Leaders are confronting a storm, and it is not simply economic. Organizations are facing unprecedented Social and Sustainability challenges and their leaders are unsettled by trade uncertainty, political instability and competition resulting from disruptive technology. Many of the supply chains we have taken for granted are at risk.
Take the example of Food Supply where biodiversity is an essential for sustainability. Just 9 Crops account for two-thirds of production needs. So, climate change and misuse of resources could make chronic failures a real possibility.
Most of our supply chains are highly wasteful, with “losses” found at all stages of the chain. 1.3 Bn tons of food are wasted globally - an amount that could feed almost half of the world’s population, and half of that waste is related to consumption patterns and consumer behaviors
Leaders are also concerned about attracting & retaining talent for the future. As we are seeing currently, industries like logistics are suffering from skills and labor shortages and they are reliant on a migrant and transitory workforce. Businesses need a new set of capabilities across the value chain, with teams led by digital natives.
You will find businesses that are locked into supply chains which are not fit for the future.
- Legacy assets that are poorly utilized
- Logistics networks that are gridlocked and inefficient
- Manufacturing and distribution models that need to be transformed and future proofed by leveraging new technologies (such as additive layer manufacturing)
Alongside this, demographic shifts pose both huge challenges & opportunities for Society, the Environment and Supply Chain Management. It is estimated there will be
- 43 mega-cities (of more than 10 million people) by 2030
- 70% of the world’s population will live in cities
- and they will generate two-thirds of the global CO₂ emissions
The growth in Smart City solutions are about addressing these issues
Digitization and connectivity
High Speed digitalized SCM is therefore a “must-have” capability to compete in this future world. Mobile “always on” connectivity is the norm. Connected consumers have expectations for immediacy of delivery and personalization of services. Demand sense & respond technologies will allow us to predict consumption patterns and influence behavior.
By 2030, there will be 500 billion objects connected via the Internet of Things. Smart Sensing technologies make it possible to collect and analyze all this data in real-time. SCM can be predictive, rather than reactive – enabling rapid response and better management of risk. For example: the use of sensing technology in agriculture is improving the productivity of farms and helping to produce better crop yields. With Vertical Farming Technologies we can produce more with less land and water use.
Advanced robotics and autonomous vehicles have the potential to make our supply chains safer, faster, more flexible and efficient. Amazon has deployed Co-Bot fulfilment systems (RMFS) increasing productivity by up to 100% Driverless transport systems and automation in supply chains will be an increasing feature in this decade.
Connectivity provides visibility across the entire chain. Having this visibility of needs in real time allows management of the flow of goods and services in a fast, efficient and effective manner, resulting in less inventory and waste in our supply chains. It also provides transparency of information and data in the supply chain, which in turn builds Trust. People in your Organization, your Customers and your Suppliers can see, and are able to immediately understand what is going on.
By creating One Source of Truth – information and data that everyone can align around for the basis of decision making – will enable you to build Trust and Transparency which are the foundations of Collaboration. Along with advanced data analytics and scenario planning using “digital twins” this will all support decisioning – making everyone more agile, more robust and reduce risk.
Collaboration is a key enabler for Synchronization. Good collaboration across functions inside the organization as well as with parties outside, is necessary to synchronize and optimize the value chain. EFESO’s recent survey found that nearly 60% of companies were only just starting out in their Sync journey, and less than 10% considered themselves as “quite advanced”.
Benefits of synchronization
In the survey, we asked a group of Supply Chain Leaders to articulate the benefits of Sync to their organizations. They highlighted the tangible and measurable value creation opportunities that Sync can bring including enhanced revenue growth, margin gain and higher cash-flow.
Sync means all elements of the value chain are being driven real-time by the pacemaker of customer demand. All players make globally optimized decisions to synchronize end to end flow – with the aim of delivering the right value to the market and customer. Ambition is big and hurdles are many. Gartner claims that 63% of organizations want to be Synchronized in the next 2 years. This won’t be easy as there are some major hurdles to overcome. For example: master data accuracy or legacy systems will inhibit connectivity or integration.
EFESO’s survey also found that “Silo” organization structures and legacy metrics discourage collaboration and Sync. Leadership and skills gaps are also cited as a hurdles to creating the right environment for Sync.
Companies that are ahead in their Sync progression journey share 3 characteristics:
- Business leadership that understands the wider benefits of Sync
- They work on the human dynamics to create a Collaborative & Sync’d culture
- Build systemic collaboration with suppliers & customers connected by digital tools
High Speed SCM delivers contributions to revenue, cost reduction and improved cash-flow. Synchronization delivers less Waste leading to a more sustainable supply chain.
This clearly demonstrates that Connected and Synchronized value chains make for a better world - improving the planet, people and business profitability.
About the author:
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Clive Geldard, VP EFESO Management Consultants , specialist in customer centric supply chain transformation. |