Digital Network Platforms: Adapting to Reality for Agile Supply Chains

(Editors’ note: This is the second of a five-part series of articles about the journey to creating an enterprise-to-enterprise (E2E) business network that enables demand-driven supply capabilities.)

Emerging digital technologies and the consequent need for new capabilities are disrupting all aspects of business: people, process, and technology. Today’s supply-chain operating models are being challenged to deliver unprecedented levels of agility and economic value.

To survive and thrive, businesses today require invigorated and innovative supply-chain leaders. First and foremost, they must be partners who can drive the convergence of business, digital, and I.T. strategies. They must be able to lead a fundamental rethinking and reskilling of the organization at the strategic and leadership levels.

Such dramatic changes must be executed from the top of the organization downward – and that’s not a classic strength of supply-chain strategy execution. Companies can no longer afford to wait years for I.T. to implement complex and expensive systems keyed to supply-chain businesses cases that are based on a siloed mentality.

I once heard a leading supply-chain executive say during an international presentation, “We thought we understood supply chain and we had nailed it. Now digital has appeared and we are all confused.” Staggering!

So what needs to change, and what stays the same?

The challenge of generating value from end-to-end, demand-driven supply chains – with the understanding that overarching business goals haven’t changed – boils down to a few fundamental use cases:

• Deliver products and services safely and responsibly,
• Innovate for growth,
• Ensure product integrity and traceability every time,
• Provide on-time, in-full (OTIF) delivery to customers, buyers and patients every time,
• Respond to sensed demand and buying signals,
• Ensure that agreed-upon customer service levels are met,
• Ensure availability when the business promotes a product or service, and
• Achieve a deep and segmented understanding of why consumers choose and use a company’s products and services.

As they journey down this transformation road, leadership teams are learning that integrative and systemic thinking is a necessity. They must bring together an array of siloed projects, metrics, and performance measures, in a manner that’s sustainable and doesn’t compromise end-to-end business performance.

Companies must learn to quickly identify and manage scenarios through the creation of capabilities such as:

• Avoiding siloed metrics that degrade end-to-end business performance. (For example, cutting logistics costs can compromise customer-service levels, while cycle-time goals can undercut product quality, master data and visibility.)
• Continuously evaluating business maturity and capabilities, maps to initiatives and performance goals, and identifying challenges and constraints in line with priorities and plans.
• Continuously leading change by addressing softer issues such as roles and responsibilities, resources, organizational design, and skills.
• Ensuring that initiatives for functional excellence aren’t siloed, and don’t compete with or are compromised by one another.

Going forward, businesses must reevaluate the key capabilities that make up real performance transformation. One galvanizing approach used by leaders is to identify the best use cases, then mobilize resources around those priorities.

Start by analyzing and executing the following strategic use cases:

• Manage the pivot of the business’s operating model from supply-driven to demand-driven by adapting metrics, processes, people, and technology elements to outside-in processes.
• Provide accurate and real-time demand and supply visibility with business context.
• Execute the “smart” orchestration of continuous, integrative business planning, versus traditional supply-driven sales and operations planning events.
• Ensure continuous end-to-end visibility and traceability of all products and services. (Visibility should be treated as a process requirement instead of a software system like an inwardly focused control tower.) Many leaders are creating “digital twins” of their physical operations, to separate product and information flows.
• Build a digital network platform of services and applications, and expand the network of partnerships to leverage the power and economic value of two-sided networks.
• Continuously monitor and actively manage transformative change.
• Holistically deploy digital technologies to fundamentally change work practices and business capabilities – to drive improvements not just of 2x or 10x, but of 100x!

Next: Transformation Is a Journey

Roddy Martin is Chief Digital Strategist with TraceLink.