Author: FIN Marketing

Supply Chains at the Tipping Point, Part Two

About the Author

Patricia A. McLagan has worked at strategic and operational levels during major shifts in NASA and other aerospace organizations, manufacturing organizations, energy, banking, telecommunications, defense industry, cyber-security, and globalizing consumer businesses. She also helped business and government organizations in South Africa as they prepared for the end of Apartheid and realigned themselves to compete globally.

This is the second in a series of articles focused on the transformational role supply chains are playing in business today, and on the human and culture change implications of this role.

While the term “transformation” means changes in technology for many, the other vital aspect of business transformation continues to lag.  It’s the people dimension of the business. Culture isn’t there yet, but it is reaching a tipping point that is now inevitable because the end-to-end digitally assisted enterprise is possible.

In Greek mythology, Zeus learns that his wife, Metis, is pregnant with a daughter who will be more powerful than he is. In true mythological style, he swallows his wife as a way to keep his power. But while inside him, his wife gives birth to Athena. Athena wants to break out and causes Zeus to have increasingly severe headaches until, with the help of a powerful blow to Zeus’ head by Hephaestus, the God of Fire, Athena emerges from his head, fully grown and ready to bring her wisdom and intelligence to earth.  

This story has many parallels with the transformational changes happening in supply chains and businesses today. But in this article, the relevant point is that, although it seemed Athena was born fully grown, she actually developed to a maturity of wisdom while inside the womb of her mother and then grew into a warrior inside the body of her father. It took time for her to develop the wisdom, intelligence and warrior capacity she needed in order to do her work in the outside world.

What does this mean for supply chains and business transformation? I see several lessons. First, in spite of how much we want organizations and people to change on our schedule, no key human or cultural capability emerges full grown, even though we would like to think we can “transform” in the here and now. Big changes often start as annoyances, aberrations, and challenges to the existing system. They have moments of breakthrough, then are swallowed up, perhaps to fight on. Eventually a new “mainstream” emerges, seemingly full grown.  This all happens in the overlap area of life cycle curves, in the testing period that helps sort ideas and refine those that will breakthrough. It is how evolution works.  Think of how long it took for total quality to become a priority. 

Second, new capabilities often develop in spite of the support of those in power. This is the case when new capabilities threaten the status quo and power relationships but are important for growth and survival of the enterprise. These capabilities emerge in response to survival and other challenges even though the system presents barriers. They occur ad hoc, as people gradually change their behavior to accommodate new technologies and the fast pace of change – even when it means operating outside the rules. As biophysicists and complexity scientists point out, all living systems naturally self-organize. They develop the capabilities needed to respond to problems. They survive and grow without being told to do so. Zeus didn’t want bring Athena’s wisdom, intelligence, and warrior strength into the world he dominated. But Athena had other plans.

Third, for decades, organizations have been deliberately developing and strengthening some of the technological and the human capabilities they need to move into the 4^th Industrial Era.  The spotlight has been on technology, with many people equating “transformation” with “technology change.” But simultaneously, businesses have also been developing the human — cultural  — dimension of the business. 

This deliberate development of people’s “change” capabilities has taken many forms since IT accelerated the pace of change in the 70’s. Leaders began to realize that command and control and rigid bureaucracies were interfering with their ability to adapt and compete. So, they launched Interventions to channel and align behavior while also unleashing creativity, responsible problem solving, teamwork, etc. They invested in Quality Circles, Kaizen and Continuous Improvement, Statistical Process Control, Total Quality Management, Process Reengineering,  Lean, Six Sigma, Lean Six Sigma, Agile and other programs and projects. 

Many of these programs may have faded away as stand-alone initiatives. But the capacities they built remain embedded in more mature and system-wide processes, norms, and human capabilities. Thanks to decades of evolving participation and experience with local and system-wide change, many people have basic skills for participating in a digitalized, process- and customer-oriented Industry 4.0 enterprise. They are ready to move beyond being a box on a pyramid chart where their main focus is a boss and a silo. 

So, people have evolved many capabilities for today’s changing workplace. They are increasingly exposed to the technology and process support that is changing how business works. But there are missing pieces. Most people now require a new vision of themselves as value adding participants in a value-adding flow of work where they are responsible to customers. And they need confidence that they can continually evolve to deal with the changes they face and that lie ahead. Leaders, of course, have new roles in this emerging view of work and the enterprise, and must deal with their own mindset transformation.

Like Athena who developed critical capabilities of intelligence, wisdom, and warrior strength while hidden away inside Metis, then Zeus, the people of today’s enterprises have been developing capabilities for the next era while working inside the traditional structures that they will now help replace. 

