If a golfer were trying to correct her slice, she wouldn’t expect to fix it simply by buying the newest and most expensive golf club. Understanding her stature, swing path and preferences is key to fixing underlying issues and developing a better overall swing.
The same goes for complex supply chains, which are interconnected ecosystems that demand human guidance and context at every turn.
Without a doubt, global supply chains are overstressed due to a raft of recent challenges, including COVID-19-induced panic buying, production shortages, and logistics nightmares like the Suez Canal blockage.
But these challenges aren’t new, according to a recent report from Ernst & Young. COVID-19 simply accelerated and magnified existing issues, hampering the multi-party supply chain. As a result of the renewed focus on the global supply chain due to the pandemic, interest in autonomous and digital innovations to streamline workflow and optimize operations have been steadily rising in popularity over the past 18 months.
Simply investing in artificial intelligence and other emerging technology, however, isn’t enough to solve the underlying issues throughout the multi-party supply chain. Instead of playing buzzword bingo and expecting technology to solve every problem, businesses should look to their people and processes in tandem with innovative technologies to lead to real supply chain transformation.
A Need for Context
The acceleration of cloud-based technology brings a far more expansive and much-needed connected view of the supply chain. The Ernst & Young report found that increased visibility is the number-one priority for businesses over the next 12-36 months. It also revealed that increased automation (63%) and investments in AI and machine learning (37% already deployed, 36% planning to use them soon) are among the measures that companies are taking to help their workers utilize digital technologies.
Also contributing to this shift are the digital freight forwarders, marketplaces and other startups that are disrupting logistics and changing the way that companies transact and physically move goods around the world.
With all this technology, there’s a larger need for context in whatever area of operations companies are aiming to address. This involves understanding the way that people in the supply chain work, as well as knowing exactly what it is you’re trying to transform. Transformation doesn’t have to be so massive that it becomes cost-prohibitive or sucks up too many resources.
Similarly, new technology must be equipped to consider the larger supply chain ecosystem. Some 80% of all information needed to run supply chain operations is external, living with suppliers, logistics service providers, warehouses, consolidation facilities and banks. All these businesses have unique needs, and address them with their own set of technologies and processes.
When there are disruptions, technology should enable shared responsibility among companies across the supply chain. With a human-centric approach to digital supply chain transformation, technology can enable shared responsibility among partners when disruptions occur, and actions to resolve them can be taken more quickly.
How to Organize Transformation
While it’s clear that the pandemic has accelerated digital transformation, putting humans at the center of these efforts is key to long-term success. But what exactly does a “human-centric” approach mean? To find out, companies must be prepared to “get a little dirty” by sorting through all of their messy data, and account for the human interactions that allow them to better understand policies and processes within operations. These include e-mails, phone calls, spreadsheets, and manual processes that move cargo around the planet.
The bigger the enterprise, the bigger the “mess.” But there’s no cookie-cutter approach to success, because no two supply chains are the same.
For LSPs, digital transformation is even trickier, almost like building a plane 30,000 feet in the air. Large companies can’t afford to halt operations to make across-the-board system changes to their supply chain. In the same way, strong existing vendor relationships should serve as an asset, not a hindrance. Support, transparency, and communication among partners can ensure continuity during transformation.
As for the scope of transformation, it’s best to take an incremental approach. End-to-end system replacement or a rip-and-replace approach aren’t practical and virtually guarantee business disruption. Often it’s not the systems themselves that cause issues — they’re usually highly specialized and functionally excellent — but what happens to the data these systems generate.
Achieving a Strong ROI
There are good reasons for companies to have enterprise resource planning (ERP), but it’s expensive, time-consuming and difficult to change. Transportation and warehouse-management are just as well-entrenched, so achieving real change that adds value can be a challenge.
All the more reason to stay focused on a human-centric approach to transformation. That will help ensure that you choose the right technologies to aid in your organization’s business goals, which in the end are what drive return on investment.
So what does the process that look like? Start with the human who sends the initial demand signal to begin purchase planning, and continue along the chain until you reach the human who delivers the finished goods in the last mile. Then consider what technologies or system implementation can add value. This means weighing whether the new systems can help people do their daily jobs better or more efficiently.
An additional benefit of a truly human-focused approach is the level of detail and context required to drive successful supply chain transformation. As the multi-party supply chain collects and conveys a myriad of information, it’s critical for humans to analyze the data gathered by those systems, to provide the context necessary for making the most informed decisions to keep cargo flowing. Having innovative technology in place, combined with the human element, will give organizations a competitive edge and help turn their digital transformation efforts into action.
Internally, companies need to understand the processes that can provide data, visibility and collaboration between business functions that might not have previously been possible. Evaluate processes to uncover interactions between companies, then determine what can be automated and augmented. This can start with a single, small step that demonstrates the possible ROI of a larger implementation, to avoid disruption and waste.
Because of the severity and urgency of the challenges that businesses and consumers have faced over the past 18 months, the supply chain is now considered an essential function and a strategic investment. A partner mentality will go a long way toward achieving the kind of transformation that ensures doing right by your customers, and their customers as well. The multi-party supply chain revolves around humans; so should its solutions and operations. No matter how advanced technology becomes, a human touch will always be needed to get the most out of any investment for maximum ROI.
Matt Gunn is vice president of product and solution marketing at Slync.io.