Category Archives: Supply Chain

4 Reasons To Be Excited About The Future Of Supply Chain Technology

What’s next in supply chain systems? There’s plenty to be excited about


First-generation supply chains were good at automating and optimizing processes. But they were restricted to functional silos – and that’s not enough for what we need in supply chains today.

Advances in supply chain technology are needed if procurement teams are to manage supply chains that are dynamic, responsive and interconnected with ecosystems and external processes. The new tech needs the capacity to manage much, much more data (by several orders of magnitude). This in turn will make it possible for an individual procurement manager to make sense of entire supply chain ecosystems in real-time.

These demands are driving progress – which is why I am excited about the future of supply chain technology.

1. We’re actually getting fairly good at applying AI repeatably in supply chains.

In order to continue to maintain the labor ratios and level of service to which we’ve become accustomed, we need AI within supply chains – this is non-negotiable.

The IBM Sterling Supply Chain Suite gives end-to-end visibility, real-time insights and recommended actions to turn disruptions into opportunities for customer engagement, growth and profit. 

It’s an open, integrated platform that easily connects to a company’s supplier ecosystem. And that connection and openness provides the data necessary to build self-correction into supply chains.

2. With blockchain, we finally have a chance to change the way we manage multiparty sharing of supply chain data.

It’s clear that use of AI in supply chains will be essential. But it is important to start from the understanding that organizations are at different stages of maturity in this area. Nevertheless, companies can make dramatic improvements simply by deploying existing tech to digitize and implement an organizational commitment to information hygiene and managing data effectively. Being able to digitize, catalogue and normalize supply chain data means having real-time information in the right place to make decisions quickly.

One survival from the old-tech world of supply chains is the use of enterprise resource planning (ERP) systems built to manage the data for each individual company. Each company’s ERP was its view of the world. The procurement team spent their lives comparing notes with other ERPs to reconcile differences. Everything from invoices to purchase orders had to be reconciled and supply chain processes were put in place to facilitate this.

For the old-world supply chain really to change, we need to recognise that we can’t each have our own copy of what we believe to be true. We need to have an accepted, shared view of the truth. This idea of multiparty shared data is a promising one. And technology such as distributed databases, shared ledgers and blockchain helps build these common views of the world.  


3. We are seeing the emergence and coordination of specialty ecosystems and networks that can be integrated in a ‘network of networks’.

Before hyper-interconnectivity and the opportunity to create ecosystems or a network of networks, we operated in a limited way – for example, connecting one value-added network (VAN) to another VAN in a logistics network with practical applications like document exchange for advance shipping notices and the like.

We’re now seeing that an interconnected ‘network of networks’ really adds value. People are using technology and data to work together to solve domain-specific issues like fresh food provenance with Food Trust and ocean-shipping visibility with TradeLens.

These specialized ecosystems can be seamlessly integrated into existing business networks to provide a wealth of information about previously opaque areas of the supply chain – where things went dark at critical moments.  

4. It’s possible to have personalized ‘control towers’ that can track the essential elements of global ecosystems but are tuned to what we each want to measure and act on.

Finally, we’re able to see the world the way we want to – from each of our perspectives – bringing together actionable recommendations from real-time intelligence to act on supply chain implications. 

From a simple example of inventory management that can have downstream supply implications for a logistics analyst, to the same information tracking financial implications and payment terms for a financial analyst, the varying views, insights and interrelated metrics stemming from core supply chain activity helps everyone across the organisation.  

Also knowing that no two supply chains are the same means the ability to quickly configure and personalize ‘control towers’ is twice as useful as simply having the static data.

So just when the need for a strong supply chain has never been greater, technology is increasingly proving itself up to the challenge of meeting this need. And what’s more, small changes can have big impacts.


Hear Vijay present in our recent webinar – 4 Supply Chain Capabilities You Need For The Decade That’s Going To Change The World here.

 

Life At The Coronavirus Epicentre: Is This A Glimpse Into Our Future?

Are you ready for what’s to come? …


Every day, those of us in Australia, the US and Europe are increasingly feeling the full force of the coronavirus. In Italy, where the situation has escalated, the country has been fully quarantined. Countries all over the world are implementing strict restrictions on incoming travellers, and with no end in sight, the stock market continues to plummet.

One Procurious member who has already survived the worst of the crisis, and has come out the other side, is Paul Ryder, President of the International College of Finance at the Bank of China in Shanghai. Paul shared his fascinating story with us about what he’s experienced during the last few months, including special intel on China’s current supply chain situation. His insights are perhaps a glimpse into our future … will we be able to get the coronavirus under control, or will the sacrifice feel too great? 

When the news broke … 

The scenes of chaos we’ve seen worldwide and even worse, the harrowing decisions Italian doctors are now having to make, have become what we all now accept as consequences of the outbreak. But in stark contrast, Paul says that when the virus broke out in China, he felt the response was quite controlled: 


Want to hear more of Paul’s fascinating story? Join our exclusive Supply Chain Crisis: Covid-19 group. We’ve gathered together the world’s foremost experts on all things supply chain, risk, business and people, and we’ll be presenting their insights and daily industry-relevant news over an 8-week content series via the group. You’ll also have the support of thousands of your procurement peers, world-wide. 

We’re stronger together. Join us now. 


Disrupt – Or Be Disrupted

We have to try to engage proactively with a changing business world, no matter how impossible it seems to predict what is coming.