About the Author

Patricia A. McLagan has worked at strategic and operational levels during major shifts in NASA and other aerospace organizations, manufacturing organizations, energy, banking, telecommunications, defense industry, cyber-security, and globalizing consumer businesses. She also helped business and government organizations in South Africa as they prepared for the end of Apartheid and realigned themselves to compete globally.

An article Series on Supply Chain Driven Business Transformation

This is the first in a series of articles focused on the transformational role supply chains are playing in business today, and on the human and culture change implications of this role.

Supply chains are often seen as “primarily logistics.” But supply chains are emerging as the fundamental business transformation driver of the 21st Century. They are leading organizations and ecosystems into what the World Economic Forum calls “Industry 4.0,” the age of intelligent machines – and importantly – of generations of people who must be ready to co-evolve with them.  

Digitally-enabled supply chains shift what it means to be and operate as an organization. Along with the technologies that support them, they are the long missing structural foundation for the culture changes organizations have long aspired to: agility, resilience, innovation, quick learning and solving problems, fast movement of information with few intermediaries, self- and team autonomous but aligned accountabilities. 

Digitization, AI, and the Internet of Things are some of the external breakthrough forces. They make it possible for supply chains to flow outward and horizontally, energized by customer needs. It’s now possible to formally structure businesses around natural customer value flows rather than in vertically oriented pyramids and silos – in the true spirit of “form follows function.” Traditional pyramid and silo structures have been essential for alignment, data management, control, and communication in large enterprises in the past. But in their traditional forms, these coherence mechanisms and the mindsets they rely on, present many performance and cultural obstructions today.   

In this article series, I will explain, from my change professional’s experience, research and perspective, why supply chains are the structural powerhouse that can trigger the elusive holy grail of transformation that businesses have been seeking for decades. And I’ll suggest what this new supply chain centrality means for the future of business as well as for supply chain leaders and participants. 

The second article in this series provides a quick review of how organizations have evolved their capacities for change since the traditional business enterprise arose in the early 1900’s.  While businesses have been making massive technological, process and business model advances, they have also been slowly developing the human and cultural capabilities for bringing these changes to life.   There is a great deal more to be done, however, to help the human dimension co-evolve with the accelerating pace of changes in the technical side of the business. Changes in the supply chain are adding accelerant to the urgency of attending to this co-evolution of people with technology (and vice-versa).

In the third article, I take a close look at different types of change and their implications for the human dimension of an enterprise. You’ll see that it’s important to reserve “transformation“ for the deeply fundamental changes that have been trying, for many decades, to happen in businesses.  Transformational changes require many realignments, a lot of experimentation, and big shifts in assumptions, world views, and mindsets for everybody involved. In a sense, everyone must be reborn into the new world technology is helping us create. 

In a fourth article I look closely at transformation in the supply chain and, through the supply chain, in the overall business and its ecosystem.  As the supply chain – the end-to-end value stream becomes the main structural force in and beyond individual enterprises – it takes a new centrality in business models and in the mental models that drive peoples’ aspirations, behaviors and interactions. 

Finally, in the fifth article in this series, I address supply chain leaders as change – transformation —  agents for the business as a whole – and even into the entire stakeholder ecosystem.  If you are a supply chain leader, you may not have asked for it, but, because you are spearheading the most transformative force in your business, you have, by default, a major business-wide transformation responsibility.  It is important to know what it means to perform this vital leadership role.

Every insight and recommendation in these articles will be based on decades of research and experience in the trenches of change, side by side with executives and with people implementing changes in very difficult – often technology driven – circumstances.

I hope you will join me to explore transformation from a change agent’s perspective.

About the Author

Professor Mark Jolly is Head of the Sustainable Manufacturing Systems Centre, at Cranfield University

In an energy-intensive sector like manufacturing – making up one third of all energy consumption in the UK – foundries are a hotspot, using casting processes that typically demand 75 GJ per tonne. In the UK there are more than 450 of them, reportedly about 26,000 in China, more than 2,000 in the USA and around 600 in Germany – large numbers of mature, small and medium-sized operations that tend to lack the ability and motivation to become more energy efficient.

More than 100 million tonnes of metal were cast in foundries globally in 2016, producing 400 million tonnes of CO2 – 1.5% of global CO2 emissions. A particular issue is the shift to more manufacturing using lightweight materials, in this case the dramatic increase in demand for aluminum. Lightweighting is only increasing the scale of CO2 emissions. In 1997, aluminum emissions were 41 million tonnes (17% of the global total from foundries); this has now become 123 million tonnes (31% of the total).

In our conversations with 100 foundries and industry experts, it became obvious that energy efficiency and emissions weren’t a key decision-making factor and there was no detailed monitoring or analysis of energy use, the focus was solely on energy bills in themselves.

