Continuous evolution is the norm today. Whether facing technology and digital disruptors, changes in workforce skillsets or the transformation of operating models, supply chain executives can be certain: the ways of the past century will not position you as a leader in this century.
So what does it take to be a 21st century supply chain amidst these changes?
Future-ready supply chains are customer-centric, can operate in the ever-changing digital world with agility and do so profitably in order to be a revenue driver for the business. KPMG believes that future success for supply chain depends upon being purpose-built and built to last.
As they shift towards customer-centric offerings with demand-driven and automated networks, supply chain operations will see significant disruption across six key areas.
Customers today want personalized services and rapid delivery. Do you think of supply chain as the biggest contributor to the customer experience? You should. And knowing your customers is an important part of supply chain success.
Many organizations don’t understand their true cost to serve or who their most profitable customers are. They don't know if they are over-servicing or under-servicing. Between internally focused metrics and other metrics more inclusive of last mile and reverse logistics, they still lack the full picture.
To become customer-centric, supply chains must partner with marketing, promotion and R&D to ensure that customer requirements are built into the structure and metrics. The future-ready organization will focus on:
The emergence of "as a service" platforms and providers adds more complexity to the supply chain outsourcing discussion. It is no longer just about logistics outsourcing. Now manufacturing, planning, warehousing and more can be obtained as a service. Organizations must decide what components they will outsource and what they will provide in-house.
In order to be future-ready, organizations should develop an outsourcing strategy for their supply chains that establishes a balance between the importance of cost, service delivery, risk mitigation and longevity of relationship. This will allow a build/retain discussion resulting in better outcomes.
The end goal? Be an organization characterized by an outside in operating model empowered by "as a service" platforms, which is driven by business, customer, and employee insights and powered by technology and talent.
It is not surprising that new supply chain roles and skills will be required to execute supply chain operations in the future. But how should an organization in an industry that is admittedly steeped in traditional ways of working balance the co-existence of both digital and human work?
Supply chain organizations are facing stiff competition from non-supply-chain companies as well as other functions within their own organization in attracting new skills and are faced with a gap for new talent that balances analytics skills and supply chain expertise.
In order to address the changing skills landscape, decreasing talent pool, shifting demographics including where, how, and when people want to work, and the need to prioritize dexterity over technical know-how, the supply chain of the future will be obliged to focus on these key components:
Digital and human co-existence - Create a modern, digital working environment where employees are less burdened with repetitive tasks, but key decision-making remains with human experience.
Supply chain as a business partner - Change to a culture which makes supply chain a business partner across functions.
Digital center of excellence - Deploy a digital center of excellence to accelerate value creation that focuses investment on the most impactful opportunities across functions..
New roles - Identify roles, skills and behaviors needed to meet an organization’s targets.
As supply chains strive to adapt to a fast-changing world, technology can play a major role in making them more agile, responsive and efficient. But with a huge array of possible digital solutions, organizations risk making poor investment choices. With the technology landscape constantly shifting, what are the technologies which will benefit your supply chain and production functions?
KPMG believes leaders should first clarify their strategic ambitions and only then select technologies that support these goals, with three key priorities:
Future-ready supply chains will also focus on these key questions:
The effectiveness of a supply chain ultimately comes down to two things: efficient processes and effective decision making. However, both these factors are often impacted negatively by conflicting objectives of different functions within an organization.
A cognitive decision center takes a cross-functional view of the supply chain covering products, suppliers, distributors and customers. It enables organizations to balance cost, revenue and profit decisions, using advanced simulations and modeling to identify the optimum trade-off. The center is focused on wide organizational goals, so that any decisions – and the incentives of the decision makers – are based on what is best for the enterprise as a whole. Leaders gain complete supply chain visibility and the ability to make rapid, informed decisions, to better respond to customer needs and manage performance.
Future ready supply chains will:
A number of forces are putting strain on traditional global supply chains. Shorter business cycles, rising customer expectations and proliferation in the number of SKUs present significant challenges. As consumers get accustomed to same-day deliveries of highly personalized products, manufacturers recognize the need to produce, assemble and store goods closer to the point of delivery.
Macro trends are also making supply chain leaders question the wisdom in making huge batches in large factories in far-away locations. Volatile interest rates and exchange rates, tax regime change, trade tariffs and quotas, wage inflation and crop failure can all push up costs and interrupt sourcing.
The future-ready supply chain will respond to these disruptions by focusing on
Local production and assembly - To meet changing customer requirements, supply chains will need more local production and assembly to be first to market.
Contracts - Supply chains will be required to be agile and flexible, leading to the death of long-term, locked-in contracts. Short-term value chains will thrive as 4PLs begin act as a key coordinator across environments.
Collaboration - Collaboration across industries and competitors will increase as organizations seek to reduce costs and complexity of their operations. Platforms will be utilized to empower strategic decisions.
Technology - Advancements in technology will allow supply chains to more efficiently and effectively improve last mile, local production and reverse logistics functions.