‘It’s difficult to make predictions – especially about the future,’ as an old Danish proverb observes. 

The saying – sometimes attributed to physicist Niels Bohr – makes perfect sense. Predictions are hostages to fortune, and it’s not difficult to think of a number of well-known forecasts that turned out to be embarrassingly wide of the mark. 

Thomas Watson, then president of IBM, wrote in 1943 that he saw a world market for ‘maybe five computers’. Steve Ballmer, then the chief executive of Microsoft, said in 2007 that there was ‘no chance’ of the newly launched iPhone gaining any significant market share. Telephones were just a toy that would never catch on, wrote the president of Western Union, William Orton, in 1876, when inventor Alexander Graham Bell offered to sell him the patent. 

And so on, and so on. 

Nevertheless, not everyone has the luxury of being able to avoid being held to account. Especially those of us who run businesses or supply chains.

For us, we have to make predictions: it’s our job. And right now, we’re facing a choice – disrupt or be disrupted. Here’s why. 

Why do we need to make future predictions? 

A business or supply chain that is ill-prepared for the future is a business or supply chain that may not have much of a future. 

In the current business environment, we all need to make predictions about the future. But even so, making predictions about disruptive trends is excruciatingly difficult.

While it’s easy to laugh at how wrong predictions can be, at the time those predictions may well have appeared to be sober, hard-nosed assessments. 

All of which is worth bearing in mind as businesses and supply chains around the world begin figuring out what to do about 2 key disruptive trends that are competing for our attention. 

1. The sustainability agenda

From the fuel that powers our trucks, ships, trains, and aircraft, to the paper and plastics that make up our packaging, logistics is very much in the crosshairs of sustainability activists’ sights. 

We all need to have a strong sustainability agenda. Ignoring the issue is not an option. But right now it’s difficult to see what options we have. 

A few years ago, the focus was on ‘peak oil’ and running out of the stuff. Now investors are alarmed at the prospect of so-called ‘stranded energy assets’ – reserves of fossil fuels that may never be extracted because of their impact on climate change. 

2. Geopolitical uncertainty and the perils of a hyperconnected world

After sustainability, the next disruption that will affect all of us is ongoing geopolitical uncertainty. President Trump’s trade wars. Brexit. China and its ‘Belt and Road’ strategy. Seemingly perennial Middle East tensions. These are not comfortable times in which to be determining supply-chain strategies. 

Nor is it solely geopolitical uncertainty that impacts supply chains. From the Japanese earthquake and tsunami of 2011 to the more recent coronavirus outbreak, again and again we see what an interconnected world we live in. 

Within days, an event on the other side of the world can disrupt supply chains thousands of miles away. Supposedly resilient, they turn out to be more fragile than anyone imagined. 

Roll it all together, and it is increasingly difficult to avoid the suspicion that present approaches to supply chain management aren’t as effective as we practitioners fondly imagine. 

What can we do? 

In short, we need something else – not least a change of mindset. Because transformation is only possible when we are willing and able to let go of our old patterns, old models – and old concepts of what constitutes supply chain management. 

Put another way, the biggest risk that businesses may face today is the risk of doing nothing at all. It is not an exaggeration to say that businesses can choose to disrupt, or to be disrupted. 

As I point out to my students, Uber is the world’s biggest taxi company, but doesn’t own a single taxi cab. Airbnb and Booking.com are the world’s largest hoteliers, but don’t possess any hotels. And after being in business for a quarter of a century, Amazon – the world’s biggest bookseller – is only now experimenting with physical book shops. 

It’s time for something more radical 

Even some of the world’s leading thinkers on business and supply chains believe we need something radical, and we need it now.

In late 2018, for instance, influential management thinker John Elkington took to the pages of the Harvard Business Review to officially ‘recall’ – i.e. take back – a concept that he had first launched 25 years ago: the Triple Bottom Line.

Simply put, he argued, the Triple Bottom Line was no longer enough. Something else was needed. Something bolder. 

To those in the know, Elkington’s admission was startling. The Triple Bottom Line had an enormous impact on businesses’ and supply chains’ approach to corporate and social responsibility. It replaced a single-minded focus on profitability with a broader focus on social, environmental and economic impact – the Triple Bottom Line. 

There’s no doubt that it’s made a big difference. But it isn’t enough, Elkington acknowledged. Too many businesses see it as a trade-off mechanism, rather than as an absolute test. 

Something else is required if businesses are to really ‘shift the needle’. Right now, though, we don’t yet know what that something else could be. 

But one thing seems certain: despite Donald Trump’s dismissive remarks at Davos this year, Extinction Rebellion and Greta Thunberg won’t let up on the pressure to find it. 

Supply chains need a radical rethink, as well 

Another concept that may be ripe for re-evaluation is the very notion of the supply chain. Look at many real-world supply chains, and it is difficult to escape the conclusion that ‘chain’ is too mechanistic a description of fulfilment processes – too linear, too unidirectional, too evocative of inflexible conveyor belts. 

In industry after industry, real life doesn’t work like that any more, if indeed it ever did. 

What can we replace the term ‘supply chain’ with? I rather like the suggestion that ‘supply web’ would be a better term.

It is closer to what many of us deal with in practice. It brings with it values of flexibility and resilience, as well as facilitating two-way flows and multiple sourcing connections. 