Foundries are an eye-catching example, but clearly aren’t the only manufacturers that have just come to accept extravagance, living with high levels of energy use and waste of resources as a norm.

“Small is Beautiful” is a new philosophy for the sector that aims to ensure that resource efficiency (both in material and energy terms) is included in every aspect of planning and management, from the design stage onwards. Crucially, at the heart of this way of thinking is the need for measurement: “If you can’t measure it, you can’t manage it”. And any monitoring of environmental impact has to consider all the stages of the materials. That means not only the energy consumed directly through the manufacturing process, but also what’s involved in extracting, preparing, recycling and disposing of the materials used in processes.

Looking at foundries in particular, there are some straightforward wins when the whole cycle resource costs are taken into account. Using a software tool to visualize energy and material flows, it’s been possible to create a detailed analysis of the entire production chain from charge to waste, and benchmark against other foundries internationally. This has highlighted opportunities for more efficient processes and new metrics as a basis for auditing.

Take aluminum melting – an energy-intensive process using crucible furnaces and natural gas consuming more than 60% of the total process energy. Using the Constrained Rapid Induction Melting Single Shot Up-Casting (CRIMSON) process was shown to reduce overall environmental impact by 57%, in terms of reduced waste of materials and use of energy. CRIMSON uses an induction furnace for melting the metal in a closed crucible, meaning only the quantity of metal required to fill a single mold is molten, rather than large batches that use unnecessary energy and increase the number of rejects. Due to the rapid melting, transfer and filling, the holding time of molten metal is minimized and there’s a huge energy saving.

The lesson for the manufacturing sector from Small is Beautiful is around being clear-sighted – breaking from assumptions and traditions and looking again

Professor Mark Jolly

We’ve also compared a number of the processes used for casting modern small aluminum alloy cylinder blocks – High Pressure Die Casting, Gravity Die Casting and Low Pressure Sand Casting – a full analysis of all the materials life cycles, including raw materials production, recycling loops of alloys, mould materials, heat treatment, machining. The results show a variation in energy needed from 98 GJ/tonne to over 180 GJ/tonne (2.5 – 4.6 MJ/block) compared with Cast Iron which only uses 32 GJ/tonne (1.2 MJ/block) – demonstrating the importance of taking into account the costs of the manufacturing process when materials are substituted.

The lesson for the manufacturing sector from Small is Beautiful is around being clear-sighted – breaking from assumptions and traditions and looking again. Only by understanding the full and detailed costs of processes is there a basis for cost-savings and long-term sustainability.

About the Author

As Chief Strategy Officer, Dr Anne Robinson is responsible for accelerating Kinaxis strategy development to add further value to customers. She’s a proven leader in analytics and digital transformation, with expertise in operations, supply chain, and strategy, Anne has extensive experience in managing supply chains for complex, global organizations. Anne is a past president of INFORMS (the Institute for Operations Research and Management Sciences), a seasoned industry speaker and has served on several advisory boards. Originally from St. John’s, Newfoundland and Labrador, Anne has a BScH from Acadia University, MASc from the University of Waterloo and an MSc and PhD in Industrial Engineering from Stanford University.

Most journeys are full of twists and turns, so guidance along the way can keep you from going astray. I’ve led successful supply chain digital transformation efforts in high-tech, retail and telecommunications, so in the interest of helping others, I have some hard-won lessons to share from my own experiences.

Top four pitfalls to avoid during your digital transformation:

1. Failing to create a shared vision for all stakeholders
2. Not curating the right transformation team
3. Lifting and shifting existing processes
4. Omitting change management in your initial project plan

Embarking on a supply chain transformation can feel like a daunting, epic task. Supply chain organizations are entwined with so many other partner organizations that any change requires a systems-thinking approach, process innovation and dedicated focus on change management.

Establish your vision

In the words of Harvard Business School professor emeritus John Kotter, widely considered the leading expert on the topic of leadership and change, any transformation requires you to create a sense of urgency, a vision for why now and a prediction for what the future could look like. Especially during times of disruption, a crisp vision of your future supply chain and resultant benefits to your organization is critical for success. This vision needs to be reflective of all the different stakeholders impacted by the change, not just those engaged in the process.

It needs to complement key performance indicators (KPIs) too. When defining KPIs, don’t be afraid to make aspirational (yet realistic) projections of resultant metrics. It’s better to aim for your moonshot in setting the metrics and use them to directionally motivate your team. Do not forget to baseline the current situation. Having a baseline and projected value greatly outweighs the potential nervousness of overpromising the project results.

With vision and metrics in hand, describe your plan. One trick I’ve used is to map backwards. With your end vision described, identify the major milestones to reach that vision. Don’t feel like you need to do this alone. Engage others who can populate, validate, and ultimately own those milestones. And include celebrations in the plan as a way to recognize your team!

