Make supply chain technology work for you
Written by Nachi Sharma
My recent engagement with a US based Fortune 500 giant provoked me to write this article. The customer was gung-ho on how the new Enterprise Resource Planning (ERP) software roll out for them is going to change their organisation and set them on growth trajectory.
My question to the director was not how this engagement is going but also if the organisation is keeping up with the changing social/technology paradigms in times to come? There are numerous customers who are thinking on similar lines and are looking to invest more to make sure their investments directly hit the bottom-line.
This plight also makes me wonder what I would consider had I been making the investment. Here I outline past, present and future trends that continue in ERP software and supply chain technology as a whole, and must be considered when choosing the right system.
The evolution of ERP systems happened when the need arose to integrate various Planning, Ordering, Procuring, Manufacturing and Financial systems. The erstwhile ERP systems were focused towards making sure that data available to planning folks can be shared with the order entry personnel. This made sure that whole organisation from shop floor supervisor to business managers are able to look at the same data. The access to data was restricted based on roles and responsibilities
Workflow driven business processes:
Once the transactions were integrated there was a need to automate the business processes. The businesses did not want to make their processes person dependent, delegation was needed and a 24/7 working engine was required. A workflow application is a software application which automates, at least to some degree, a process or processes. The processes are usually business-related, but it may be any process that requires a series of steps that can be automated via software. Some steps of the process may require human intervention, such as an approval or the development of custom text, but functions that can be automated should be handled by the application. Advanced applications allow users to introduce new components into the operation.
Business Process Management:
When all workflow could automate some or all of business processes, businesses recognized the need of managing all these business processes from a dashboard. Business process management (BPM) is the discipline of managing processes (rather than tasks) as the means for improving business performance outcomes and operational agility. Processes span organizational boundaries, linking together people, information flows, systems and other assets to create and deliver value to customers and constituents.
Plug & Play:
As businesses continued to make investments over the years, new set of technologies were required to make use of existing investments without creating sunk costs. There were multiple silos existing across the organization. Technologies like web services and other products from top ERP vendors came into picture to provide value to customers.
As businesses continue to evolve and emerging economies start to bubble, this has brought out a revolution by creating socially enabled data, new decision making capabilities and tonnes of data. Following will be the key areas which businesses, including ERP companies, will leverage to make their customers successful
Social Media Enabled :
More people are regularly participating in social media such as Facebook and Twitter, and this needs to be exploited when developing ERP systems. The next generation of ERP products will have more dashboards with Social Platforms, Media Groups, and Collaboration suites as part of their products. Organizations will bring more emphasis in reducing e-Mail infrastructure and focus more on real time information sharing via chat rooms on ERP products and Video Messaging integrated with roles.
The Aberdeen Group indicates a top concern for businesses continues to be the existence of data silos and worries about information quality. Disparate applications that are not interconnected through an ERP generate enormous quantities of information, and without those connections to tie processes and data together, the effort to examine company information is tedious. ERP can serve as the backbone of an organization by providing a fully-integrated operational system capable of processing, storing and reporting on high volumes of transactions. With ERP, companies have the ability to use business interface tools to collect and analyse data. ERP data schema is inherently complex and custom queries generated directly from the ERP may be challenging for some companies to achieve on their own.
The need to convert fixed cost into variable cost has always been the conundrum businesses are facing. With changing technology infrastructure and variance in the type of technology work businesses do, there’s a strong need to move towards Software-as-a-Service (SaaS) model. This will be the trend which will continue till next few years. ERP companies will continue to invest in cloud based models as customers achieve more maturity in adopting SaaS model.
Gartner defines big data as that which has high volume, velocity and variety, and the expanding social media universe is a prime example. Analysis of unstructured data such as that generated by social media poses a real challenge for companies. Products like Hadoop have gained attention of large corporations that wish to harness consumer opinions expressed in social media to drive company actions. Most small and midsize businesses, however, have not yet given much attention to these tools. What midsize business should consider is whether or not they will have the capacity to integrate their systems with products like Hadoop in the future.
When choosing an ERP solution, an important consideration is always going to be product agility. How adaptable is the architecture? Can the solution support ongoing customisations, not only to address your unique business vertical but also to adapt to changing technology trends? Are big data capabilities on the roadmap?
Another quite recent change in our daily business life is the increased requirement for mobility. With more people doing their job 'on the move', out on client sites, in warehouses, remotely from home, and not in a traditional office, mobile devices of all sorts are becoming important business tools. These changes have to be reflected in the ERP system to ensure that all staff, regardless of their location, can access vital information in order to carry out their duties effectively
About the author:
Nachi Sharma is currently working as Supply Chain Consulting Manager with Wipro Technologies. He is an SCM consultant with 11 years of experience. He has thorough experience in Business Process Modeling, As-is Process Mapping. He advises his clients on solving Supply Chain Challenges through various process modeling and technology deployments. He has worked with entire gamut of clientele in Hi-Tech, Discrete Manufacturing, Retail and Financial Services industries in US. His work has been published in international journals. He is the Founder & President of Sandhi Charity, a non-profit organisation focused on child education and providing global resource pool to various other non-profit organisations.
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.”