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Drivers of Supply Chain Innovation


Thursday, 18 Jul 2019 ( #932 )
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"To deliver an enhanced customer experience," was the top factor cited by leaders of above average performing supply chains for driving supply chain innovation at their companies, according to a recent survey. "It's not about reducing costs, and it's not about creating competitive advantage," according to Kristi Montgomery, vice president, innovation, research and development, Kenco Innovation Labs. "Supply chain innovation is all about the customer and the customer experience."

To another question about the adoption of emerging technologies that in five years will have delivered the most supply chain innovation benefits, the top three selections are mobile devices and apps, control tower visibility (predictive and prescriptive analytics) and warehouse automation/robots. Other innovative technologies mentioned were Artificial Intelligence/machine learning, Internet of Things, driverless trucks, Blockchain, drones and 3D printing.

Montgomery had a very interesting observation after speaking with supply chain leaders and reviewing their survey responses: they are really interested in all of the emerging technologies, but they are not yet at the point where they can commit major capital investments and begin large-scale adoptions with any specific technological innovation.

"Instead, they prefer experimenting with different emerging technologies as a learning objective, trying it out in a smaller area, piloting it, determining potential ROI, and assessing how it may fit to achieve best benefit in their specific environment," she explains.

Montgomery also shared: "When considering digitizing the supply chain, emerging technology is definitely a consideration, but it only succeeds when it is suitably married with an integrated approach of revamping your operations."

"If you don't change your processes and improve your processes before you implement the technology, then you just have more bad processes with a lot of technology enabling them," she acknowledged. "You have to have a view of how the technologies are going to increase the level of proficiency at the end of the day. You have to start with the end in mind and not with the technology."

About digital transformation
A major focus in the logistics sector is moving in the direction of modifying the supply chain to be more digitally focused to better serve the customer and to do it faster, better, cheaper. However, many companies currently are really struggling with the digital transformation because they tend to look at it from a siloed approach.

As Montgomery shared, "Forward-thinking supply chains shift from single-threaded, transactional processing to smart, connected multi-dimensional flows of data and products."

However, the difficulty in the supply chain industry is, she continued, "We don't play well with others often times, and, 'I'm not so inclined to hand my data off to somebody else and let them see it.'"

In order to move towards what is truly a digital supply chain, Montgomery strongly recommends learning how to collaborate with others, learning how to integrate well with others so that the data has visibility across multiple parties.

The problem arises when a customer has four 3PLs, 15 carriers, 85 suppliers, and they are international in scope. Realizing that all of these parties have to talk at the same time, with the same information to make it all make sense, it clarifies why it's difficult to get there.

"In order to create the digital supply chain, there's going to have to be a collaborative eco-system," Montgomery noted. You have to have these connections that are not sequential, they're not purely, 'I'm going to send the data to you, you take it, do something with it, and then send it back to me.'

"It instead becomes a circular pattern and there's data flowing through all these different parties in a real time fashion on demand and you now have information that's truly flowing and you have visibility to what's happening across your supply chain," she explained.

Next, the smart, connected warehouse
Numerous studies find that companies that aggressively digitize their supply chain can boost annual revenue growth three percent and top line revenue by at least two percent, Montgomery shares. "If you can grow total revenue by two percent by digitizing your supply chain, that might make the supply chain a standout winner in your organization," she adds.

One of the primary benefits of a smart, connected warehouse is the enhanced customer experience. Other benefits include faster lead times, higher degree of process efficiency, better collaboration, and being proactive rather than reactive.

Montgomery outlined the following steps to begin the journey to the smart, connected warehouse:

Align with overall business strategy. "If you don't have an overall business strategy that says here's where we're trying to go, and then lining up your digitization strategy with here's how we get there, you're going to end up in failure," she warns.

Rethink current business models. Determine how to change the way you do business and make it digital and improve it for everybody.
Strengthen core differentiators and build digital strategy specifically around them. Focus on what you do well, make it more digital and determine how to make it more on demand to customers.

Take an integrated, cross-functional view. Move out of your silo, work across other functions, create an ability to collaborate with each other and help them understand what's going on in your warehouse and why you need to digitize.

Determine how you will manage the change and evolve the culture. Communicate, communicate and communicate, stressing "what's in it for me." Get your people on board, especially the operators who probably know exactly what you have to do differently but have never been asked. Give them a forum to contribute and reward them for doing so. They'll respond.

Watch a video of Kristi Montgomery's full presentation by visiting the Online Learning Center at werc.org. Interested in presenting an industry solution? Watch the werc.org website for our Call for Proposals, coming soon.



Warehousing Education and Research Council (WERC)
werc.org
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