Create the right team

Transformations are impactful and tricky, so you need a team empowered to handle both conditions. Representation from all areas of the organization engaged in the change needs to be part of your team. If, for example, there will be impacts to financial models, marketing plans or sales practices as a result of your supply chain transformation, then people who are experts and can be your advocate in those communities need to be part of the official team. A project of mine required a new approach to inventory management for retail store staff, so we engaged the field team representatives to champion the change.

Identifying the right people can be a challenge. As one expert advised me, there should be no potted plants (people who provide little value but are easy targets to offer as team members). You want people whose absence will be a bit painful when they are out of their day jobs. The ideal profile is someone with a depth and breadth of knowledge for their domain and enough seniority to make decisions.

With the right team in place, a “one team” model should be instituted. I like to say, “Leave the sports coats at home,” meaning you shouldn’t be able to tell the difference between the business, IT and consultants by the “uniforms” by which they are identified. In one of my more recent projects, we grouped people by the process they were responsible to create comradery and functional accountability. This decision helped create synergy from process design to technical implementation.

I learned about these forms of principles-based governance and distributed leadership from Mark Bonchek, a pioneer in digital thinking and change management I first met when he keynoted an executive education event. Essentially this structure allows leaders to ring-fence decision-making and empowers the team, enabling incredible agility in process design and technical execution. Empowering a working team in this way will keep a transformation on task while ensuring critical decisions are still escalated to the executive sponsors.

Focus on processes

Process, process, process – please don’t just lift and shift! Merely moving work to a new technology without examining the underlying workflows will not bring about true change. Use transformation as an opportunity to evolve and modernize your processes.

Often legacy processes are wrought with a culmination of system constraints and workarounds. I remember a discussion with a former colleague frustrated after just such an experience. She had completed a supply chain planning transformation without the resultant benefits. Unfortunately, prior processes and associated bad habits migrated with the new system. Bringing new technologies and capabilities should be a catalyst to re-evaluate and potentially change your processes to fully embrace new ways of planning and executing your supply chain.

Change management

Change management might be the most critical element in your transformation journey. Too often, I’ve seen change management initiated as an afterthought. Engaging a change management expert to participate in everything, from project kickoff to blueprinting through implementation and rollout, ensures a robust, well-described change plan. Transformations don’t end at implementation. They’re just getting started because the next critical steps are about adoption and institutionalizing the new capabilities. Understanding each impacted party’s perspective, sentiment towards the change and willingness to adapt are keys to a transformation realizing its full value.

About the Author

Marian Temmen is a progressive change agent at heart and has been working at the intersection of global supply chain, procurement and value chain optimization for the last 15 years. He has been steering major transformational turnarounds and M&A integrations across Europe and Asia, translating complex commercial needs into high-performance and agile solutions in dynamic environments. Marian is particularly passionate about a compassionate and emotional intelligent leadership culture of empowerment and is keen in driving this new agenda into the future.

Are You Rethinking Leadership in this New Reality in the Right Way?

If there is one thing that you will have discovered from the magnitude of the events in 2020 so far, it is how significantly interconnected and vulnerable our systems are.

In the face of the pandemic ‘business as normal’ has been challenged head-on and doesn’t exist anymore. We already refer to a ‘New Normal’. The events have tested our businesses as well as political systems more so than anything else in recent memory. A deadly infection gets triggered in one part of the world and rapidly spreads across the rest of the world without knowing any borders.

It has shown us how increasingly interconnected our businesses are and how dependent on technology, communication tools, and supply chains these systems have become.

We all had to adapt to lockdown, social distancing, and other obstacles in recent months. Those in a position to do so have adapted – working remotely and adopted new technologies to speed up digital transformation in their day-to-day rapidly. 

For this global interconnectedness to function as effectively as it should, a particular type of leadership is needed; leadership with a clear vision, a single future in mind, and the ability to inspire and guide this increasingly complex and uncertain world into this envisioned future.

Now is the time to stand up and demand more from our leaders and leadership principles as a whole. In this surreal transitional period, we need to start asking ourselves:

What type of leaders do we want and need for our tomorrow?

What skillset should such leadership possess?

Evidently, politicians and business leaders alike have struggled to respond effectively to the current climate. Which leads me to believe, conclusively, we should not prize the same kinds of leadership qualities that we have in the past. We no longer require hero leadership figures like “the big tough guy”, “the smart guy who says he knows it all.”

These leaders led us in the direction of absolution. Our fate, both in societal and business systems, has been in the hands of the few, and it hasn’t been exactly successful. The problem with this kind of leadership is that it doesn’t work for the vast majority. Those kinds of leaders are fallible because they’re prone to mistakes, ego and other flaws. 