Does such relabelling help? Shakespeare, after all, aptly observed that a rose by any other name would smell as sweet. 

But with all due to respect to the Bard, I disagree. We need that mindset change. We need to let go of our old patterns and old models – and embrace new thinking.

As practitioners, ‘supply chains’ imprison our thinking, locking us into paradigms that constrain us. ‘Supply webs’ open us up to new possibilities, new paradigms and potentially new and different processes. 

And with the challenges the world faces, those new possibilities, paradigms and processes have never been more needed.

Disrupt – or be disrupted. Be an Uber, Airbnb or an Amazon. And not a moribund traditionalist. 

How to Manage Supply Chain Risks From the Coronavirus Outbreak

Are you being proactive in managing risks to your business from the coronavirus?

supply chain risks


The death toll from the coronavirus has reached more than 2,800 and the number of confirmed cases has exceeded 80,000. 

Beyond the enormous human toll, the effects of the coronavirus and the efforts to control its spread are being felt throughout the world’s supply chains. 

Factories in China are facing staff shortages. Or they are electing to remain closed to protect their workforce. Airlines have suspended flights to China. 

However, there is an indirect result of the necessary steps being taken to contain the outbreak. Restrictions and regulations designed to control the spread of the virus could have an adverse impact on cargo leaving and entering ports all over the world. 

Delayed Effects

And while some of the impacts have been immediate, other latent effects will not be felt for months.

This will hit:

  • manufacturers and retailers who rely on affected products and labour
  • logistics haulers expecting to transport the material
  • and, ultimately, the end consumers.

This crisis demonstrates the increasing complexity – and global nature – of supply chains and the imperative need to manage risk within this complex supply chain. 

Compare the current outbreak with that of SARS in 2003. It is striking to see how quickly coronavirus has eclipsed SARS in the number of infections. It took the coronavirus only 2 months to infect 75 per cent of the total number infected by SARS over a 9-month period. 

The crisis also shows how much China has developed in terms of population and establishing itself as a key cog in the world’s economy.

There is a danger of coronavirus becoming a major global issue if not controlled closely. So, what can organisations do to prepare themselves for these impacts?

Many leading organisations have developed programmes to manage and deal with supply chain disruption. But this situation is a unique challenge for even those organisations with advanced risk management programmes. 

Regardless of the level of sophistication in an organisation’s risk programme, all organisations can take steps to monitor their supply chain. This will help them to for the impacts of the epidemic.

3 Key Steps to Manage Risk

1. Know where your supply chain is located

Identify those countries that are currently at high risk and map your supply chain against these affected areas. This mapping should include evaluating key tier 2 and tier 3 suppliers as well as key logistics hubs that could be impacted.

2. Continuously monitor changes

Understand that the crisis is still unfolding and the true impacts from a supply chain disruption perspective may not reveal themselves for months. Establish a process to monitor other regions outside the infected areas that could be impacted.

Are ports outside the infected areas being impacted through disruption or through new regulations to protect against transmission of the virus? Are suppliers struggling financially without access to the Chinese markets, jeopardizing their viability?

3. Diversify the supply base

Like a financial portfolio, look for opportunities to rebalance and diversify the supply base to minimize the risk and take actions to qualify these suppliers in the event they are needed.

Need for Proactive Risk Management

This crisis underscores the need for organizations to establish and maintain effective proactive risk management programmes for their supply chain. 

It is impossible for organisations to anticipate these types of outbreaks. But an effective risk management programme, complete with processes, tools and data can lessen the impact. And the time it takes an organisation to recover.

Learn more about the challenges and steps necessary to build an effective and proactive Supplier Risk Management programme in this research “Integrated Risk Management: A Playbook for Procurement” from The Hackett Group.

‘Often The Right Way Isn’t The Easy Way,’ – Sustainable Sourcing From A World Leader

Whether or not your business is prioritising sustainability right now, there’s no doubt that it will be the focus for many of us in 2020 and beyond.


As we all well know, executing on sustainability can be challenging. Is it even possible to have full supply chain transparency? How do we manage the requirement to be sustainable against risk and cost savings? Almost all sustainability initiatives, while well-intentioned, can be fraught with complexity. 

While this may be the case for many of us, one person who believes that sustainability isn’t as complex as it seems is Chris Fielden, Group Supply Chain Director for Innocent Drinks. Innocent Drinks is a revolutionary health drinks company that gives an incredible 10% of their profits to charity. Beyond this, Innocent focuses on sustainability throughout every part of their supply chain, from creating a plastic bottle that’s made from 100% renewable material to developing a carbon neutral factory. 

Prior to his keynote at Procurious’ Big Ideas Summit, we sat down with Chris to see how he helps drive such incredible sustainability achievements at Innocent: 

Live your values – and incorporate them into your business model

Have you ever looked at a corporate values chart and thought to yourself, ‘those don’t really seem to matter here?’ Many of us feel the tension between aspirational values and lived values, but one of the reasons Chris thinks that Innocent is so successful in sustainability is because they don’t do this. 

Chris believes that sustainability can’t simply be a ‘tick box’ but it needs to be front and centre of a business’s genuine value set if they want to achieve it. On this, Chris says:   

‘Innocent drinks is a values-led business, absolutely. We believe in [and live by] sustainable capitalism. We hire people against those values.’ 

‘Often the right way [to do things] might not be the easy way, but we do things the right way anyway because we truly live our values.’ 

