In light of COVID-19, is the status quo still the best way, or is it time to move away from Globalisaton to embrace Localisation and its benefits? Tania Seary explains what such a gargantuan shift would entail and how you can master it.
The supply chain strategy paradigms we have held close and true for decades are being challenged. The questions are complex, important, urgent and without easy answers.
Consider some of the traditional supply chain paradigms such as lean manufacturing, just-in-time inventory management and extended payment terms. In light of COVID-19, is the status quo still the right way to operate? Take supplier payment terms, for example. Maximising working capital has been a top priority for as long as we can remember. Now, given the rise in bankruptcies and the clear connection between supplier viability and business continuity, many procurement leaders are taking a step back and thinking more about their suppliers’ cash flow in addition to their own.
These paradigm shifts are substantial but pale in comparison to the potential changes around supply chain globalisation.
Supply Chain Globalisation: Is It Time to Localise?
For decades, supply chain strategies have revolved around moving production and sourcing to low-cost geographies. This traditional low-cost sourcing mindset affects everything from lead times, supplier selection, production, quality, margins and more.
Today, leaders everywhere are asking if their heavy reliance on global suppliers is less strategic and more of a risk. When Procurious asked more than 600 procurement and supply chain professionals where COVID-19 had the biggest impact, 21% said logistics and transportation slowdowns or delays. Over one in four cited lack of available supply due to production downtimes and shutdowns. Ninety-seven percent said they were impacted in some capacity.
Pressure and attention are heightened when disruptions cause shortages to critical supplies such as ventilators or personal protective equipment, direct materials and popular merchandise. Beyond the headlines, there’s also a significant impact to the services supply chain. When critical outsourced services, including customer support, security and IT, were suddenly forced to go remote, we saw a corresponding rise in risks related to quality, fraud and compliance.
When a supply chain disruption occurs, it is impossible to control what is happening, especially when the product or service you rely on is thousands of miles away and completely inaccessible. What business leaders can control, however, is from where they source. That explains why over one-third of the profession is currently planning to either expand their supply base or shrink their global supply chain and depend more upon local suppliers.
Surprisingly, 27% of executives plan to stay the course and not make any meaningful post-pandemic strategy shifts. Many of them probably want to alter approaches, but recognize the inherent complexities and costs associated with doing so.
Understandably, most executives have never before experienced a supply chain disruption to this extent. While localisation seems like an appealing strategy to minimise future risks and boost the local economy, it’s far from a quick and easy fix. The obstacles are plenty.
Overcoming the deep reliance on low-cost sourcing is the first challenge. The second is production complexity. Technology gets more innovative, personalised and sophisticated by the day. It would be nearly impossible for a single manufacturer to hold all the technical capabilities and expertise to produce these products 100% in-house. To keep up, manufacturers outsource critical components to others, who outsource to sub-suppliers and so on.
Breaking this chain, while simultaneously bringing production closer to home and swaying the board to accept lower margins, will require executives and procurement teams to perform in a new reality.
Of course, there are clear benefits of going local. The end-to-end supply chain impact on carbon emissions is more than five times that of companies’ direct operations. Localisation optimises and shortens the supply chain network, lowering emissions.
In addition, sustainability performance is proven to impact the bottom-line. According to the World Economic Forum, sustainable procurement practices can reduce supply chain costs by 9 – 16%. On a larger scale, shifts toward localisation strengthen national and local economies, support the job market and, in many cases, reduce enterprise risk.
What’s to Come?
The decision to move production requires long-term planning and commitment. It won’t and can’t happen overnight.
Companies planning to make seismic strategy shifts like localisation require proper technology investments. Over 90% of companies are already using at least one Industry 4.0 technology, including blockchain, artificial intelligence, internet of things and more. While adoption of blockchain is still relatively low, the network promises to play a pivotal role in whatever changes come next.