And when someone disagrees with them, too many react out of emotion, ego, and uninformed opinion than that of informed intellect and sound judgment. It is this shortsighted perspective we need to move away from, and we need to do it fast. It is no longer just about your organization or community. It’s the other systems that interact with them, the interconnectedness. We have now seen this play-out in real-time. 

The world; beautifully made up of mostly similar, but different cultures, traditions and behaviors demands; tolerance, respect, collaboration and fairness among its citizens across the board, something I call the etiquette of global citizenship.

Now that we know what we don’t want, what is it that we need?

I genuinely believe we need to start to prioritize the following six leadership qualities going forward to drive a more compassionate and emotionally intelligent leadership culture:

Passion

The leaders of tomorrow’s ‘New Normal’ will be genuinely passionate. They will harness an intense enthusiasm. This strong desire enhances commitment, efficiency, productivity and ultimate team success.

Passionate leaders inspire their teams and those around them. It is this intense enthusiasm that explains why the majority of successful leaders regard their work as a passion, not a job. In being passionate, you’re also exposing a level of vulnerability which again builds trust and hence leads to stronger interpersonal relationships.

Persistence

‘New Normal’ leaders will need to persevere in the face of opposing obstacles and challenges. 

Persistence is about continuing with a course of action despite the difficulty and opposition—the courage and ability to continue pursuing a goal, in spite of greater challenges along the way.

With all facts on the table and a vision in mind, a leader driving change should be ready to face stakeholders and engage them in candid discussions that may probably not please everybody.

Systems-Thinkers

Leaders of the ‘New Normal’ will need to understand how the big picture works and how everything is interconnected. How individuals fit within their functions and where they overlap for teamwork and engagement. 

This type of ‘systems thinking’ will be required in two ways:

First, they will understand that everything is connected and that their choices and priorities should articulate that. Future outcomes are a reflection of today’s decisions and actions.

Business systems are combinations of things that should exceed the sum of their parts. A business is more than its products and people; the interconnection between these helps the company thrive. Leaders of tomorrow will need the capacity to connect the dots—the ability to observe the links and understand their broader implications carefully. The actions of a leader almost always have second-order effects on the whole system. So the ‘New Normal’ leaders will be aware of that and make decisions based upon that of the greater system, not just short-term results.

The second point is that leaders will understand that ‘systems thinking’ applies to their teams. The team they lead will be smarter than them. This means they will need to be both intellectually honest & humble. The leaders of the ‘new normal’ will unlock the potential of the team, instead of being the one who has all the ideas and calls the shots. This means that they will need to be both intellectually honest & humble.

Intellectual Honesty

Leaders of the ‘New Normal’ will be intellectually honest. They will not attempt to navigate the murky waters of intellectual dishonesty where one finds them peddling misinformation. 

Leaders will instead be providers of truth, useful and correct information. As industries become more complex and connected – a reliance on collaboration is needed to make business systems work. At the heart of cooperation are transparency and honesty.

Intellectual humbleness

Leaders of the ‘New Normal’ will need to be humble. Leaders can only facilitate and draw new connections if they are open to it. This requires the leader to have a level of humility to help a team of people who will be smarter than them to unlock its full potential. 

What is meant here is that they will need self-awareness to the extent of their knowledge. They will need to be open and willing to change their minds when new information is presented and humble enough, open and receptive to different views as well as new sources of evidence. 

We need adaptable leaders. When it comes to leadership, flexibility is the new strong.

Empathy

Leaders of the ‘New Normal’ will need to be empathetic. 

It’s increasingly becoming impossible for one to isolate him or herself from those who look, speak or behave differently. You will need to look outward for unique and diverse inspiration or collaboration than limit yourself to inward sources only.

Leaders of the ‘New Normal’ will need to be kind, and understanding of other’s situations and feelings – empathetic. Leaders who are trustworthy, respectful and respected by an overwhelming majority.

Leaders of the ‘New Normal’ will not only be required to solve problems by confronting them but will need to address the root causes of such issues, be it problems caused by; systematic injustice, inequality or any other societal challenge that usually triggers unrest.

The ‘New Normal’ Leaders will Influence

When leaders demonstrate the six qualities above, they can motivate individuals and teams to behave in a certain way. Unlike managers, influencers can inspire their followers into taking action; to win people’s trust through inspiration rather than compulsion. However, for influence to last, it needs genuine integrity and authenticity.

The ‘New Normal’ Leaders will inspire teamwork

A common goal is one of the ways these new leaders should be judged upon, unifying different functions around a shared objective. It is through the collaborative effort of the group that teamwork comes alive in lasting form.

