Competitive advantage is now shifting to the Supply Chain

Article written by Matthew Webber

We are living in very uncertain times, driven by the various disruptions that are playing out in front of our very eyes. The level of disruption is often overwhelming, and the certainty, safety and security of our supply chains are under threat. It will be those organisations that can bring a level of consistency and reliability in their supply chains that will most certainly be well positioned for competitive advantage.

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Disruption has also created a level of complexity in our Supply Chains that is confusing our decision making, impacting our opportunity to service or even to manage costs in an orderly and sensible manner. The complexities often have impacts that reach far greater than the organisation itself, and often are impacting communities and environments that are not in close proximity at all. Organisations that develop Supply Chains that can address this complexity, and make it on surface seem simple, are placing themselves in a strong competitive position.

We are moving from a world of industrialisation to digitisation. The impacts of this is in itself uncertain and complex – but it will most certainly have an impact on the way we work, the way we manufacture, the labour we use, the skills we acquire, and most certainly the geographies we operate in.

How organisations design and execute their supply chains will be the fundamental source of competitive advantage going forward. Supply Chains that are value and demand driven will certainly place themselves at an advantage over slow and reactive supply chains.

Let’s look at some strategic levers you can consider as you lead your organisations supply chain transformation strategy for competitive advantage.

Make data and digital your friend

Big data, artificial intelligence, the Internet of Things (including tagging, sensors and geolocation technologies) and blockchain are all means by which organisations are transforming their supply chains. Of course, on their own, these means are worth little, the value comes in the way that the information can be captured, disseminated, visualised, shared and acted upon.

What needs to be appreciated is the amount of information that flows across the entire Supply Chain and the awareness of how the ability to access this data in a meaningful way can add to the value proposition.

The manual collation of data and information is an inefficient way of doing business which exacerbates risks in the supply chain by delaying information flow and visibility.

Organisations are innovating to be able to operate with decisive speed, ensure that they are meeting and exceeding standards and providing customers, partners and other important stakeholders on demand information that meets compliance standards or reinforces messages on promises made.

With the amount of data and information being used, shared, and published – security is also becoming of paramount importance. Not only is there an expectation that the information is trustworthy, and able to be relied up so there needs to be integrity in the information (which can be potentially met with block chain technology), organisations also need to guard themselves from misuse of the information, ensuring that the information is used in the right context for the right permissible purposes. They also need to guard against cyber-attacks.

There are a number of ways that you can start making data and digital your friend;

1. Build an information strategy that provides for the on demand access to information and insights across the entire Supply Chain - create opportunities to share and collaborate on data and information sources to aid the operational planning and execution, network configuration and control of the Supply Chain;

2. Develop data capturing methods, activities and devices to be able to capture useful data, automating the collation and production of key insights and reporting;

3. Identify the areas of key risk and opportunities in your Supply Chain – ethical, operational, commercial and develop predictive modelling to leverage insight capability and to sense supply chain disruptions ; and

4. Establish safeguards to ensure the security of data and information.

Start Automating

There are many reasons why Supply Chains are transforming towards Automated and Robotics solutions. Access to reliable labour sources are becoming a challenge particularly for countries where there is an aging population, competing demand on labour, the lack of skill generation (or potentially the reverse where labour resources are upskilling to less labour orientated vocations), there is safety reasons, and cost imperatives that are also driving the push towards automation. On top of this is the exponential growth in ecommerce and the need for fast, reliable, consistent and accurate operational performance.

It would be difficult to envisage operations that are completely automated. By definition to automate something, you need to be able to provide the instruction on what the activity is that needs to be completed, how to complete the activity, when to complete the activity and so on. This requires human intervention and input at some level. Toyota have a principle of ‘autonomation’ which is basically automation with some human touch. This would involve approximately 80 to 90 % automation of process with the allowance of human engagement for improvement to the system.

 Whilst there may be significant impacts to employees, and potentially economies relying in the use of manual labour to provide these services that can now be automated – the counter argument of improvements in productivity, reduction in safety issues, job creation in the innovation and delivery of automated solution, and the reinvestment of capital into more meaningful (and often more impactful) ways.

There are a number of ways that value can be created through Automation;

1. Building an automation strategy that provides for reduction in manual tasks that may create safety, reliability, accuracy, efficiency and service bottlenecks;

2. Redeploy resource into value adding activity which has customer focus;

3. Partner with automation design experts; and

4. If you want to be successful at automation, you must place people at the centre of automation – that may seem counter intuitive, however it is people that make automation successful, not robots

Design your Supply Chain with adaptability in mind

A one size fits all strategy for a modern Supply Chain will simply not work. Customers are becoming increasingly demanding upon what their requirements are, and how they want their expectations fulfilled.  

This resonates on so many fronts for the supply chain strategy. How products are made, where you source from (and from who you source from), what geographies you operate from, how you manufacture and how you manage logistics, the depth of your relationships and the integrations of your systems will all have a significant bearing on how you can customise your offer to your customer, and how you diversify your supply chain accordingly to meet this requirement.

Supply chains need to be configured around the channels, clusters and customer experience expectations. Essentially customers need a supply chain menu, where micro segments are offered to meet the customer experience requirements of the customer and the efficiency requirements of the organisation.  This could mean many things to many organisations – but as a start you could be thinking about different supply chains based on product characteristics, channel (such as physical or online) or even the velocity and predictability of the demand.

