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From the supply chain – to the supply value network

Phil Davies
3 Aug 2022

Consumer product organizations are reimagining the traditional supply chain into a supply value network – a connected, responsive, and evolving ecosystem that serves the needs of the consumer through engaging the right third-parties to deliver, while maintaining profitability.

Many organizations talk about a consumer-centric supply chain, but only a few of them make it a reality. In traditional models, the supply chain is usually a one-way, linear path from a large-scale manufacturer to the retailer. The emphasis is on the mass production of goods and the speed at which they can reach shelves. Few, if any, members of the chain have reason to consider the consumer.

On the other hand, in a modern supply value network, the path to purchase is not a sequential chain, but an interconnected web. The consumer is at the center, and every other aspect of the ecosystem is connected to him or her.

In shifting to this new model, businesses must completely rethink how to meet consumer demand within the supply value network. For example, inventory may not necessarily need to be managed in traditional warehouses. Instead, organizations may want to diversify their assets so that they can support a variety of sales channels and delivery models. There is no longer a one-size-fits all approach. There are many different types of consumers to reach, and the supply value network should reflect that.

At the same time, organizations need to optimize their business operations. They must ensure the business remains profitable, even as the demand for personalization, speed, and direct access grows.

The power of data – and of people

Consumer product organizations have long relied on biographical and transactional data to help segment consumers and predict demand. However, advances in intelligent automation also allow them to incorporate contextual data, which includes any combination of external factors that may inadvertently affect sales, such as weather, traffic, holidays, or tourism.

Developing this capability depends on the ability of the organization to bring data to the center of each business function. Companies must be more deliberate in organizing the business in a way that embraces data-enabled technology. For example, if a consumer wants to customize a product, the organization will need to be able to service that preference across the supply chain. This is a completely new way of working, and it can be executed only if the organization thinks about data and technology holistically.

While technology is a critical underpinning of supply chain modernization, we cannot underestimate the human element of transformation. Shifting to a supply value network model requires the organization to change its skills, culture, and mindset. These elements are, at best, underestimated, if not outright overlooked – and yet addressing them is the only way consumer product businesses will survive and maintain a competitive advantage. People are as much a part of that equation as the technology itself.

Supply value network solutions

While organizations traditionally looked for end-to-end visibility in the supply chain, today’s environment requires a 360-degree view across the supply value network. At Capgemini, we provide consumer product organizations with some key elements to help enable their supply chains:

  • Strategy and operating model – for many consumer product organizations, putting the consumer at the center of the digitally-enabled supply network will require a complete overhaul of both the business strategy and operating model. Further, organizations will need to assess how this new way of working will impact other aspects of the business, as well as their relationships with every member of the supply value network.
  • Connected autonomous planning – organizations should consider moving to an environment where planning of manufacturing, transport, procurement, and virtually every other aspect of the supply value network is completed in a touchless, autonomous way. This system, which is enabled by data-driven intelligent automation applications, helps optimize each function across the ecosystem. While humans maintain oversight of this system, tedious and recurring tasks are handled entirely by machines, which frees the workforce to focus on higher-value tasks, such as customer service or sales.
  • Connected manufacturing – in today’s digital world, organizations must ensure that they have near real-time visibility into production lines, and that every element related to them is enabled through the cloud. Working this way will help unlock operational efficiencies, such as maintenance timing or workforce planning, as well as the ability to cut costs through more precise demand forecasting or inventory awareness capabilities.
  • Connected control tower – the most crucial aspect of modernizing the supply chain is enabling a 360-degree view of the supply value network, including internal operations and external variables. This forward-looking function is both predictive and proactive – helping the organization anticipate issues and opportunities, while also generating ways to respond to them.

It’s an approach that provides the six pillars we have identified as necessary to support an intelligent supply chain.

  • The six pillars of the independent supply chain:
    1. Intelligent network design and risk management
    2. Smart forecasting and integrated business planning
    3. 360° sourcing analysis and supplier collaboration
    4. Touchless and agile order to delivery
    5. Supply chain as a service
    6. Supply chain control tower and end-to-end performance management

Evolution towards a supply value network

As consumer product organizations reinvent the traditional supply chain as a networked ecosystem, it is worth remembering what an ecosystem is. As in nature, the supply value network is complex and connected; responsive and adaptive; evolving and ongoing. It is also potentially fragile – requiring a delicate balance between serving the needs of the consumer, engaging the right third-parties to deliver, and maintaining profitability.

For this reason, the modern consumer product company is much more than its core business. It is an orchestrator, overseeing multiple channels, interconnected supply systems, and a deep and varied network of partners. In embracing this new role, organizations might come to think of the creation of a supply value network not as the end of the supply chain, but as its latest evolution.

About author

Phil Davies

Head of Intelligent Industry, Capgemini Invent UK
The digital revolution is creating unprecedented challenges and opportunities for companies and they are having to invent new business models and ways of working in order to survive and prosper. Phil works with senior executives to leverage the digital opportunities and transform – customer experiences, operations or business models.

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