Being a compassionate and emotionally intelligent leader for a team entails; having the capacity to ensure that interdependence among team members – towards a single destiny is created and preserved. This style of leadership challenges preconceptions about those in positions of influence and authority. This ends the need for an all-knowing, all-powerful, omnipotent leader. This dated and flawed concept of leadership will be replaced in time.

The leaders of tomorrow, who will establish themselves in the ‘New Normal’, will be connectors and facilitators, they will need to be an active listener, excellent communicator, conflict manager, better at delegating, consensus-driven, inspiring and a leader by example. It will be through their empathetic strength, that their teams will align with them by default.

It will be systems-thinking leaders that see the ‘bigger picture’ of the business system, the sum of its parts, how each individual or its department’s contribution affects the operational flow of its system.

These leaders will ally themselves to their team; compelled to know what makes their team tick from building rapport with their highly skilled team to acknowledging the full extent of each individual’s capabilities. Thus, replacing the need for micromanagement. It will be through facilitation leaders will motivate their teams toward their shared objective.

Leadership will become more about inspiring, uniting and ensuring that their team functions together as a unit. It will be empathetic leaders that provide a sense of direction and purpose, understanding that indeed; “In the absence of reason visions collapse”. It is a vision that gives direction.

Imagine if every leader of every company was a systems thinker who was intellectually honest, humble, practiced empathy, and charitable.

It is these ‘What If’ scenarios in profound times as we are currently witnessing that will challenge and change our perspectives on leadership as we know it. This may sound like a fantasy to some, but to those of you that resonate with this let it shine. Speak of this desire for change, share it, or be the change for it is only then that we can shape the future together. 

The ‘New Normal’ is for those that can dream it, and it will be together that we will make it. As Eleanor Roosevelt said, “The future belongs to those who believe in the beauty of their dreams”.

This is the kind of leadership that’s needed now and beyond the Covid-19 pandemic.

About the Author

Marian Temmen is a progressive change agent at heart and has been working at the intersection of global supply chain, procurement and value chain optimization for the last 15 years. He has been steering major transformational turnarounds and M&A integrations across Europe and Asia, translating complex commercial needs into high-performance and agile solutions in dynamic environments. Marian is particularly passionate about a compassionate and emotional intelligent leadership culture of empowerment and is keen in driving this new agenda into the future.

In the preceding article; Transforming Supply Chain through Digital alignment, we looked at four key Supply Chain management functions – namely; Procurement, Transportation Logistics, Manufacturing and Inventory management, and focused on how digitalization of these functions transform Supply Chain in general.

In this article, we proceed by talking about prerequisites that have to be in place, for these digitally transformed functions to interconnect, align and operate as one digitalized Supply Chain structure.

Prerequisites to a digitalized and transformed Supply Chain will include:

1. Culture conducive to digital transformation.

2. Leadership with skills to drive the transformation. 

Culture conducive to digital transformation

To digitally align and sustainably transform a business; Supply Chain from analog or manual to digital processes, an organizational culture conducive and welcoming to such a major transformation should be in place.

An organizational culture fundamentally describes the values and social-psychological atmosphere that define an organization. 

It mainly consists of; the environment, systems, attitude, behavior or shared beliefs senior managers or founders of the business/organization would have established and inculcated into the whole organization its workforce included. 

In this case, a culture anchored on behavior that is welcoming to progressive change – in this case being a digital transformation of Supply Chain, in pursuit of delivering optimum value to the customer, career growth for staff members and a lasting return on investment for the business. However, the truth must be told. In most instances, change can be challenging and unsettling, especially in the beginning.

Therefore, to create a culture that is welcoming and conducive to a major transformation let alone digital, management and employees have to go through orientation and training programs, so that they are adequately informed beforehand, of the positive impact the change would have on their careers, as well as the expected growth the transformation would bring to the company.

A workforce that understands the benefits a transformed Supply Chain would bring to individuals and the business as a whole is more motivated to wholeheartedly drive and deliver the change, and keep improving on it moving forward. 

A conducive environment for Supply Chain transformation will provide room for and embrace new skills, whether insourced or outsourced. For it would be understood by all that at the end of the day, it is for the benefit of the business and its stakeholders in general.

Given the economic devastation of COVID-19 has had on individuals and businesses globally, now is the time for companies to dismantle departmental barriers which perpetuate silo mentality, and install end-to-end transparent Supply Chain systems which usually improve collaboration hence, a conducive environment for digital transformation.

An atmosphere full mistrust, dishonesty, misalignment and lack of unity, can not appropriately transform.

Supply Chain transformation requires an operating system that is interconnected, visible and therefore, able to provide the impetus needed to tackle operational challenges and provide real-time data, especially on issues affecting customers.

