It does if you want to be competitive. These 3 critical steps lead to success with both.
According to research, industry leaders have been working diligently throughout the Covid crisis to develop supply chains of the future. And the future is now.
These supply chains are aligned to customer values, embedded with technology planned from the start to work cross-functionally to improve both business and supply chain performance, and the lessons learned during one successful initiative strengthens the success of the next.
But should you expect the same success if you are not a bell weather, global enterprise? Or not as technically adept?
You no longer have a choice. The answer is yes, you must.
Truth is; customer expectations are being built and you need to compete even if you are not a “tech” company.
Wondering where to start?
Here are 3 critical steps. Steps enabled by the SCOR (supply chain operations reference model – building blocks of supply chain processes, metrics, and other), that provide the direction and support required in your quest for improved, competitive performance and customer satisfaction.
Step 1: Have a roadmap based on your strategic goals and chosen customer performance values
What do you need to do better – in strategic terms first. Starting with a tactical or operational point of view means that you are looking at the trees and not the forest. You will miss integrations across the business and intersections between functional areas with similar goals and metrics.
For example, logistics and warehousing used to be the stepchildren in the supply chain. Product got loaded onto trucks or ships or trains, moved, and dropped off. Sophistication used to be low.
Now, things are different.
The last mile creates the company image. Marketing provides the first impression. Sales makes the first promises. Supply chains must fulfill both. If either marketing or sales creates false beliefs, no matter what happens next, the customer is upset, frustrated, and will often take their business elsewhere.
The blame often falls on warehousing and logistics operations for not getting orders out in full when and where needed.
With a strategic roadmap, you can begin tying these entities (sales, marketing, warehousing, logistics) together more tightly. For example: AI can bring in deeper understanding of what customer segments exist and what each segment truly values.
Continuing with our use of AI as an example digital technology:
Supply chain capabilities are the foundation of the first impression made by marketing. Marketing uses knowledge of market trends and customer buying habits provided by AI to give insight into potential demand spikes, product desires, demand downturn, and what customers value. This knowledge is then married to the realities of how your supply chains work now.
Remember, now’s reality is temporary. It will change as machine learning, 3D printing, and other digital technology solutions specifically chosen to improve business performance are brought online in accordance with the larger roadmap.
Sales takes the realities of what performance is being provided, the customer segments that want that performance, supply chain capabilities and capacities, and AI information about the health of the pipeline and customer sentiment, as well as automated lead generation, and turns all of it into top line revenue. Revenue requiring performance the company can provide. This match of requirements and revenue is continually improved as a company’s AI use, and its integration with other performance enhancing digital technology solutions, improves.
Still, nothing works correctly if you don’t know what performance the company should provide.
That means strategic planning must begin with a determination of the strategic performance. Do you choose agile? Responsive? Reliable? Cost focused? Other? All?
The answer is: all.
You choose the top performance attribute then prioritize all others below it. This provides you with trade space information for procurement negotiations as well as logistics decisions on mode and timing. It also provides the company, and its digital technology, with the strategic performance data needed to match customers who desire the unique performance you provide. This is a foundational concept for users of SCOR. Supply chains build both economies and business – they are no longer relegated to being “just the operational component”.
Once your performance is prioritized, your roadmap may be created.
You will focus on improving performance gaps such as:
- performance that does not meet customer requirements, and customer requirements that don’t fit into your company’s chosen performance
- metric gaps illustrating performance misalignment, such as the inability to achieve significant inventory turn improvements because your sales activity, marketing efforts, and supply chain performance are not aligned
- digital capabilities needed to provide real time data feeding KPIs and showing the effectiveness of your supply chain management
- integrated technologies and human skill sets (called augmented intelligence), and/or
- strategic, big picture lack of agility or alignment, not just at the tactical or operational levels, needed to create the company image and to attract the customers you desire.
By embedding digital technology solutions matched to your strategic goals and performance strategy, customers become attracted to your overall business offering and buy into it (literally). Doing this, companies have shown 2 to 5 times more operating profit. At the same time, they add 3.5 times more impact on service operations than laggards in their industry (these numbers include use of AI, which is often embedded in advanced technology offerings).
Step 2: Change your perspective on talent
When you review industry hiring practices, some stand out for their uniqueness as well as their ability to risk possibly not finding the talent needed at specific times.
With a roadmap, you will have early warning of when specific skills and talent are required.