The following 6 – 12 months will be crucial for every company and require a great amount of flexibility and adaptability. It’s impossible to predict (with 100% accuracy, at least) what’s next. Anyone that tells you differently is out of their mind. My advice to C-suites and supply chain and procurement leaders is to remain agile, invest, lean on your peers and prepare for anything.
New computers can analyse a million rows of data in minutes. So why not let the computer do the heavy lifting? As a supply chain professional of the future, you won’t be manually processing data. You will have data you can trust at your fingertips, as well as meaningful insights. The rest will be up to you! IBM’s Takshay Aggarwal explains.
In the future, what will separate the successful supply chains from the rest?
In 20 years of supply chain experience, Takshay has never seen a supply and demand shock at the same time.
“It’s completely changed how supply chain planning is done,” Takshay says.
Before, people used historical data to project demand – usually with a 5-10% variability or 1-2% percent for really mature organisations.
But even with a high level of accuracy, too many companies were unsure which supplies were coming when.
“Processes were so monthly and weekly orientated,” Takshay adds. “There was no sense of response; it was all about, ‘We’re used to this stepwise process and will get to it when we get to it.”
The result? Slow response time and lost sales. And reaction time was seriously hampered by years of cost cutting.
“An easy analogy is that you can cut and cut the fat to the bone, but when you need to run, where is the muscle?” Takshay says.
Sensing the market
That’s not true for all organisations, of course. Some companies invested in the right technology to detect changes in the market, which enabled them to respond quickly.
Takshay uses the example of two big retailers during the early days of the pandemic.
“One retailer had sensing and response capabilities,” Takshay explains. “They secured all the available supplies in the market. Their shelves were stocked and their sales were booming.”
On the other hand, the second retailer’s supply chain officer was slow to respond. “They had traditional ways of doing stuff and their shelves were empty.”
The difference between the two? “One supply chain officer is now promoted to the board and the other is finding a new job.”
That’s why it’s so crucial to have the tools in place to detect market fluctuation and respond.
Looking at data differently
Going forward, how will you prepare for disruption – not only for your suppliers, but your suppliers’ suppliers?
The solution is incorporating non-traditional data for demand planning, Takshay says.
“Let’s say a discretionary spend category like electronics or fashion; you need to understand how unemployment is panning out in certain areas because that determines the footfall in your store,” Takshay says.
Non-traditional data includes areas of demographics like looking at unemployment or how a disease is spreading.
“You will start seeing a lot of what we call demand sensing in the near term, and driver-based forecasting which is trying to understand larger drivers in terms of promotions, in terms of macroeconomic factors,” Takshay explains.
“I think that’s where we’ll see demand sensing capabilities, like trying to understand the near term impact of weather or demographics and how they affect demand.”
Spreadsheets won’t cut it
Technology will also change how you use that non-traditional data, Takshay says.
That’s because higher computational power creates the ability to process data at lightning speed.
“The basic math hasn’t changed, but what has changed is how fast you can ingest that data,” Takshay says.
Think of it this way. How long would it take you to analyse a million rows in an Excel spreadsheet? Yet for some of these new models, a million rows is nothing.
Artificial intelligence can quickly process large amounts of data, making it easier to extract meaningful data.
It will also be easier to bring in different sources of data – as and when – they’re relevant.
For example, data about the pandemic spread might be a big consideration now, but six months from now it might not be relevant (fingers crossed!)
Instead, you may be more interested to ingest data at scale about economic recovery. AI can help you make sense of a huge amount of data and understand correlations – something that used to take an army of data scientists to uncover.
Welcome to efficiency
That ability to analyse vast quantities of data will also make demand planning a lot easier.
“If you ask any demand planners, 60 to 70% of their work today is about cleansing and harmonising data, and 20-30% is figuring out what it’s saying,” says Takshay.
Now, technology can eliminate much of that manual processing. In fact, Takshay says IBM estimates around 40 to 60% of that work will be covered.
“Now imagine if you’re a demand planner and you don’t have to go through those daily tasks to get the data cleansed,” Takshay says.
Making it personal
So what does the future hold for supply chain?