Creating a progress-oriented atmosphere is vital for the ultimate creation of a well-aligned and digitally transformed Supply Chain. But first and foremost in this digital transformation journey is to have the right Leadership in place.

Leadership

The key to any significant change is Leadership.

For a digitally aligned Supply Chain to function as a coherent structure, it will require leaders who will be willing to be at the forefront of championing and managing the transformation.

Managers with the capacity to integrate new technology, existing culture and the workforce into a system that functions as one unit – towards a shared objective.

These ought to be inspiring leaders able to communicate and invoke excitement among members of staff, especially when explaining the benefits digital transformation would bring to the organization and members of staff in general.

In the process, making every member see the need, importance and value their contribution will have on the business progress or growth that would accompany the change. For example, to emphasize the importance of his employees, Jack Welsh, former Chairman and CEO of General Electric (GE), used to have a one-on-one with his staff. Where he would sketch the GE operations model on a piece of paper, then point out where the individual fits in. Highlighting the importance of the contribution made by every individual towards the overall success of the business. That is the type of a team leader, a systems thinker, who appreciates his employees and motivates them into giving their ultimate best. 

A visionary can inform and inspire his staff, by explaining where the company is, where/why it needs to go, the dots it needs to connect or milestones it should achieve, for its Supply Chain transformation to take hold and for the business to efficiently and cost-effectively get there.

A team-leader who by example fully embraces, integrates and drives the digital transformation across all Supply Chain functions. 

In some people, it is time to fully become accustomed to a major change. Therefore, a successful digital transformation will require empathetic leaders able to motivate and where necessary, provide support to staff members that may mentally or technically struggle to adapt and move with change.

Experiential Learning (EXL) is another approach to managing embedding change.  EXL is mainly about learning through hands-on experience. And with the necessary training, expert support and guidance, learning by doing is the best approach management can apply for their staff to better understand and grasp new operational systems. 

By ensuring that everyone is technically on board, it would be easier to usher in Supply Chain digital transformation steadily.

Cross-functional collaboration and process coordination are highly required in Supply Chain, more so during a major transformation process. 

A leader can not be everywhere at the same time. Therefore the ability to delegate through clear instructions will be a skill needed in a leader if functional alignment and digital transformation across the Supply Chain is to achieve. 

A knowledgeable leader who would recruit on merit and assemble a team of experts to supervise the digital transformation project.

Digitalized systems enhance the free flow of information between functions, and prevents intruders from tampering with data. Digital systems like Blockchain technology has already proved that they can neither be misinterpreted nor manipulated. 

Real-time end-to-end visibility is the ultimate goal of an effective Supply Chain. And digitization technology once collaboratively aligned and appropriately deployed, would transform and provide the needed transparency into the supply network. 

With social distancing now becoming the new global norm, digitalizing and remote controlling is the best option forward; hence, Supply Chain can not afford to lag behind. In fact, digitalizing supply chains is no longer an option for businesses, but a mandate if companies are to survive and thrive into the future. 

In all, the impact of digital transformation across the supply network is revolutionary.  Supply Chains need to be more responsive and strategically quick in their digital transformation.

Despite the large sums involved in transforming Supply Chains from manual/analog to digital, the long-term benefits are all worth it.

To compete on the global stage businesses will need Supply Chains that are aligned, agile, digitally inclined and resilient to disruption. Achieving this would require a shift in the mindset, culture, technology and Leadership.

In this case, business leaders capable of putting necessary prerequisites in place, then shifting; culture, people, and operational systems towards a digitalized Supply Chain that is well aligned and in sync with the strategic direction of the business.

About the Author

Marian Temmen is a progressive change agent at heart and has been working at the intersection of global Supply Chain, procurement, and value chain optimization for the last 15 years. He has been steering major transformational turnarounds and M&A integrations across Europe and Asia, translating complex commercial needs into high-performance and agile solutions in dynamic environments. Marian is particularly passionate about a compassionate and emotionally intelligent leadership culture of empowerment and is keen on driving this new agenda into the future.

Supply Chain functions are linear, sequential and systematically overlap as they get operationalized. Ironically, despite their operational linkage, these functions are often managed in isolation. That’s why digital transformation is important for Supply Chain.

The advent of digital technology, especially the interconnectivity the technology enables, makes it easier for functions and processes within Supply Chain to be more aligned, optimized and significantly transformed into one robust, flexible and resilient process.

Digital transformation is the necessary, good and highly rewarding disruption, businesses and Supply Chains, in particular, can not afford to ignore.

Transforming Supply Chain through digital alignment does not end with merely substituting manual with digital processes. It entails the rolling out of end-to-end technology powered by; Internet of Things (IoT), Big Data, machine learning and Artificial Intelligence (AI) among others. 

