4 keys to successful supply chain implementation
By David Riffel, Solution Consulting Director, TAKE Supply Chain
In today’s competitive business environment, a mid-market company’s supply chain is crucial for its success. Caught between small, nimble competitors and large, better-resourced competitors, mid-market companies are looking for ways to improve their supply chains, especially by upgrading their existing supply chain tools or implementing new supply chain systems to stay competitive.
Research suggests that’s a smart move. A recent study by Deloitte found that companies that position their supply chain as a strategic asset deliver 70 percent better results than their peers, and that 79 percent of “supply chain leaders” reported revenue growth “significantly” above the industry average.
In this article, I’ll highlight four key areas that are critical for successful supply chain collaboration implementations. In our experience, companies who neglect even one of these areas will run into challenges that they could’ve avoided with some better pre-planning.
1. Internal Staff (Change Management)
To get key stakeholders to truly buy in to your supply chain implementation, you must make the transition from “why change?” to “Who is going to be impacted, what is going to change, and how are you going to make it happen?”
This process cannot occur in a vacuum: you need to involve a broad audience in the communication and pre-planning of the project so each individual team can examine what the change would mean for them and for their specific function, as well as which key process hand-offs (or interfaces) between functions could be impacted.
It sounds obvious, but it’s critical to communicate particularly closely with teams and individuals that will be the most affected by the proposed changes – especially the front line employees who are actually executing a process and conducting the day-to-day work. Early consultation and inclusion are important for all stakeholders but especially for the front-line performers because they’re the ones who can typically find holes in the proposed changes quickly, which can then be more proactively addressed. It’s much better to involve the right individuals early, before you get too deep into your project planning, so you can avoid the hard resets or major scope/design changes later in the project: those are usually the most painful and expensive.
2. Schedule for Success:
One of the best ways to set your organization up for success when overseeing a supply chain implementation is creating and maintaining a realistic schedule. As you know, basic project management involves managing three things: scope, schedule and resources. Although all three are interrelated, in my experience poorly planned schedules tend to cause a good majority of implementation headaches.
If management is too short-term focused, they can push to get too much scope implemented too fast to justify a faster ROI. This creates an excessive amount of business risk for the company (risk of disrupting operations); the end results are the project is not set up for success and ROI actually takes much longer to achieve. A rapid implementation is great, but you need to balance speed with thoughtful risk mitigation. Implementing in phases is another good way to mitigate risk. It allows the project team to focus on important tasks and quality work without feeling the time pressure to cut corners. This helps build positive momentum as the project stays on schedule, hits its milestones, and produces more stable results and ROI step by step.
3. Systems Choices – SaaS or On-Premise?
You must determine if you should implement a SaaS (i.e., Subscription as a Service, or Cloud) solution, or an on-premise solution. This decision usually depends on two factors: ROI considerations and IT resources/support. If rapid ROI is important, then SaaS is by far the preferred option. SaaS implementations typically require a much smaller up-front investment and they can typically be implemented faster (because you don’t have to buy and set up your own hardware/servers on-premise).
On-premise can make sense if you have very strong IT team, or if you want to keep the skillset needed to maintain the solution inside your business as a core competency. On-premise requires your IT team to be involved for the duration of the implementation and throughout the solution’s lifespan, while SaaS typically only requires your IT team’s help to set up and maintain the required connectivity between your ERP and the third-party solution.
4. Supplier Participation:
Supplier participation and acceptance are absolutely critical to any collaboration project: the success of your system is directly tied to your suppliers’ willingness to use it. If you’re a big fish in a small pond, then your suppliers are typically more “willing” to participate and use your system. Small and mid-market companies don’t have that advantage, so they need to use a bit more finesse. For them, ensuring the system is easy to use and adds value for suppliers is crucial.
Regardless of your size, for long-term supply chain success, there must be benefits for all parties. One-sided or lop-sided benefits push relationships into transaction-based vendor/customer interactions rather than partner-to-partner. The former can be fine for cost cutting, but it can cause issues with quality, support and commitment between partners in the long run, especially if there are disruptions in the chain. Both sides need to feel they can depend on each other and they are more than a means to an end.
To truly create value for their company, mid-market executives must look holistically across their supply chain. In order to position their supply chain as a competitive weapon, they need to ensure that they have buy-in across the company and that the implementation is planned both strategically and realistically. Managers who know the value of an effective supply chain collaboration will also take the time to research the pros and cons of on-premise versus SaaS solutions, and they will provide their suppliers with ample reason to adopt their new supply chain solution.
Business model innovations like improving your supply chain networks, processes, tools, and services are hard for your competitors to imitate, so they tend to have a more of a lasting, sustainable impact on your results. Use these four tips to ensure your supply chain collaboration results in rapid and ongoing ROI.
NTT DATA Services, Remodelling Supply Chains for Resilience
Joey Dean, the man with the coolest name ever and Managing Director in the healthcare consulting practice for NTT DATA and is focused on delivering workplace transformation and enabling the future workforce for healthcare providers. Dean also leads client innovation programs to enhance service delivery and business outcomes for clients.
The pandemic has shifted priorities and created opportunities to do things differently, and companies are now looking to build more resilient supply chains, none needed more urgently than those within the healthcare system. Dean shares with us how he feels they can get there.
A Multi-Vendor Sourcing Approach
“Healthcare systems cannot afford delays in the supply chain when there are lives at stake. Healthcare procurement teams are looking at multi-vendor sourcing strategies, stockpiling more inventory, and ways to use data and AI to have a predictive view into the future and drive greater efficiency.
