Apr 1, 2021

Benchmarking Supply Chain Digital Transformation

Trianz
benchmarking
DigitalTransformation
Supplychain
By Paul Brunda, Benchmarking P...
4 min
Benchmarking Supply Chain Digital Transformation
Evaluate your supply chain against competitors to guide your digital transformation...

The Benefits of Benchmarking

According to a leading research firm study, more than 50% of organisations have yet to build a roadmap for supply chain digital transformation. Furthermore, organisations who have developed a roadmap are three times more likely to succeed in digitalising their supply chain.

To plan a roadmap, benchmarking your existing supply chain will help significantly. This involves looking at both your and your competitors’ technologies and strategies. It helps organisations assess their supply chain’s current state and identify future pathways towards supply chain digital transformation success.

Amazon is an obvious example of how supply chain digital transformation can offer end-to-end digitalisation and reap immense rewards. The Fulfilled by Amazon (FBA) program, alongside Amazon Logistics, has enabled same-day delivery in all major and most minor cities across the US—with third-party logistics (3PL) companies set to play an increasing role in the US network in 2021 (according to Morgan Stanley)

This is already the case in the UK, where they are referred to as Delivery Service Partners. Internal warehouse operations are largely automated, using robots to pick and load products onto conveyor belts, and with visual machine learning to read product labels and customer delivery addresses. 

Inventory management services (IMS) and transport management systems (TMS) are provided using their own IT infrastructure and the Amazon Aurora database, orchestrating check-in and -out processes across its network to enable just-in-time (JIT) delivery across the supply chain. 

While many enterprises cannot match the scale of Amazon, they can certainly learn from the company to catalyse their own supply chain digital transformation initiatives. Benchmarking is the right place to begin that journey.

How to Approach Benchmarking Supply Chain Digital Transformation

Access to competitor data is a rarity, but anonymised data (like that used in a survey) can offer similar insight levels. Trianz, a leading US-based digital transformation consulting firm, has collated more than 1.5 million anonymised data points from 5000+ companies across 20 industries for use in digital benchmarking. 

This led to creating the Digital Enterprise Evolution Model™ or DEEM, which can be used to benchmark your supply chain operations against industry competitors as well as industry leaders (we call them Digital Champions). There are five levels of maturity, with an accurate representation of the number of competitors at each level and any technologies or strategies they may use.

By determining your place on the DEEM maturity arc, you can understand your strengths and weaknesses and create a roadmap to catalyse your supply chain digital transformation.

Digital Enterprise Evolution Model™ - Supply Chain Management

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Copyright © 2021 Trianz

Supply Chain Benchmarking Areas

Digitally mature supply chain operations will leverage the following technologies and strategies:

  • BI Dashboards – Business intelligence (BI) dashboards offer centralised access to real-time holistic supply chain data. This increases visibility, with alerts and KPI monitoring to ensure your supply chain runs smoothly. Examples like Klipfolio allow you to track out-of-stock item percentages, current and historic units per transaction, cost of carriage, and inventory turnover. These metrics will help supply chain managers to monitor efficiency and avoid disruption.

BI is commonly used by Level 3 companies in the DEEM model (~20% of total respondents).

  • Prescriptive Analytics – Where traditional analytics offers insight, prescriptive analytics can offer suggestions that guide decision-making processes. This involves calculating thousands of potential approaches and predicted outcomes before presenting an optimal decision pathway to decision-makers. RiverLogic is one solution that enables organisations to run unlimited scenarios, showing predicted effects on areas in the supply chain to enable managers to make the right decision.

This technology is commonly used by Level 4 companies in the DEEM model ( ~15% of total respondents).

  • RPA – Robotic Process Automation (RPA) is the peak of current technological capabilities in supply chain management. RPA requires vast amounts of data from your supply chain—including inventory, logistics, purchasing, and sales—where process mining can reveal and visualise underlying workflows. UiPath is one solution that uses flowcharts to visualise processes, with built-in failovers for multiple approaches to the same process for continuity purposes.

This technology is used by Level 5 companies in the DEEM model (~5% of total respondents).

Benchmarking your supply chain digital transformation offers the diagnostics and insights needed to improve the organisation and its agility across the supply chain operations.  

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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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