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Digital Supply Chain: The Journey Ahead

Disruption has become a constant condition of doing business. The organisations that are more likely to thrive are those which not only adapt to continuous change but become the drivers of change – and nowhere is this more relevant than an organisation’s supply chain. In Ireland, we’re seeing a growing focus amongst our substantial MNC community to embrace digital supply chain technologies and practices, to better meet customer needs and overcome inherent vulnerabilities with traditional supply chain models. Cian Kelliher of our Operational Transformation practice explores the issues.

Supply Chain of Tomorrow

It’s becoming increasing clear that in the future, supply chains won’t be driven by products and processes, but by customer needs. They won’t depend on capital-intensive fixed assets and linear flows, but on an ecosystem of modular capabilities, delivered through a network of trusted third-parties, that can be scaled and recombined as needed. Operators will become managers; new skills will be required and new job roles created.

Tomorrow’s supply chains will be autonomous and self-optimising. With the speed of technology deployment and digitisation, it’s easy to envisage a scenario where with a click of a mouse or a swipe of a touchscreen, your customer will set your production line in motion, realigning your supply chain in real time to deliver a personalised, frictionless experience. Imagine drawing on data, from smart devices in the field and third-parties, to segment your customers and develop separate micro-supply chains to service their needs more effectively.

Disrupt to Grow

Disruption is the new norm. As new technologies continue to emerge, the pressure on supply chain leaders to innovate is only going to get more intense. Across multiple industries, agile challengers are exploiting new technologies to outcompete incumbents. Resistance to change, however, continues to be the biggest obstacle to investment in supply chain transformation among established businesses.

It’s easy to see why. The costs associated with replacing legacy technology systems or evolving business models can be high. Where supply chains are reliant on capital-intensive fixed assets and long-term contracts, leaders may be inclined to defer digitisation and automation, especially if the model seems to be working. Success in the present can sometimes be the most tenacious obstacle to change.

Tomorrow’s successful organisations will adopt an agile approach to business transformation. Impatient for quick returns on investment and not afraid to invest, they will focus their budgets on targeted, high-impact, modular strategies: cloud-enabling or outsourcing some parts of their supply chains as a priority; hybridising some — but not all — supply chain management roles to incorporate greater data science capability; or migrating non-standard manufacturing to micro-supply chains, while retaining their mature global networks for the manufacture of standardised products and parts. 

Customer Demand as a Driver

New technology is part of this, of course, but it’s not the whole story. At a fundamental level, the way we think about supply chains is changing and this has dramatic implications for the future. Yesterday’s supply chains assumed an ‘inside-out’ operating model: supply chain management was about focusing on the business’ existing capabilities, increasing operational efficiency and competing by reducing cost. In contrast, tomorrow’s supply chains will be characterised by an ‘outside-in’ approach, continuously adapting and evolving to meet changing customer demand. In the future, convenient, flexible and transparent fulfilment will be a source of competitive advantage, blurring traditional distinctions between marketing, sales, operations and manufacturing.

As businesses compete to deliver superior customer experiences, they’ll become increasingly reliant on data. Tomorrow’s successful organisations will utilise digital platforms, cameras and Internet of Things (IoT) sensors to collect, integrate and interpret data from across the enterprise. They’ll harness advanced analytics to turn those data points into actionable insights and leverage cognitive technologies and robotics automatically to execute some actions and support evidence-based human decision-making for others. Above all, tomorrow’s supply chains will be connected and able to adapt quickly in response to changes in the market. It is important for companies to have complete supply chain visibility and the ability to make rapid informed decisions to better respond to customer needs and manage performance. 

Reskilling to Succeed

A technology-enabled, data-powered and insight-driven approach to supply chain will require a range of new skills and capabilities. Tomorrow’s successful businesses will invest in recruiting top talent, reskilling their workforces and partnering with knowledge providers. They’ll outsource skills and capabilities in which they don’t excel and sell their strongest competencies and surplus capacities ‘as-a-service.’ If yesterday’s supply chains were rigid and reactive, tomorrow’s supply chains will be nimble and predictive.

Finally, leading local MNC’s are already embracing the digital platforms that enable visibility and collaboration across the value chain, educating and working with third-parties towards shared sustainability goals, and taking bold steps in empowering consumers with transparency to make informed buying decisions, which will continue to see Ireland play a critical role in the evolution of global supply chains.

Source: KPMG

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