Success depends on bringing in the correct talent, with the correct skill levels, i.e.: more expensive, at the right time.
However, the new talent may not stay with you forever.
Heavy reliance on forever employees is a thing of the past. Employees come with areas of specialization. Areas they enjoy the challenges of and look forward to new opportunities in. Sometimes the chosen talent is required long term at your company. Sometimes it is required for a shorter term.
Since we’ve used AI as our example, let’s continue with the technology, although you’ll find similar requirements for any technology or major supply chain initiative.
Often failure is not due to the inability of the chosen initiative to work. Failure is due to the refusal to bring in the types and levels of expertise at the quantities needed during critical times in the development and implementation cycles.
For example: AI needs more specific AI-related workers (AI and cloud engineering, cybersecurity, analysts, data experts, advanced technology experts, legacy integration…) in the early stages of the initiative. The exact talent mix changes over time as the initiative matures and progresses. For AI or any other digital solution, it also means there must be tech translation experts brought in house to keep the rest of the company, and even the rest of the initiative team, conversant and understanding of what is going on, what is being developed, and what it means for the company. The translator also brings critical input to the initiative team from the company and its various functional areas during the design and development stages.
Eventually, talent alignment may mean more engineering and different cybersecurity talent (the exact cyber skills may change between development and sustainment). Change is required for spot-on implementation and stability in continuing operations.
Specialized talent is now a subset of the gig economy. Highly talented people come and go from your business not just to update a web page or provide more service call capacity. They enable the critical initiatives that form the image of and build the strategic performance for your company.
The very same image and performance the company will take to the bank.
Step 3: Support your change efforts with the needed investment
In a continuous improvement reality, companies impose ROI hurdles, deadlines, and multiples.
In supply chain transformation with embedded digital technology solutions, those constraints must be lifted.
The investment for digital integration is mainly made in the early stages of a supply chain transformation initiative. That means more money out with fewer results in for a while. In many instances due to the complexity and the time required for the integrations and technologies to learn enough to produce measurable returns, the time is longer, the investment is higher, and the tasks to get the tech up and running is often described as arduous.
Yet the arduousness of it means many of your competitors will stop at earlier stages. They will settle for mediocre outcomes and may even stop before they receive any results at all.
By staying the course with your strategic roadmap, bringing in the capable and skilled talent needed, spending the money required to obtain real results, and patiently watching as the results begin to positively affect your strategic goals, you have allowed your company and its newly embedded capabilities to ripen and mature.
Once integrated and aligned, the knowledge and results continue to grow as the tech becomes second nature to the company, is integrated more fully and, as in the case of AI, has the chance to adjust more finely.
Pulling the plug early because time frames are longer and investment is higher means you waste the dollars spent. Much of the analytics money spent by companies that are leading tech integration is spent during what is called “the last mile”.
What is at stake?
Pulling the plug early means this last, critical investment is not made and the final, critical steps are not taken for successful deployment and results.
You know from former initiatives that getting the program designed and deployed is only half the battle. The rest is socializing it into the company. Helping executives understand what to expect, how to expand the initiative to best improve the adjacencies and common goals across the company, and how to measure the results. Training personnel, both on the job as well as what it means for their jobs. Making sure those responsible for adoption feel comfortable with the new tools and capabilities. Getting to a place of trust and respect to avoid sabotage or just putting the new capabilities aside for the established status quo.
The successful hockey stick graph of financial results only happens at the end of the arduous journey. While not all digital technologies by themselves require an arduous journey, taken together as an integrated technology stack means you should be prepared for a longer, phased-in, initially slower (and then bigger) results producing initiatives.
To make the pain of waiting tolerable, companies receive (from research) 3.4x financial outperformance results that are sustained and continue to grow over time.
Plus, your supply chains are aligned what your customers value.
And your customers are spoiled by the service and care you’ve automated in.
You can learn more about digital supply chain transformation and the SCOR roadmap and performance attributes to achieve results customers buy. Either click the link or go to https://processstrategysolutions.lpages.co/virtualscor-p/
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Cynthia Kalina-Kaminsky is the CEO of Process & Strategy Solutions where she assists companies of all sizes successfully navigate supply chain transformation with digital technology solution integrations. She also provides virtual training on customer facing performance strategy and has a May SCOR course providing hand-on mastery to creating focused performance strategy and digital technology integration into supply chains. Please click to learn more