“The priority should be to shore up procurement channels and re-evaluate inventory management norms, i.e. stockpiling for assurance. Health systems should take the opportunity to renegotiate with their current vendors and broaden the supplier channel. Through those efforts, work with suppliers that have greater geographic diversity and transparency around manufacturing data, process, and continuity plans,” says Dean.
But here ensues the never-ending battle of domestic vs global supply chains. As I see it, domestic sourcing limits the high-risk exposure related to offshore sourcing— Canada’s issue with importing the vaccine is a good example of that. So, of course, I had to ask, for lifesaving products, is building domestic capabilities an option that is being considered?
“Domestic supply chains are sparse or have a high dependence on overseas centres for parts and raw materials. There are measures being discussed from a legislative perspective to drive more domestic sourcing, and there will need to be a concerted effort by Western countries through a mix of investments and financial incentives,” Dean explains.
Wielding Big Tech for Better Outcomes
So, that’s a long way off. In the meantime, leveraging technology is another way to mitigate the risks that lie within global supply chains while decreasing costs and improving quality. Dean expands on the potential of blockchain and AI in the industry.
“Blockchain is particularly interesting in creating more transparency and visibility across all supply chain activities. Organisations can create a decentralised record of all transactions to track assets from production to delivery or use by end-user. This increased supply chain transparency provides more visibility to both buyers and suppliers to resolve disputes and build more trusting relationships. Another benefit is that the validation of data is more efficient to prioritise time on the delivery of goods and services to reduce cost and improve quality.
“Artificial Intelligence and Machine Learning (AI/ML) is another area where there’s incredible value in processing massive amounts of data to aggregate and normalise the data to produce proactive recommendations on actions to improve the speed and cost-efficiency of the supply chain.”
Evolving Procurement Models
From asking more of suppliers to beefing up stocks, Dean believes procurement models should be remodelled to favour resilience, mitigate risk and ensure the needs of the customer are kept in view.
“The bottom line is that healthcare systems are expecting more from their suppliers. While transactional approaches focused solely on price and transactions have been the norm, collaborative relationships, where the buyer and supplier establish mutual objectives and outcomes, drives a trusting and transparent relationship. Healthcare systems are also looking to multi-vendor strategies to mitigate risk, so it is imperative for suppliers to stand out and embrace evolving procurement models.
“Healthcare systems are looking at partners that can establish domestic centres for supplies to mitigate the risks of having ‘all of their eggs’ in overseas locations. Suppliers should look to perform a strategic evaluation review that includes a distribution network analysis and distribution footprint review to understand cost, service, flexibility, and risks. Included in that strategy should be a “voice of the customer” assessment to understand current pain points and needs of customers.”
“Healthcare supply chain leaders are re-evaluating the Just In Time (JIT) model with supplies delivered on a regular basis. The approach does not require an investment in infrastructure but leaves organisations open to risk of disruption. Having domestic centres and warehousing from suppliers gives healthcare systems the ability to have inventory on hand without having to invest in their own infrastructure. Also, in the spirit of transparency, having predictive views into inventory levels can help enable better decision making from both sides.”
But, again, I had to ask, what about the risks and associated costs that come with higher inventory levels, such as expired product if there isn’t fast enough turnover, tying up cash flow, warehousing and inventory management costs?
“In the current supply chain environment, it is advisable for buyers to carry an in-house inventory on a just-in-time basis, while suppliers take a just-in-case approach, preserving capacity for surges, retaining safety stock, and building rapid replenishment channels for restock. But the risk of expired product is very real. This could be curbed with better data intelligence and improved technology that could forecast surges and predictively automate future supply needs. In this way, ordering would be more data-driven and rationalised to align with anticipated surges. Further adoption of data and intelligence and will be crucial for modernised buying in the new normal.
These are tough tasks, so I asked Dean to speak to some of the challenges. Luckily, he’s a patient guy with a lot to say.
On managing stakeholders and ensuring alignment on priorities and objectives, Dean says, “In order for managing stakeholders to stay aligned on priorities, they’ll need more transparency and collaborative win-win business relationships in which both healthcare systems and medical device manufacturers are equally committed to each other’s success. On the healthcare side, they need to understand where parts and products are manufactured to perform more predictive data and analytics for forecasting and planning efforts. And the manufacturers should offer more data transparency which will result in better planning and forecasting to navigate the ebbs and flows and enable better decision-making by healthcare systems.
Due to the sensitive nature of the information being requested, the effort to increase visibility is typically met with a lot of reluctance and push back. Dean essentially puts the onus back on suppliers to get with the times. “Traditionally, the relationships between buyers and suppliers are transactional, based only on the transaction between the two parties: what is the supplier providing, at what cost, and for what length of time. The relationship begins and ends there. The tide is shifting, and buyers expect more from their suppliers, especially given what the pandemic exposed around the fragility of the supply chain. The suppliers that get ahead of this will not only reap the benefits of improved relationships, but they will be able to take action on insights derived from greater visibility to manage risks more effectively.”
He offers a final tip. “A first step in enabling a supply chain data exchange is to make sure partners and buyers are aware of the conditions throughout the supply chain based on real-time data to enable predictive views into delays and disruptions. With well understand data sets, both parties can respond more effectively and work together when disruptions occur.”
As for where supply chain is heading, Dean says, “Moving forward, we’ll continue to see a shift toward Robotic Process Automation (RPA), Artificial Intelligence (AI), and advanced analytics to optimise the supply chain. The pandemic, as it has done in many other industries, will accelerate the move to digital, with the benefits of improving efficiency, visibility, and error rate. AI can consume enormous amounts of data to drive real-time pattern detection and mitigate risk from global disruptive events.”