Even beyond this, Chris says that sustainability needs to be incorporated throughout an organisation’s entire business model: 

‘Here at Innocent, we’ve incorporated sustainability into our entire business model through becoming a B-Corp.’  

Give your people freedom 

Sustainability is often about pushing boundaries and doing things that haven’t been done before. So, in order to achieve that, Chris thinks you need to give your people creative freedom – and this is exactly what’s happened at Innocent. 

‘[The carbon-neutral factory idea] came about primarily because we told our people not to accept no. We told them “don’t accept it when someone says it can’t be done.” In all aspects, we try not to constrain our people.’ 

Not limiting people also applies to the suppliers you work with, says Chris. In fact, when you don’t give suppliers limitations, you can sometimes achieve things you never would have imagined. When planning Innocent’s carbon-neutral factory, Chris gave his suppliers an unusual challenge – which yielded an unusual (yet highly beneficial) result: 

‘With the carbon-neutral factory, we said to the contractors we employed – just geek out and tell us what you would do if you had unlimited funds and no restrictions.’ 

‘Doing so meant that it actually turned out cheaper than we budgeted and the solution is ever better!’ 

Giving their people and suppliers freedom has meant that Innocent’s new carbon-neutral factory,  to open in Rotterdam in 2021, is truly one of a kind. Costing over $250 million, it will incorporate initiatives such renewable energy, sustainable water use, and resource-based waste management. Its Rotterdam location will also mean considerable C02 is saved, as the drinks are produced close to where ingredients arrive, saving trucks over 13,000 trips a year. 

Not being afraid to fail 

Despite Innocent Drinks being a relatively large company (it recently surpassed £10 million in donations alone), everyone works hard to cultivate an entrepreneurial spirit, says Chris. And a big part of this is not being afraid to fail. 

‘Failure is a big part of what we do. We only have to be 70% sure of what we’re doing. And failure has led us to where we are – we’ve doubled in size because we’re not afraid to fail.’ 

This can sometimes be hard to stomach as a procurement professional, Chris thinks, as we’re trained to mitigate risks. But Chris insists that Innocent still do this: 

‘We do have risk registers so it’s not as if we’re being cavalier!’ 

Where to from here? 

With Innocent being at the forefront of all things sustainability, it’s hard to imagine what Chris might still want to achieve. But there’s always more, says Chris, and ultimately, he’d like to see more businesses taking an active role in helping the environment: 

‘I would love to see more businesses doing more – but we can’t wait for politicians to mandate this. The impetus needs to come from us.’ 

Ultimately, Chris has an important message for all procurement professionals out there: 

‘If you put sustainability at the heart of your agenda, then know this: you can make a difference very quickly.’ 

What are you doing to drive the sustainability agenda at your business? Let us know below. 

Want to learn more about exactly how Chris is driving the sustainability agenda at Innocent, and how you can do the same? Chris is speaking at the 2020 Procurious Big Ideas Summit on March 11, and you can hear all of his insights through becoming a Digital Delegate. Grab your free pass here.

Will 2020 Be Our 50-50 Year? How To Help More Women Into Leadership In Procurement

The business case for diversity is clear – diverse teams and leaders are more innovative, collaborative, successful and profitable. But when it comes to diversity in leadership, we’re not where we need to be. How do we get there?

Procurement as a profession has proven our ability to change, to adapt and to thrive. From order takers, to expediters, to deal and market makers, we have proven we know how to make the most of an opportunity to create value, and we’ve been able to do so in ways never done before. 

Yet to realise the true potential of our profession, there’s one thing I know we need to achieve that we haven’t as yet, and that is: gender equality in leadership. 

Across the board, procurement performs above average from a gender perspective. A recent survey from our recruitment partners, The Source, revealed that 38% of leaders and managers in procurement are female (compared to the 30% average across all professions). This is a great start, but we’re still losing too many women along the way – when you look at entry statistics, 48% of procurement graduates are female. 

If we’re doing well, then, why do better? Better diversity can help us better manage complexity and enhance profitability, as I’ll explain below. And in good news, there are (at least) five things you can do right now to help your team get there. 

Why is increased diversity particularly important for procurement? 

As Deloitte pointed out in their 2019 Chief Procurement Officer report, CPOs (and increasingly, all of us in procurement) have to be “complexity masters” to excel at work. As we know all too well, complexity is now coming in all shapes and sizes, including trade wars, climate change and new regulations (external complexities), stakeholder alignment (internal complexity), people, organisational models and business plans (talent complexity) and finally, digital disruption. Managing one aspect of this is challenging enough; managing all can feel overwhelming. 

But greater diversity can help us do it all. Firstly, with diversity comes multiple perspectives and enhanced innovation, which will help us identify multiple solutions to solve the complex problems we face.

Diversity also helps us with everything inside our own four walls. The more diverse we are, the more likely we’ll represent the interests of those we serve, including our organisation’s customers – who are ultimately our customers. And not only do we represent our customers and stakeholders, we also better represent our own staff when we’re diverse, as we’re better able to understand them and make decisions that enhance their wellbeing. 

Finally, and perhaps most importantly, given the expectation of strategic business partnering from procurement, diverse teams have been shown to be up to 35% more profitable. With procurement functions now often required to do more with less, diversity can be a key driver in increasing our value-add and securing resources to innovate and grow. 

