Sustainable Supply Chain Transformation - The Role of Information Technology
Supply Chain is comprised of interlinked processes and systems that are used to plan and execute activities involving suppliers, internal operations and customers. From a manufacturer’s perspective, it begins when customer demand is created through everything that a firm needs to do until the customer receives or once in a while (a long, long while hopefully) returns the product. The Supply Chain Operation Reference Model of APICS provides a comprehensive conceptual framework that can serve as a guide to design a suitable configuration of processes, metrics, organization, and technology. In reality, there is no one-size-fit-all world-class supply chain design. Each company needs to stay within its means of cost and capital structure as it invests in the transformation of legacy practices through automation, training and reorganization. While options are importantly shaped by the company’s business objectives and competitive landscape of supply and demand, the Head of Information Technology of every firm must take a leadership role in the transformation journey and become a trusted advisor of senior management.
At the highest level, the vision of a world-class supply chain is to become a competitive advantage that will be used as order winner. It changes the cost conversation to a dialog of value generation and differentiation. Information Technology is an essential enabler of the required supply chain capabilities and not a mere support function. To that end, IT leaders need to proactively partner with the business and supply chain leaders as they spearhead a 3-prong strategy:
(1) Create cohesive, agile business processes (QTC-RTP-FTM-DTA) in order to sustain positive customer and supplier experience even in the event of disruption;
(2) Provide visibility of cost and constraints across the end-to-end supply chain so as to enable optimized decision making and effective management of key resources and priorities;
(3) Leverage capabilities of trading partners to deliver supply chain innovations that enhance the firm’s technological and operational competitiveness;
What we need to support this strategy is a blueprint of supply chain architecture that shows how the pieces must fit together - business processes and organization competency, supply chain applications, information infrastructure, manufacturing and logistics assets. IT leaders clearly play a big role in the planning and implementation of this architecture particularly the integration of supply chain applications and their links with data and user interfaces.
To realize the supply chain vision, a firm must first and foremost be able to collect information about material movement and conversion across the entire supply chain. Access (pull) and presentation (push) of this information on demand and at any single point of contact globally is crucial to timely analysis, planning, trade-off decision making, and actioning. Just as Generation X supply chain decision makers and knowledge workers are changing guard to millennial, IT leaders need to articulate a strategy for harnessing the potential of cloud computing, big data, mobile devices and social media while leveraging existing investment in technology and mitigating the complexity and risk of the vast amount of data and increasingly demanding communications.
The sources of supply chain data have exploded in the last decade. As decentralized smart sensors and control devices proliferate and turnkey RFID systems continue to mature, “big data” will get bigger. Additionally, increasing internet-based commercial transactions will create even more unstructured data. Successful transformation of supply chain hinges on the availability of a secure and scalable Business Intelligence infrastructure that consists of hub-and-spoke cluster of databases, smart data marts (e.g. dating and cross synchronization), mining tools and analytics all of which are designed to support the firm’s application requirements and data characteristics – volume, longevity, hierarchy, predictability, diversity of users and sources.
The use of information technology must also go beyond point solutions albeit effective tools and systems for process improvements. There are hundreds if not thousands of software applications, on and off the cloud, that are designed to help certain users across the supply chain continuum do their jobs faster and more accurately. I get inquiries almost every week from different software companies and consultants telling me that they have just the right tools that my company cannot live without – community cloud and mobile apps for customers, Sales & Operation Planning, eSourcing, finite production scheduling, manufacturing execution system, DRP incident response management, distribution network design, inventory optimization, collaboration tools, and so on and so forth. Not to mention the complex permutation of platforms for application deployment ranging from on-site license to on-demand SaaS.
There is tremendous pressure to create step change in supply chain performance through leading practices that will redefine the rules of competition. This can best be done by utilizing the latest technology to compile the data and synthesize the most up-to-date knowledge and insight about customers and suppliers. The Supply Chain leaders are subject matter experts, but they need collaboration of IT leaders to determine the right way, if not the cheapest and fastest option, to deliver the intended supply chain innovation and efficiency. Those of us who stay ahead of competitors, suppliers, and customers will be able to drive the agenda although the cost of rushed disparate deployments or even failed implementations can be high. In order to steer the organization on a long-term roadmap with well orchestrated programs and projects that on one hand do not impede progress and on the other hand maximize ROI and standardization, the progressive IT leaders have broken out of the old paradigm of technical support function. They have acquired pertinent know-how in supply chain practices and adopted a business mindset so that they may work across the organization from the C-suite to the plant floor as they lead the strategy and deliver the value of Information Technology.