Technology in manufacturing and production needs to be leveraged to be able to deal with complex, unique and customised designs. Additive manufacturing (commonly referred to as 3D printing)  and rapid prototyping techniques are enabling a “fail fast” mentality, more complex design, smaller parts and less waste.  This will have significant bearing on size, scope and location of manufacturing facilities and where and how products are sourced, milled and configured.

With the vast amount of data available, and the ability to link this data, and collaborate with this data – the opportunity to build more demand driven supply chains is realistic. Whilst the concept of demand driven supply chains is not new, it has in many circumstances been unachievable because it has relied on historical data sets. With embedded sensor activity, remote engagement and instruction, predictive analytic models and the ability to scrape social media data and collect data from open sources the ability to predict demand, recognise patterns and anticipate changes is greater than ever before providing for the ability to customise solutions.

There are a number of ways that this value can be created through designing an adaptable Supply Chain;

1. Building a diversification strategy supply chain strategy that provides for the ability to respond, build, distribute and satisfy customisation needs;

2. Establish a multi geared, multi clustered supply chain that is linked to the customer experience anticipated;

3. Establish data collection capability from multiple sources that can be collected, curated and  managed; and

4. Realign manufacturing and production footprint, methods and location to create the ability to customise based on customer preference and volatility in demand requirements

Together is better than alone so collaborate

The benefits of collaboration have long been recorded in the world of global supply chains. Collaboration provides the opportunity to share the weight of common problems, develop more insightful solutions, leverage the various perspectives and intellect from across the supply chain, to share the investment and resource allocation and of course to build value and share in the spoils in very fair and reasonable manner.  

Collaboration is a hot topic for the current environments, and for reasons no more important than the fact collaboration is the core ingredient to innovation and developing solutions to fast, complex and spread problems that have infiltrated the supply chain. For many of the new and emerging technologies to function they need a higher degree of collaborative effort.

Like the Apple iPhone requires the collaboration with app builders to make the iPhone an attractive value proposition (without the apps they are just another phone), supply chains require the collaboration of key elements to make a fast, agile and responsive supply chain work. It is near on impossible to run every aspect of the supply chain on your own, the sheer scale makes this unachievable. You need systems, service providers, suppliers, finance and so much more to connect the supply chain and bring value to life in the global supply chain. 

Cost driven, transactional style relationships with partners and providers is a significantly outdated and inappropriate course for a supply chain strategy dealing with disruption and realignment. You need meaningful relationships, insights, technologies and operational capabilities to actually be able to create value. Toxic relationships, and ones with no trust, are not only exhausting, distracting, expensive and unreliable – they are a threat to your brand and ability to drive social impact and to do the right thing.

Digital and data capabilities will of course make the collaboration effort easier, and more powerful with the aggregation of information that on its own is nothing special but combined becomes a source of insight and considerable strategic advantage. The magic happens when there is alignment with supplier performance and consumer behaviour. 

There are a number of ways that this value can be created through collaboration;

1. Building a collaboration strategy that provides for the ability to innovate and create shared insight and value;

2. Consolidate your partner base to provide the opportunity for deep relationships that enable collaboration practices to evolve and thrive;

3. Develop data, insight and best practice sharing capability – including the opportunity for teams from both organisations to work in each others environments; and

4. Identify and prioritise problems that can be solved collaboratively

Don’t forget your values

There is no doubt that there is a greater emphasis of all organisation to provide a greater focus on ethical and sustainability issues. There are also greater opportunities for organisations to create competitive advantage specifically through what they value and how they go about doing business.

There are very pragmatic reasons why organisations focus on values and socially focussed initiatives. For a start putting aside competitive advantages that can be created through value alignment, organisations focus on these areas to mitigate reputational damage risks and also focus on these areas for regulatory compliance reasons.

Being Values driven and socially focussed is not an afterthought, it must be an application of intent and desire.

What it requires is an exerted effort, strong focus, consistency in behaviour and messaging and a very authentic will – otherwise it will be seen as a dressed up marketing ploy. Long consistent repetition of positive actions and behaviours are the order of the day.

There are a number of ways that this Value can be created through values;

1. Building a values and social impact strategy that provides the source and foundation to create value, and competitive advantage;

2. Create a business case that considers a holistic value concept view of value and moves beyond short-term financial effects;

3. Leadership support, communication and behaviour that is consistent with the values and social impact; and

4. A long term view of consistent, repetitive reinforcement of the values and commitment to social impact that earns the trust of the supply chain and customer community

One thing is for sure, our Supply Chains will look very different in terms of the way the operate, and how they are positioned.

The organisations that can transition effectively stand to gain significant advantage over the long term – in fact it is almost certainly becoming a race, and a race that we have no choice but to join.

The race of business will be won and lost by how organisations organise their Factory to Customer Supply chain and adapt to the new environments that are upon us and can satisfy the growing demands of the modern customer and the experience that they expect. 

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LOOKING TO rethink your Supply Chain? REACH OUT.

Our leadership team at Whiteark  have decades of experience in leading Supply Chain Transformations from Factory through to Customer, developing Market and Customer strategies that ensure relevance and desirability . We design the business model to deliver commercial feasibility and  to ensure that your business is ready to not only deal with disruption, but to thrive in it. From strategy to design and execution. Contact us on whiteark@whiteark.com.au or explore our supply chain transformation services here.

Article written by Matthew Webber