How to increase diversity in leadership in procurement

The challenges faced in retaining women in leadership in procurement echo those of wider society: inequality with paternity leave, unconscious bias and a lack of flexibility. But there’s so much we can do to counteract these, even on an individual level, and you don’t need to wait for society or even your organisation to catch up. If you want to reap the benefits of greater diversity in your team, try the following:

1. Give (public) praise 

In order to reach a position of influence, you have to be noticed. And unfortunately, sometimes being noticed can be as much about announcing what you’re done as it can be about the actual achievement in the first place. 

This can be particularly problematic for women, whom research shows can be punished for advocating for themselves. To counteract this, try giving public praise to women you believe deserve to get noticed. Whether it be on Procurious, LinkedIn, in a meeting or in front of an influential executive, giving praise can help someone be recognised and hopefully promoted. 

2. Encourage others to have a go

Across the board, there’s a big difference in how women and men apply for roles. Men will apply for a job when they have 60% of the required skills and experience, whereas women apply when they’ve got closer to 100%.

Although this is a stereotype, there’s never any harm doing what you can to prevent it. So if you know a talented female and there’s a role going, why not encourage her to have a go? 

3. Mentor and sponsor 

Whether or not you’ve got diversity as an official target or KPI in your team, as a leader, you’re no doubt responsible for performance. Knowing that, it’s important that you mentor and sponsor other more junior procurement professionals – especially females. 

Your mentoring can be any arrangement that suits you and the mentoree – you may want to meet regularly but informally or alternatively, you might put a more formal development plan in place. If you choose to be a ‘sponsor,’ though, you should be more active – as a sponsor, your responsibility is to specifically advocate for the person you’re working with in the hope of securing them a promotion (like giving public praise, but with a very specific end goal in mind!). 

If you want to increase your impact, you could even mentor someone outside of your organisation. Procurious and The Faculty run mentoring programs in both the UK and Australia, get in touch if you’re interested.

4. Role model flexibility – regardless of your situation

If you’ve ever been in any type of leadership role, you’ll know that you can influence your people as much (or more) with your actions than with your words. One of the most important ways to influence your people is to show you trust them through giving them flexibility. 

Flexibility is fast becoming the norm these days and for good reason – employees offered flexible work are more than 20% happier and more productive, and flexibility is the number one benefit sought by all employees, across the board. Yet still, there can be a ‘stigma’ around flexibility and when it is offered, it’s offered mostly to working mothers, which further entrenches (unhelpful) stereotypes. 

But if you’re in a position of influence, you can change this. No matter what your situation – mother, father, or non-parent, if you lead by example by both working flexibly and allowing it, you’ll help remove the stigma and as a result, help create better diversity.

5. Campaign for equal rights and equal opportunities 

Although unconscious bias is still an issue, one of the biggest reasons that there are less women in leadership roles in organisations is that they have career breaks that their male counterparts may not have, by way of maternity leave(s). 

But if you’re in a position of influence, you can change this by giving fathers a much sought-after opportunity to be at home. Numerous big companies have all recently removed the terms ‘primary and secondary carer’ and instead offered equal leave to all new parents. Why not advocate for this at your organisation? 

In our profession, a lot can change in a year. So why not make this year the year we all rally together and create a change we can be proud of? Our profession is complex, but helping more women into leadership doesn’t need to be. Diversity benefits us all, so let’s all do what we can to help propel more women into leadership. 

Tania Seary is the founder of Procurious and a passionate advocate for gender equality. If you’re interested to learn more about how to help women in leadership, tune in to our podcast ‘Don’t Quit Your Day Job – Your Path to the Top’ webinar on January 23rd, 2:30pm BST. Register for it here.

3 Success Factors In Building An Agile Supply Chain

Adaptability and agility in the supply chain are crucial in responding to fluctuations in demand and shorter product cycles.

By Nadezhda V. Kulagina/ Shutterstock

Today’s global marketplace is volatile and fast-moving.  Adaptability and agility in the supply chain are crucial in responding to fluctuations in demand and shorter product cycles. Agility within this unpredictable market requires that your supply chain is responsive and can deal with any sudden variations. According to most experts, there are three main success factors in effective and agile supply chains: your supplier relationships, your people, and the effective use of the supporting technology.

The FMCG sector

Organisations involved in the fast-moving consumer goods sector (FMCG) need to be able to adapt to unanticipated external shifts in customer demand.  Any company that has a constant stream of new, innovative products and services,   and is selling direct to the consumer (B2C) in the e-commerce world, needs to be doubly flexible.

Fast fashion poses real challenges. If you launch 10 000 new designs per year and you have more than 1 700 suppliers across 50 countries, you need to be both agile and quick.  Inditex, one of the largest fashion retailers in the world and the holding company of the Zara brand, does this successfully.

What contributes to its success is:

  • Market sensitivity.  Teams of retail and commercial specialists plan their products based on sales data collected on the fashion trends of target customers around the world.
  • Postponement of production.  Less than half their garments are sourced as finished products from low-cost producers. At least half are manufactured at short notice, mostly in Europe, depending on demand. 
  • Flexibility.  Manufacturing activities including labour intensive finishing operations are accomplished by a network of 300 specially trained subcontractors. 

Zara has gained accolades for its ability to swiftly implement decisions and deliver new clothes to stores faster than its competitors.  It has a supply chain that is not only agile and flexible but incorporates many lean characteristics into its processes, especially when overseeing the operations of its subcontractors.  In a lean approach, anything in the process that doesn’t add value for customers is eliminated.  Lean supply chain management is essentially about lowering the cost base and reducing waste as much as possible.   

