How Collaboration, Verification and Accountability Can Smooth the Supply Chain Conundrum
In This Article
The state of the supply chain is unlike anything I've seen in 30-plus years in business. And the pace of change doesn't appear to be slowing. We should get used to disruption.
Congestion in the supply chain appears to be easing -- Morgan Stanley's supply-chain stress index is showing positive signs. But a weaker global economy is hampering demand, which could lead to idle inventory for a lot of companies.
As demand and supply ebb against one another, transparency and visibility inside the supply chain are crucial to weathering the storm (for however long it may last).
Nearly every company I engage with is in some state of overhauling their partnerships up and down their value streams. Overwhelmingly, these companies are placing a priority on who they can trust to understand their pain points and deliver with predictability.
WWT is no different. As executive vice president of global supply chain operations, I oversee WWT's massive technology supply chain: Over 4 million square feet of logistics and integration space across our four main supply hubs; capacity to ship to more than 115 countries; configuring and rolling out tens of thousands of systems every week.
Given the sheer scale of our operation, believe me when I say predictability remains the most important commodity in pushing through today's chaotic landscape.
To drive increased predictability, supply chain leaders must invest in digitalization and IT modernization across their operations -- artificial intelligence and machine learning, cloud, data science, digital twin modeling, edge computing and mobility, among other critical technologies -- to become more agile, aware, efficient, intelligent, safe and sustainable.
Consider these statistics from IBM's annual CSCO study, which asked chief supply chain officers (CSCO) which technologies will most help deliver the results their supply chain needs over the next three years:
- Artificial intelligence (54 percent)
- Hybrid cloud (49 percent)
- Internet of Things (49 percent)
- Process and task mining (43 percent)
- Predictive advanced analytics (41 percent)
- Augmented, virtual and extended reality, including the metaverse (33 percent)
- Visualization (32 percent)
Just like business transformation, supply chain transformation must take place in partnership with IT modernization to truly drive meaningful progress and outcomes.
And as we enter the next phase of supply chain disruption, we cannot put off applying the lessons of the last several years. Five specifically stand out above the rest.
Just 6 percent of companies report full supply chain visibility, which is causing disruptions that drive a massive 62 percent loss in finances.
Shared visibility -- putting data out in the open -- will have a profound effect on mitigating those losses.
On the surface, we all say we need to collaborate more. For many, that's easier said than done, as it's a leap of faith and requires stakeholders to be vulnerable with one another.
Nearly half of the CSCOs surveyed in the IBM study agreed that an open innovation model with customers and ecosystem partners will promote collaboration that can lead to increased visibility and predictability.
You can facilitate open sharing of data by:
- Investing in automation that can accelerate collection and sharing of information and insights.
- Implementing AI that uses predictive analytics to forecast changes and can alert customers and partners in your supply chain.
- Collaborate beyond traditional boundaries -- from internal business and IT teams to external partners and suppliers -- to remain plugged in to the latest thinking and strategies.
Establishing a culture of collaboration with vendors and suppliers allows you to adopt more agile, data-driven delivery models that offer greater real-time visibility, predictability and validation that they're delivering on their commitments.
Transformation isn't simply a generational investment in technology. In fact, technology is rarely what solves the problem right out of the gate. Transformation is about changing processes, models and mindsets.
True supply chain modernization will hinge on your relationships with business and IT leaders, who can work together to identify and tackle the problems in general. Savvy business leaders understand the importance of the symbiotic relationship between digital transformation and IT modernization. The same is true for supply chain transformation.
As WWT has grown -- from a small reseller in the 1990s into a $16 billion technology solutions provider today -- we've undergone several transformations in our supply chain operations, most recently to establish the type of data collaboration I'm writing about in this article.
As we developed our vision, it became clear success didn't rely solely on the technology, but rather our ability to adapt and evolve the technology to deliver against our objectives. We did this by:
- Simplifying our vision so that all stakeholders were aligned on the goals and outcomes, and then regularly communicating progress and status updates.
- Identifying short-term optimization efforts were aligned to our future state vision while using data analytics to verify those efforts were working appropriately.
- Delivering in an iterative and incremental fashion. Quick wins quickly amassed into substantial progress, which cultivated buy-in and an eagerness to continue along the path.
Data and details are more fluid than ever.
So much of supply chain visibility is predicated on having the right systems in place. But the reality is true visibility relies on continuous verification that your systems and processes are giving you a holistic view.
A report from the Business Continuity Institute found just one in six organizations carry out due diligence on key suppliers at the procurement stage, with a quarter leaving it until contracts are signed.
Continuous verification should be taking place on multiple fronts:
- External: Every link of your supply chain is vital. Are you verifying beyond your direct partners and vendors, and probing the systems and processes of your Tier 2 and beyond suppliers?
- Internal systems and processes: Are you continuously vetting and validating the information or data your technology and systems are producing?
- Internal people and resources: With technology increasingly playing a role in transforming supply chains, are your people and hiring plans up to date with the needs of the business? Are you verifying your people have the right skillsets or access to upskilling resources?
The last several years of disruption have taught us the importance of maintaining a diverse set of partners and suppliers within our supply chains. Often, the main obstacle to increasing diversity within our supply chains is brutally simple: Access to opportunity.
WWT recently spoke with Ying McGuire, CEO and president of the National Minority Supplier Development Council (NMSDC), who said promoting a more diverse supply chain is more urgent than ever.
"It requires a lot of intentionality to make it happen," she said. "In the C-suite, we still have a lot of work to do in terms of buy in. We traditionally work with chief procurement officers or supply chain leaders, so our message resonates with them. But a lot of decisions are being made by line of business leaders – CMOs, CIOs, CFOs, and CEOs. The question is how can we get in front of them to tell these stories? The next step is to translate those conversations into action."
Championing supplier diversity, McGuire said, starts with the individual but extends to P&L leaders and executives to more heavily scrutinize where they are spending their dollars.
It's time to get more strategic from both an upstream and downstream perspective.
If we really want to increase transparency and predictability, we must do a better job of engaging upstream partners and investing differently with their operations. Likewise, leaders should be more proactive with downstream stakeholders, collaborating with them to perform scenario-based modeling that can help make ordering more seamless.
Begin incorporating this type of thinking into internal and external strategy sessions; talk about what new technology is enabling in your organization and how that's changing how you do business.
Values are rarely developed in crisis, but they are almost always revealed by it.
A tidal wave of disruption over the last several years has put the resiliency and transparency of our supply chains through the wringer. A global pandemic, geopolitical forces, tight labor markets, chip shortages and more. Pick your favorite, there are plenty of them.
In many cases, systems cracked, shattering any illusion supply chain leaders had regarding control, autonomy and agility.
To regain control and drive continued clarity, effective collaboration, verification and accountability will be table stakes.