However, building, aligning and achieving a digitally transformed Supply Chain is not an event, but a process, a journey. It is not a fad, but a strategic undertaking that requires patience in allowing employees to get accustomed and settle into the new system.

Essential Supply Chain functions in need of digital transformation and alignment, include:

i. Procurement. 

ii. Transportation logistics. 

iii. Manufacturing

iv. Inventory management

Now, let us look into these four key functions and see how digitalization of these enhance Supply Chain transformation in general. 

1. Procurement:

Usually, Procurement is comprised of repetitive Procure to Pay (P2P) tasks. It is, in fact, about business relationships between buyers and sellers along a Supply Chain Network.

Digital alignment and coordination of procurement tasks and related entities not only improve transparency into the process, but it also enhances and transforms Customer Relationship Management (CRM) across the supply network.

Several software is used to automate Procurement tasks, and they include; Ariba, Coupa, Sunsmart Global. 

Apart from enhanced process alignment, digitized and cloud-based Procurement to Pay (P2P) technology provides companies with remote connectivity that enable their Supply Chains to apply standard systems across all functions, therefore, easy to monitor and control from different locations.

Artificial Intelligence is a transformative technology that assists Procurement and all relevant parties with real-time visibility into daily activities across the network. Such visibility enables Procurement to detect risks end-to-end and deal with operations-related challenges more proactively and robustly, thus reducing Supply Chain cost while delivering optimal performance to customers.

2. Transportation Logistics: 

Success or failure of a Supply Chain system is measured by how the structure functions from source to consumption.

Digitally aligned and transformed Supply Chain will have to factor-in all transportation legs, including; inbound, outbound and the last-mile delivery.

Regardless of where commercial terms in use place the burden of responsibility on, a digitalized and transformed transportation system provides all relevant parties with real-time visibility, from collection all the way to delivery. 

Outstanding performance in transportation and delivery logistics is also achieved through the application of usual Fleet Management Formulas, Tactics and Techniques. For that does not only save lives but time and resources as well.

Dispensing of digitally aligned and real-time data on all activities, including those of Third-Party Logistics (3PL) providers, is the best transformative approach to streamlining and optimizing transportation and logistics processes.  

Digitalising and granting relevant parties access to all transportation documents, such as; Loading tally sheet, Cargo manifest, Bills of lading, Airway bills – etcetera, is so vital, as it ensures that all members understand the value and risks involved hence, the necessary collaboration and effort required. 

Industry 4.0 is here. Customers are increasingly demanding for real-time transparency into their transportation logistics. They are no longer content with traditional notices about their cargo being on board or on its way; they want to track the location of their consignments, in real-time.

3. Inventory / Warehousing management:

Managing inventory manually is the most laborious and time-consuming task in Supply Chain management. 

To efficiently conduct warehousing inventory management, Supply Chain needs to leverage track and trace technology. Digital Track and Trace provide the visibility required to detect and deal with inventory management risks or bottlenecks in a more proactive way.

Digital technologies like Radio Frequency Identification (RFID) assist businesses in tracking the movement of items within the warehouse or factory. Using digitized tags, RFID systems can detect or identify specific types of inventory and its location in the warehouse.

Internet of Things (IoT) is another useful digital technology in warehousing and inventory management. This technology commonly uses internet linked digital devices that are attached to objects or stocked items to transmit and receive real-time data.

Digitalized stock replenishment systems provide real-time transparency and ensure that the business never runs out of stock.

Automated Re-order point and Safety stock or Buffer inventory calculation, assist businesses to effectively maintain the flow of stock, thereby boosting its operational strength and resilience. Lest we forget, buffer inventory acts as a cushion for sudden disruption or shortage in supplies.

Warehousing management systems including; FIFO, LIFO and FEFO, are equally simplified and significantly enhanced with the use of digital technology.

4. Manufacturing

Value-adding or conversion of raw materials and parts into finished products is one of the key Supply Chain management functions.

Given the current pandemic and the need for less human contact, the steady deployment of digital and automated systems in manufacturing is the best approach forward. Such that; 3D printing or robots working side by side with humans are not far-fetched approaches, but more efficient and cost-effective systems, and in fact, the reality companies will ignore at their own disadvantage.

Digital systems like; cloud-based solutions and analytics technology, improve the flow of real-time data, enhance transparency, collaboration and coordination throughout the manufacturing process. This leads to fewer damages, more excellence in performance and superb output.

The efficiency that comes with digitalized processes does not only lead to improved worker coordination, better decisions, or optimum performance, it significantly reduces operational cost and hugely contributes toward return on investment (ROI) for the business.

Read ‘Prerequisites to a digitally transformed Supply Chains’ here.