The manufacturing sector  

In the manufacturing sector, being agile means that your supply chain must be responsive enough to deal with late deliveries and non-compliant suppliers.   The need to move raw materials, components and finished products across borders and over longer distances adds complexity.  This has resulted in longer planning time and increased levels of inventory.  Improving speed in logistics and minimising disruptions are important to gain competitive advantage and to reduce costs.  

Lean and agile supply chain solutions are often offered as an either-or option but many large global companies such as Unilever and Kimberly Clark are now embracing both approaches in their diverse operations. Having a hybrid supply chain strategy by using lean and agile approaches in combination is becoming commonplace.

Technology companies need to react quickly

 Communications and information technology company Nokiacommitted to achieving agility in its supply chain when it decided to move its manufacturing away from its home base in Finland. The company aims to refocus lower-value activities closer to component sources, thereby increasing supply chain responsiveness and streamlined logistics. “We are aligning our manufacturing strategy to increase competitiveness,” said Nokia spokesperson Mona Kokkonen. “We need to optimize our manufacturing operations so we can collaborate more closely with suppliers and be more responsive to customers’ needs.”

An I.T. systems company such as Cisco hasa highly diverse and extensive supply chain that spans the globe. Cisco has increased its agility, resilience and ability to scale by implementing new business models, a single ERP instance, standardization and automation throughout its supply chain.

The three success factors in building an agile supply chain

1.Focus on effective supplier contracts

If a key supplier fails it is necessary to have an alternative plan to avoid delivery crises and disappointing customers. In this situation, and especially if there is a sole-supply agreement, contingency plans must be put in place. Multiple supplier relationships for the same goods or services are sometimes necessary to reduce risk, but this comes at a cost. 

2. Build an agile team

The most effective people are those who are alert to external changes and market trends that may affect the business. They need to have a sense of urgency as well as being flexible. Exchanging information with suppliers, listening to customers and being aware of impending disruptions are all activities that, when acted upon, will set you ahead of the competition.  

3. Apply the right technology

Leaders in agile supply chains connect their supply chain partners on a shared technology platform, often cloud-based, so that they all have access to the same data in the same timeframe. Procter and Gamble (P&G) and Wal-Mart both speed up decision-making by analysing data on order status, inventory, shipments, documents, and payments.  The resulting information provides insights into future demand and facilitates forecasting.  

Supply chain agility delivers results when a company can quickly detect changes, opportunities and threats in the external environment AND act on this information speedily. This responsiveness depends on the ease of accessibility of usable real-time data and the electronic means by which to share it. 

Competition is fierce so organisations need to be alert and responsive to turbulent changes in the external environment.  As industrial and retail supply chains become more complex agility will become a real factor in a company’s survival. The use of appropriate technology will be a key success factor but only with the active involvement and support of both employees and suppliers.

If you’d like to read additional related content or get involved with thought provoking discussions check out the Supply Chain Pros group – a one stop shop for all your supply chain needs.

Making Supply Chain Your Organisation’s Competitive Advantage

In order to succeed, a business must be able to deliver more value to customers than its competitors. How do you make supply chain your organisation’s competitive advantage?

By ShutterStockStudio/ Shutterstock

In order to succeed, a business must be able to deliver more value to customers than its competitors. It is becoming more difficult to find, develop and sustain these opportunities in the rapidly evolving business landscape.  The free movement of people across borders, developments in technology and real-time communications add complexity to global supply chain management. World trade is highly competitive, constantly changing and volatile.

As a result, supply chains today need to become more strategic. They are multi-layered, integrated manufacturing and distribution systems that, to work efficiently, need to be optimised on a continuous basis.

Technology

Automation of manufacturing using robotics and self-driving equipment in factories is now commonplace.  Software solutions and telematics improve information sharing, processing, and analysis of data which is converted into usable information to inform policy and operational decisions. However, it’s important to ensure that technology investments are based upon business needs – and not just the newest tech available.

Areas of competitive advantage

Many global businesses now compete on the basis of their supply chain capabilities rather than only on their product lines.  Leaders with efficient supply chains such as Wal-Mart, Proctor and Gamble, Tata Motors, and Unilever focus on rationalizing each activity in their supply chains. They constantly monitor costs, demand patterns, lead limes and administrative processes to achieve competitive advantage while applying relevant technologies.  

Cost of goods sold (COGS)

Reducing the cost of goods sold can be achieved through a more focused approach to procurement including price negotiation and strategic sourcing.  Inventory, distribution and freight costs are specific target areas where the potential to save can be found.  Walmart runs a retail compliance program that defines when, how and where their supplier must deliver. This helps the company reduce its costs by adjusting its storage and distribution needs in line with customer demand. This means lower prices for the customer.    

Freight costs can be managed down by outsourcing delivery logistics where there are potential economies of scale.  Telematics is used extensively by third-party-logistics providers (3PLs) to provide visibility into the movement of goods, both in the warehouse and in transit, and ensure their safety.   

Shorter lead times

There are many delays experienced in supply chains.  Some of these are because of slow processing of orders due to cash flow challenges, batching of orders, organizing shipping and freight and slow communication processes.

