Gartner: 3 areas supply chain leaders must prioritise for the future
That is the reality facing businesses and their supply chain organizations in the digital era, where business models change as...
Disrupt or be disrupted.
That is the reality facing businesses and their supply chain organizations in the digital era, where business models change as quickly as new competitors or new market opportunities emerge.
Opening the Gartner Supply Chain Executive Conference this week in Phoenix, Arizona, Debra Hofman, vice president and distinguished analyst at Gartner, told the audience of supply chain strategists that great supply chain leaders create a vision for what’s possible in the future amid the realities they face today. They need the ability to anticipate and respond to future events with integrated plans capable of responding to disruptive business scenarios.
“You will need to expand your vision and redefine the notion of a supply chain,” said Ms. Hofman. “Traditional supply chain strategies that focused on incremental change, being risk-averse, and that are measured mostly on cost savings and efficiencies, will no longer win.”
Ms. Hofman outlined three areas that supply chain leaders should focus on to create their vision for the future.
New customer experiences
We are entering the age of “experience” economies. This means that the way companies deliver customer value is different, and the customer experience is the new battlefield for competitive differentiation. The new competitive differentiator is understanding what customers want before they ask for it, sometimes solving problems customers didn’t realize they had.
Customers today are focused on getting what they want when they want it. Creating that superior customer experience can include delivering personalized, or smart products and services, with immediate access and delivery where and when the customer wants them. Or ensuring that corporate social responsibility (CSR) initiatives are built into the supply chain to provide sustainable purpose and products to customers.
“These customer experiences will be delivered through disruptive business models called ecosystems, fueled by virtual connections that enable companies to come together and deliver the customer experience in ways they couldn’t before,” said Ms. Hofman.
The new virtual ecosystem
The concept of a business ecosystem is not new. Cars, for example, have evolved to become platforms delivering a customer experience that draws on a cross-industry ecosystem of partners, from the car manufacturer to companies that specialize in communications, entertainment and navigation. What is changing with these ecosystems is the rise of digital connections combined with digital products.
Products and services delivered through the ecosystems of the future are connected by electronic touchpoints called application programming interfaces (APIs). The connection is digital and the product is digital. Michael Burkett, vice president and distinguished analyst at Gartner, said these virtual ecosystems will disrupt supply chains.
“Supply chain leaders will orchestrate product and solution development across the ecosystem, combining input from players previously unknown to them. They will design the ecosystem supply network and manage the performance of the ecosystem with their partners,” said Mr. Burkett. “Ecosystems are the future of the digital business world. Every company will compete in a virtual ecosystem.”
New digital technologies
Underlying and fueling all of this are new digital capabilities. As supply chains build digital maturity, the use of various technology evolves. “Our business lives and our supply chains will be ecosystem-driven, crowdfunded, socially agreed, 3D-printed, drone-inspected, sharing-economy-provided, usage-metered, predictively maintained and blockchain-assured,” said Mr. Burkett. “These new digital capabilities are also catalyzing changes to the very notion of what we mean by supply chain.”
Take artificial intelligence (AI), for example. Mr. Burkett said the rise of AI is enabling a future in which a supply chain will be a dynamic, self-adapting organism to a constantly changing environment, much like the human brain.
“The supply chain of the future could look like one in which customers and partners may be machines that are acting and negotiating on their own, with little to no human intervention. This supply chain can digest massive amounts of data, anticipate customer needs, predict when critical suppliers will shut down and then, autonomously and dynamically reconfigure the network to respond, making decisions to qualify and connect, all at the speed of digital.”
Gartner analysts are providing additional analysis and information on supply chain trends at the Gartner Supply Chain Executive Conferences taking place through Thursday in Phoenix, AZ and September 20-21 in London. You can follow news and updates from the events on Twitter using #GartnerSCC.
5 Minutes With: Jim Bureau, CEO Jaggaer
What is data analytics, and why is it important for organisations to utilise?
Data analytics is the process of collecting, cleansing, transforming and analysing an organisation’s information to identify trends and extract meaningful insights to solve problems.
The main benefit for procurement teams that adopt analytics is that they’re equipped to make faster, more proactive and effective decisions. Spend analysis and other advanced statistical analyses eliminate the guesswork and reactivity common with spreadsheets and other manual approaches and drive greater efficiency and value.
As procurement continues to play a central role in organisational success, adopting analytics is critical for improving operations, meeting and achieving key performance indicators, reducing staff burnout, gaining valuable market intelligence and protecting the bottom line.
How can organisations use procurement analytics to benefit their operations?
Teams can leverage data analytics to tangibly improve performance across all procurement activities - identifying new savings opportunities, getting a consolidated view of spend, understanding the right time for contract re-negotiations, and which suppliers to tap when prioritising and segmenting suppliers, assessing and addressing supply chain risk and more.
Procurement can ultimately create a more comprehensive sourcing process that invites more suppliers to the table and gets even more granular about cost drivers and other criteria.
"The main benefit for procurement teams that adopt analytics is that they’re equipped to make faster, more proactive and effective decisions"
Procurement analytics can provide critical insight for spend management, category management, supplier contracts and negotiations, strategic sourcing, spend forecasting and more. Unilever, for example, used actionable insight from spend analysis to optimise spending, sourcing, and contract negotiations for an especially unpredictable industry such as transport and logistics.
Whether a team needs to figure out ways to retain cash, further diversify its supply base, or deliver value on sustainability, innovation or diversity initiatives, analytics can help procurement deliver on organisational needs.
How is data analytics used in supply chain and procurement?
Data analytics encompasses descriptive, diagnostic, predictive and prescriptive data.
Descriptive shows what’s happened in the past, while diagnostic analytics surface answers to ‘why’ those previous events happened.
This clear view into procurement operations and trends lays the groundwork for predictive analytics, which forecasts future events, and prescriptive analytics, which recommends the best actions for teams to take based on those predictions.
Teams can leverage all four types of analytics to gain visibility across the supply chain and identify optimisation and value generating opportunities.
Take on-time delivery (OTD) as an example. Predictive analytics are identifying the probability of whether an order will be delivered on time even before its placed, based on previous events. Combined with recommendation engines that suggest improvement actions, the analytics enable teams to proactively mitigate risk of late deliveries, such as through spreading an order over a second or third source of supply.
Advanced analytics is a research and development focus for JAGGAER, and we expect procurement’s ability to leverage AI to become even stronger and more impactful.