May 17, 2020

Five takeaways from SCM Future of Supply Chain survey:

Supply Chain
supply chain digitisation
digitisation
Supply Chain Management
Admin
4 min
Five takeaways from SCM Future of Supply Chain survey:
SCM World has just closed its annual Future of Supply Chain survey comprising opinions of 1,415 practitioners around the world. Again this year digitisa...

SCM World has just closed its annual Future of Supply Chain survey comprising opinions of 1,415 practitioners around the world.  Again this year digitisation is dominating the discussion with big jumps in importance for a series of disruptive technologies, some of which were considered largely irrelevant just a couple of years ago.

1. 3D printing is through the roof in Healthcare – 

Over the course of just 26 months the share of supply chain executives in the healthcare and pharmaceutical sector who regard 3D printing as important has more than doubled.  Production volumes from the likes of Invisalign, Medtronic and Johnson & Johnson show the technology is ready for prime time.  Otherwise impossible shapes can be made with extraordinary precision using 3D printing and new materials are constantly being explored.  Expect this to keep growing.

 

2. Uberisation is growing everywhere – 

When first offered “sharing economy or uberisation” as a potentially disruptive technology for supply chain strategy only 8% bought in.  The visibility and success of Uber’s ridesharing service was prominent enough when we surveyed against this question in the summer of 2014, yet most regarded it as irrelevant. 

In two years, since, the love for uberisation has more than tripled to 27%.  Examples like UberRush at Nordstrom and Walmart, Instacart at Costco and Whole Foods as well as startups like Convoy and Cargomatic demand attention.  When cut by functional role our data shows nearly a third of purchasing and logistics people like the idea, while only 12% of manufacturing executives believe.

3. IoT, Cloud, Digital Supply Chain and Machine Learning are the fulfilment system of the future for high tech manufacturers – 

These four technologies comprise four of the top six overall on our list.  When we cut the data by sector however, it is clear that High Tech companies are a lot more impressed than everyone else.  In isolation, each of these offers different benefits – cost advantages with cloud, precision in operations with IoT, agility with digital supply chain.  In combination, however they could end up obsoleting much of the boxes-and-materials supply chain everybody else is still stuck with.

 
Pioneers like Verizon, Microsoft, Tesla and Google are increasingly connecting these four technologies to offer customers instantaneous, personalised content or software capabilities on devices they already have.  Notice the big gap in enthusiasm for machine learning among high tech companies. This reflects an understanding of how activity on this virtual fulfilment system provides training datasets for artificial intelligence to develop. 

4. Cloud computing is mature – 

Although the overall view that cloud is disruptive and important rose a bit from 2015 to 2016 it is flattening.  When the total data set is cut by industry the only sector showing a meaningful bump in the past year is CPG and retail.  Otherwise we see a general acceptance of cloud, but no growth.  This may be because cloud-based applications and computing power are widely established and proven.  In terms of total cost of ownership cloud offers significant advantages over on premise software systems, but breakthrough process enablement may be more behind us than ahead

 


5. Operational technology is catching up to information technology – 

Digitisation is huge these days, but the mindset shift away from “digital equals computers” to digital in everything is still very much a work in progress. Operational technology including advanced robotics, drones, 3D printing, uberisation and IoT is disruptive because it changes the way material and equipment behave.  It is important because these changes enable new business models that can be more personalised, less resource intensive and higher margin.


The extreme, but realistic use case is virtual inventory for maintenance parts in capital equipment situations.  Operational technology includes IoT to know what needs to be fixed, 3D printing or robotics to make the part, drones or uberisation to deliver it.  Mix and match these tools to get better business results in aerospace, building controls, energy infrastructure and more. 

Twist your mind a little and see a whole range of opportunities in almost any business.

Digitisation is quickly moving from hype to reality.  It’s time to start eating this elephant, one bite at a time.

 

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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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