One of the main methods by which a business can drive increased value is by decreasing these lead times. Both business- and consumer-facing companies are experiencing increased demand for faster shipments. Speedy deliveries can have a significant impact on sales. Amazon Prime customers will often pay more for guaranteed next day delivery.

Flexible demand management

Technology now provides us with forecasts of future customer demand using artificial intelligence tools. Predictive analytics are extremely useful in determining the optimum seasonal stockholdings and allows us to prepare suppliers for increases in demand. 

A flexible supply chain can quickly adjust to fluctuations in supply and demand keeping inventory down when interest is buying is low but being agile enough to respond to spikes in demand.

Documentation and administration

Streamlined and slick documentation and administrative processes in the supply chain are a great competitive advantage.  Reducing re-work and duplication, increasing visibility and smoothing communication channels are real advantages.  Supply contracts and service level agreements are often neglected areas that create hold-ups and expensive errors.  Some progressive organizations are using blockchain technology for maximum visibility and security.      

Insource or outsource?

The decision of whether to outsource manufacturing and/or services depends on in-house capabilities. Ideally, areas where competency or capacity are lacking are prime candidates for outsourcing.   Some larger organizations have the capital and resources to manufacture their own products, others will typically outsource their manufacturing to white-label providers.   Building internal warehousing, logistics and distribution facilities is a major undertaking and capital intensive. Successful outsourcing contracts in this category have robust service level agreements and detailed contingency plans. 

Supplier relationship management (SRM)

SRM is a huge topic and ranges from simple tasks such as paying suppliers on time to developing long-term collaborative partnerships with suppliers for mutual benefit and to promote innovation.  Leading companies in SRM such as Nestle, Toyota and Coca-Cola treat key suppliers like collaborators to get them integrated and prepared to take extra steps to ensure quality and speed.

Sustainability

A sustainable supply chain makes long term business sense.  Consumer awareness of environmental and social issues is growing around the world. IKEA is one of many companies that work with suppliers on a variety of challenges, from energy efficiency to sourcing materials responsibly.  Ignoring this trend may create reputational damage that takes years to restore.  

Conclusion

Effectively making use of rapidly advancing technology could be the key to leveraging your supply chain to get ahead of the competition. Difficulties in supply chain management occur due to evolving complexities and interdependencies. Companies that work on achieving continuous improvement through consistently and persistently working on strengthening linkages will drive competitive advantage.  

If you’d like to read additional related content or get involved with thought provoking discussions check out the Supply Chain Pros group – a one stop shop for all your supply chain needs.


World’s Deadliest Supply Routes: Ice Road Trucking

Are you responsible for sending your people into danger? In a new Procurious blog series, The World’s Deadliest Supply Chains, we investigate the most high-risk supply chains out there…


By James Gabbert / Shutterstock

The intrepid truckers on the temporary ice roads spanning hundreds of kilometres of frozen lakes in Canada and Alaska keep their hands on the door handle for good reason: should the ice crack, they have a split second to leap from the vehicle before it falls into the icy, watery abyss.

For a decade, viewers of the History Channel were given a first-hand view of what motivates these drivers and the perils they face, which include not just a frigid sinkhole but avalanches, whiteouts and hypothermia, even earthquakes and volcanic activity.

Set in Canada’s Northern Territories and Alaska, Ice Road Truckers lasted 11 series between 2007 and 2017.

The truckers’ mission was to supply remote gold and diamond mines and entire small towns with goods in the winter months, when road access is only possible because the lakes have frozen over.

Items included anything from fresh food to mining equipment that would be tricky to transport even on well-laid bitumen.

Featuring nicknames such as “Chains”, “Bear Swensen”, “Polar Bear” and “Hammer Down”, the rough-hewn drivers were often depicted in mishaps such as when they ran off the road or got bogged.

In one episode, viewer favourite Lisa Kelly – one of three female drivers – leaps from her truck amid ominous cracking sounds and a disconcerting build-up of water under her rig’s 18 wheels.

As is the norm for ‘reality’ programs, the series was criticised for overdramatising and promoting reckless behaviour among the truckers – one of them, for example, exclaims “yee-haw!” after driving too fast over a rough patch of road.

The opening sequence showing a truck sinking through the ice was staged at a Hollywood studio in sunny California, using sugar and shaved ice. However, the set-up was based on a real accident at Mackenzie Crossing in Alberta, with the driver apparently not recognising a warning sign that the road was suitable for light loads only.

Some viewers were less than impressed with the skills of the Ice Road Truckers cast. “Who the heck tries to pull out another truck using a chain that has slack in it and then drops the gas [accelerates] and takes off?” asked one heavy-haul driver.

Ventures West Transportation president Glenn Bauer reckons the televised truckers come across as a “bunch of cowboys” (the Alberta-based company hauls fuel to some of the Canadian diamond mines featured early in the series).

He says the only incident he knows about involved road-building equipment falling though the ice. “In reality, it’s very, very controlled,” he told truckingnews.com.

Despite the series’ bent towards entertainment, there’s little doubt that navigating a 70 tonne load over hundreds of kilometres of icy wilderness is inherently dangerous and there have been some fatalities over the years.

Fatalities are rare, though. As a guide, the 27 truckers in the Ice Road Truckers series all lived to tell their war stories, save for Montanan Darrell Ward who died in 2002 aged 52 – in a light plane accident. He was, ironically, on his way to film the pilot for a documentary-style show involving the recovery of plane wrecks.)