Takshay predicts consumer demand is moving toward mass personalisation. The challenge for procurement teams will be supporting that personalisation in production, without losing efficiency or driving up costs.
“Ten years from now, we will be talking more about how we can better understand the consumer,” Takshay says.
“Everything will be done by machine. Supply chain may become irrelevant. It all becomes about mass personalisation so that’s where we start putting our efforts.”
That’s why human empathy will be an even more essential skill. Quantum computing could eliminate 80% of today’s procurement tasks, so our greater contribution is using human emotion to meet customer needs.
We asked our LinkedIn community for their top pandemic anthems, and the result was an awesome playlist!
Owing to the myriad Supply Chain disruptions this year, many of us suddenly found that the world was no longer our oyster – or if it was, it clamped shut and trapped us inside. On top of Supply Chain chaos, we had to deal with our own incarceration.
What do I do when my love is away? Does it worry you to be alone? How do I feel by the end of the day? Are you sad because you’re on your own? No, I get by with a little help from my friends
When your personal network is as strong as your business network, its support takes on inertia of its own.
Don’t Worry Be Happy – Bobby McFerrin
– Greg Parkinson, Director, Turner & Towsend
The right frame of mind is the key to success: a little mindfulness, coupled with an Attitude of Gratitude a la Nicky Abdinor, goes a long way.
Thus set up for success, soon we’ll be poised to take on the world again:
I Want To Be A Billionaire – Bruno Mars
– Matthew Hadgraft, The Faculty
Oh every time I close my eyes I see my name in shining lights A different city every night oh right I swear the world better prepare For when I’m a billionaire
Keep your dreams, goals, ambitions and plans intact because all this will change. Every Procurement and Supply Chain executive knows the importance of a Business Continuity Plan – make sure your own plans are articulated, because who knows what opportunities the future will bring?
Do you have any suggestions for additional songs? Comment below.
Supply chain is firmly on the executive agenda (at last!). But how can we keep our seat at the table? Procurious talks to Kearney partner Kate Hart about the burning issues in supply chain – from attracting new talent to co-creating with suppliers.
Supply chain is firmly on the executive agenda (at last!). But how can we keep our seat at the table?
“Recent events have highlighted how susceptible our global supply chains are to disruption, from the pandemic to ransomware attacks to global trade wars,” Kate explains.
So how do we cope? It all comes down to two critical capabilities.
The first is the ability to sense the changing environment and pivot. And the second is the ability to attract and retain core talent.
That need hasn’t changed for a decade, says Kate. So why is it worth mentioning now?
“What it means today is very different to what it meant 10 years ago in regards to the importance of being able to sense a change environment and pivot,” Kate says.
That’s because the demands on supply chain professionals have changed dramatically – and certain industries adapt quicker than others.
“Some global geographies are a lot more mature than others so far as their uptake of e-commerce and some geographies have really been lagging,” Kate says.
Why technology means survival
If retailers were hesitant to adopt new technology, they have an extra incentive now. It’s their key to survival.
“Amazon has been a trigger for some of those geographies to uptake, but obviously the pandemic has just increased the proliferation of retailers offering e-commerce platforms,” says Kate.
Companies are also becoming more innovative in the way they handle the actual distribution of their supply chains, particularly in the business-to-consumer route.
“We’ve seen a proliferation of sort of rideshare ‘uberisation’ of that last mile,” Kate says.
“What we’re seeing is those companies that invested in the technology and got ahead of the game really have thrived during this. Now it’s going to be a matter of, you know, catch up or who survives, so it’s going to be quite interesting.”
Understanding the risk
So what are smart companies doing now to avoid future disruption? Supply chain network mapping.
Kate has seen a huge influx of companies not just looking at supplier risk, but looking at suppliers’ suppliers risk and building that information through their supply chains.
Interestingly, this is largely driven by senior executive interest. Never before has supply chain resilience enjoyed such a prominent position on the c-suite agenda.
