products at a certain rate, which leaves stock on the shelf, misused working capital and results in lower profits.
2. Data flow
Looking outside the four walls of our own organisations, it’s much easier to see how data doesn’t flow from consumer to retailer to wholesaler to manufacturer to suppliers. Making pizzas or beds, aircraft or cars, the timely sharing of demand data throughout the supply chain is critical to the success of every business we talked to.
Simple, low cost methods of getting the data you need is what we all want but connecting Enterprise Resource Planning (ERP) systems has never been cheap or easy. The advent of digital platforms, which allow the use of open architecture, as well as Application Programming Interface (API) connections between ERP and Customer Relationship Management (CRM) and Product Lifecycle Management (PLM) systems across different organisations, has created huge expectations around easing the flow of data – creating a digital thread.
For many companies though, the reality is very different. I’m pretty sure that one contributor cited an example of a major retailer that [still] orders highly bespoke, high value products by fax…
3. Time to value: where data meets people there is friction
Friction reduces speed. Reduced speed, when responding to demand signals, can mean lost sales, extra costs to catch up to stay competitive, or that you take a position in the market that means you will always be picking up crumbs off the table that your competitors leave behind.
It’s now widely accepted that data is the modern currency of value. The ability to get better data faster and react quickly to it may make you realise the value in that data and get ahead of the competition. Not doing so may be the differentiator between success and failure.
4. Automation/Artificial Intelligence (AI)
How do human beings fit into complex, global supply chains where digital transformation is the most often-heard phrase? Whether we’re talking about Robotic Process Automation (RPA), drone deliveries, robots/cobots, or chatbots, there are two competing fears – either robots will take over and remove the need for human beings altogether, or AI technologies are so far-fetched that they will never deliver the value envisaged by ardent technologists. The truth, of course, lies somewhere in between.
While AI is not a universal silver bullet, it can perform highly repetitive tasks with unerring accuracy at a speed at which humans can only be amazed. The important point for human beings is that they are still needed – not to do boring, repetitive, low-value work but to add value where technology cannot. This may be about understanding the subtleties of conflicting priorities and negotiating the best outcome in a complex, nuanced situation. This may be impossible to describe in an algorithm.
For example, I may want to buy a particular product that is not available in a particular configuration at the particular price I am prepared to pay. The complex negotiation and the compromises I may/may not be prepared to make are still a long way from being a reality. Another example is that Pret a Manger staff are encouraged to give regular customers a free coffee now and again, but there are no rules. It could just be because your smile makes the person serving you feel cheerful on a rainy day…
By way of a summary, I’d say that organisations of all shapes and sizes are struggling to be better, more efficient and effective, up and down their supply chains. All companies could benefit from looking at the flow of data throughout their particular value chain – the digital thread. If you can link your (potential) customer to your business functions (sales, finance, procurement) and from there through engineering to manufacturing and out to your supply and support chain, you become more competitive.
If the data in this digital thread is accurate, timely and can be trusted, then it becomes actionable. And if you can beat your competition to the punch, it becomes valuable. It is the realisation of this value that is the real insight we are all chasing up and down our supply chains.