Jun 1, 2020

BCG: is your supply chain planning ready for digital?

Supply Chain
Technology
Sean Galea-Pace
4 min
BCG: is your supply chain planning ready for digital?
With the introduction of technology accelerating at an ever-increasing rate, BCG lists eight no-regret moves for a successful supply chain.



Obtain...

With the introduction of technology accelerating at an ever-increasing rate, BCG lists eight no-regret moves for a successful supply chain.

  1. Obtain senior leadership commitment

It is important to create a common level of understanding on the executive team around the most crucial commercial and supply chain issues, their root causes as well as the available and appropriate planning solutions. As a direct result, sales and supply chain planning organisations pursue what they believe to be the right actions but don’t coordinate those actions with the leadership. Companies should ensure that senior management, including the CEO, country or divisional managers, heads of sales, finance and the supply chain is committed to excellence in the supply chain planning process.

  1. Instill process discipline

Organisations should consistently adhere to their planning process, even if that process is imperfect, with employees understanding its importance and working to solve any problems. It is also important to invest sufficient time in explaining the value the process delivers and the contribution needed from each employee. This should clearly define roles and responsibilities and set expectations. For example, attendance and review meetings should be required for all levels of staff and attendees should come prepared. Participants should focus on decisions made during meetings and help to drive the process forward. By enforcing these requirements, it will allow the business to develop individuals who trust the process and believe it will deliver results.

  1. Break down silos

Cross-functional engagement is crucial, particularly among the commercial, finance and supply chain teams. Each function must contribute to and be engaged in the process, adjusting its own actions to the agreed-upon goals. This is in addition to defining all roles and responsibilities as organisations should align functional metrics with overall process outcomes, which links individual pay to supply chain performance. They should also determine transparency across systems and locations by providing access to data on plant performance, line-level product assignments, the availability of materials, inventory levels and other KPIs.

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     4. Make high-quality data available

A robust planning process requires access to accurate, consistent and timely data. While cleaning up master data is hardly a new topic, the ways in which to approach this cleanup have changed over the past few years. Instead of manually going through thousands of data points, companies can utilise automated data-cleaning tools to accelerate the process significantly. They should combine their chosen approaches through a clearly defined master-data governance plan to ensure data consistency and quality.

  1. Engage with IT

Companies should carefully consider the way the supply chain and corporate IT works together, from both a business and a technology perspective. While IT objectives primarily focus on maintaining cost-effective operations and managing system complexity, lots of today’s digital supply chain planning technologies require specific solutions that are outside of organisations’ more traditional enterprise resource planning systems. Due to this, these technologies require a more open and flexible IT architecture - one that allows new software to connect to existing ERP systems in a simple, flexible way.

  1. Thoughtfully select and implement digital tools

Digital can introduce significant opportunities but only when the right tools are applied in the correct way. Companies should focus on digital tools that address obvious gaps in the current setup, as well as being conscious of any existing prerequisites to success. For example, introducing an enhanced forecasting tool can enhance the accuracy of demand planning and efficiency of supply planning. However, if the tool requires sales representatives to change the way they interact with supply change planners, this issue should be addressed beforehand.

  1. Establish a talent pipeline

With the future in mind, high-functioning and digital supply chain planning will require a new kind of talent. These employees will be familiar with new ways of working, including agile development processes and the requirement of being adaptable and analytical.

  1. Prepare for a new way of working

Before deciding on the introduction of any new digital technologies, companies should prepare the organisation. For example, this could be developing a pilot-refine-repeat approach to change that will generate a comprehensive understanding of how well each solution is going to work and enable companies to gain a good understanding of where digital payoffs lie.

Check out the May edition of Supply Chain Digital to read our exclusive interview with Stefan Gstettner, Partner & Associate Director in the Frankfurt office of BCG.

For more information on procurement, supply chain and logistics topics - please take a look at the latest edition of Supply Chain Digital magazine.

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Jun 11, 2021

NTT DATA Services, Remodelling Supply Chains for Resilience

NTTDATA
supplychain
Supplychainriskmanagement
Procurement
6 min
Joey Dean, Managing Director of healthcare consulting at NTT DATA Services, shares remodelling strategies for more resilient supply chains

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.

The Challenges

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.”

 

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