One reason for the low fatality rate is that, as with inherently risky aviation, operators are required to follow strict safety protocols.

For instance, trucks travel in convoy (although not too close together) with the most experienced drivers leading, and trucks are limited to speeds as low as 10 kmh. In parts where slush is forming, drivers are advised not to stop altogether lest they get stuck.

The ice roads are not random trails, but can be engineering wonders. One example is the Tibbitt to Contwoyto Winter Road, which spans 595 kilometres from north of Yellowknife into the neighbouring territory of Nanavut.

The width of an eight-lane highway, the road takes 140 workers to build each year and can support 70 tonne, eight-axle articulated trucks.

The famed Dalton Highway in Alaska – spanning 414 miles from Fairbanks to the oilfields of Prudhoe Bay – was the subject of an innovative repair job that itself presented a huge logistics feat.

The massive task involved underlaying 80 kilometres of a vulnerable section of the highway with 1.2 million metres of polystyrene foam strips, to keep the permafrost frosty and to raise the road above flood level.

Apart from a crazy streak, the only formal prerequisites to become an ice-road trucker are completing high school and possessing a heavy commercial truck licence. The truck companies provide the training – not that there is any real substitute for experience.

With no pit stops along the way, the truckers need to be proficient drivers as well as proficient mechanics.

The lure of the lucre is a key motivation, although pay levels vary markedly. Typical remuneration for a season varies between $US20,000 and $US80,000, but harder working truckers can earn up to $US250,000.

The pay levels depend on the distances driven, the type of cargo and the hazard levels.

Despite high competition for relatively few jobs, driver turnover reportedly is very high, with many not returning after their first trip after realising how dangerous the game can be.

A paradox of the ice-trucking game is that while the frigid conditions make for treacherous conditions, warmer-than-expected weather is even worse because the highways are more prone to crack and develop slushy parts.

In the next few years, climate change, rather than ice blizzards and crevasses, may defeat the hardened people of the ice roads.

If you’d like to read additional related content or get involved with thought provoking discussions check out the Supply Chain Pros group – a one stop shop for all your supply chain need

Supply Chain Pros: Could AI Save Your Day Job?

Supply chain leaders know AI is a game-changer, a technology that will allow them to optimise their supply chain for competitive advantage. But just how much will it impact your profession?

Shutterstock

Today, business leaders are looking to their supply chains to create differentiation and they recognise that data is a key driver. Having said that, only a small fraction of supply chain data is effectively used, and most companies are virtually blind to data that is unstructured – for instance, from social, weather and IoT sources. With limited visibility it’s difficult to optimize supply chain operations, leaving the business exposed to unnecessary disruptions, delays and risks, as well as increased costs. In fact, 87 per cent of Chief Supply Chain Officers say it is extremely difficult to predict and manage disruptions.

Supply chain leaders know AI is a game-changer, a technology that will allow them to optimise their supply chain for competitive advantage. They understand and have relied on descriptive analytics – using massive volumes of data within the enterprise to understand better what has happened in the past and what is happening today. They’re now ready to explore how to use AI to see beyond the four walls of their business; understand how potential disruptions in the environment could impact the supply chain; and act quickly to seize opportunities or mitigate risk.

A new era of AI in the supply chain

Already, AI capabilities in IBM Watson Supply Chain Solutions are moving from descriptive analytics to predictive insights. We’re helping clients look ahead of supply chain events and see likely delays, demand spikes, supply changes and stockouts with new capabilities, such as anomaly detection in supply chain processes and leveraging conversational analytics for response management. Going even further, we are showing clients the power of prescriptive analytics, where Watson evaluates several dynamic parameters associated with a supply chain scenario and in near real time suggests the best actions and can even automatically create supply chain playbooks.

But this is not the end of the journey. We are also creating a plan where Watson adapts on its own, learning what matters to you and developing the capability to show you where to focus your attention to mitigate disruptions and take advantage of opportunities.

Here are some new capabilities available today (and some that are still to come!) :

  • Expanding data sources for Watson – IBM Supply Chain Insights allows us to add new data sources specific to each client’s challenges in as little as five weeks, accelerating the content that Watson draws from to gain intelligence, from basic ontology and supply chain terminology to weather and now many more external data sources. 
  • Anomaly detection – This new capability in IBM Business Transaction Intelligence for Supply Chain Business Network tracks supply chain transactions, spots anomalies and provides early warning signals so you can discover potential problems and take corrective action sooner. 
  • Optimising order and response management – IBM Order Management software uses AI to select the best location to fulfill an order, adjust availability promises and safety stock levels, and empower customer service reps to make more informed decisions and answer questions with greater accuracy and speed.
  • What’s next for AI – In the future, Watson Supply Chain capabilities will include predicting supply chain cycle times, to new frontiers where Watson adapts to your supply chain and users and learns about trends, issues, actions and behaviors to make recommendations. 

Could AI save your day job?

On 30th April I’ll be taking part in a new Procurious webinar: “How AI Saved My Day Job – Confessions from a Supply Chain Pro.” We’ll be exploring the real-life applications of AI in workplaces today and the problems it can solve for supply chain professionals.

How AI Saved My Day Job – Confessions from a Supply Chain Pro will go-live on 30th April 2019. Sign up here (it’s free) to join the Supply Chain Pros group on Procurious and gain access to this webinar.