“It’s beyond just enterprise risk. There is reputational risk, there is financial risk, there are lots of different risks that are inherent in the supply chain and that is very much front and centre in many of our board conversations at the moment,” Kate says.
“The key question that we’re getting asked by boards is how they get visibility in their end-to-end supply chain risk and how they manage that resilience.”
Making it automatic
Companies are also investing more heavily in automation to improve resilience.
‘It’s been quite extraordinary. Some global areas, particularly in the US and in the UK, are seeing a lot of advantage from automation,” Kate says.
“But the investment in automation needs to be deliberate, with a very sound business case, otherwise organisations are investing but not necessarily seeing returns in some areas.”
Technology, like automation, is providing supply chain teams with new levels of influence, Kate says.
“We’re seeing supply chain organisations use digital tools to create a triage process with a front door to supply chain – a self-service functionality,” Kate explains.
“[It] enables their internal talent team to then work with their business stakeholders to drive extraordinary value.
“So, supply chain is really being impacted positively by digitisation and automation. It’s all part of a focus on resilience which elevates the conversations and, in turn, the value that supply chain can deliver.”
Working as partners
That’s why Kate says the future will be all about human decisions facilitated by technology.
“What does that mean for partnerships across your supply chain?” Kate asks. “It means that the problems that need to be solved are increasingly complex. It requires a very strategic view of your supplier base.”
The strategic view increasingly means changing the relationship to a close partnership.
“In some of the scenarios that we’re working on at the moment, the clients don’t know what the solution is and actually need to engage the suppliers to co-create solutions for problems that are new to both of them,” Kate says.
That means seeing suppliers as extensions of your own organisation, which is positive.
But as Kate points out, companies still need to maintain “control and visibility so you are not anchored to them in perpetuity. So getting that balance of control versus collaboration right is going to be really, really important.”
The right people
As Kate puts it, the bright future of procurement isn’t possible without the right people.
“All of that is very contingent on the ability to attract, retain, and grow talent – the conundrum of supply chain management for aeons,” Kate says.
“But never is it more important than now. For supply chain management to have a seat at the table it needs to be attracting the core talent that we’re seeing coming out of the universities.
“There needs to be a very strong talent pool that’s feeding into the industry.”
Kate Hart – Partner at consulting firm Kearney, overseeing the supply chain practise within Asia Pacific – can be heard in the webcast series The Future Of Supply Chain Now.
Far from being a solution looking for a problem, Blockchain is revolutionising jewellery, tea and coffee, beverage, food and automotive businesses.
While there is still some question as to whether blockchain technology can live up to the hype it has generated, it is making inroads into the supply chain environment.
The diamond and gold, tea and coffee, beverage, food, and automotive industries all have participants with blockchain applications under test, operating as pilots, or implemented as digital solutions to improve supply chain operations.
In most cases, these companies are using blockchain as an aid to supply chain visibility and product tracing, but some have applied it as a tool to streamline transactions and speed up the flow of information, goods, and materials.
In addition to private enterprise, blockchain’s interest among commercial organisations, authorities, and governmental bodies is also intensifying, increasing the technology’s credibility as a useful supply chain tool, although not the cure-all or panacea that early hyperbole may seem to have suggested.
The days of blockchain technology being considered exclusively synonymous with BitCoin and other cryptocurrencies have long been behind us.
Indeed, in the last couple of years, it has been hyped by many as the next big thing in revolutionary digital developments. Meanwhile, other, less-convinced observers have suggested that blockchain is a solution looking for a problem.
So how well is blockchain living up to commercial and organisational expectations?
Let’s look at some of its real-world uses in 2020 across the public and private sectors to see which prominent players have embraced blockchain, to what end, and what kind of inroads it’s making into the supply chain environment.
Blockchain in the Jewellery Supply Chain
Technology oriented participants in the jewellery industry, or more specifically, those in the diamond and gold businesses, began to adopt blockchain-based traceability solutions a couple of years ago. Today, at least two or three platforms are well established, and being exploited by several companies.
As diamonds, and to a lesser extent, perhaps gold, are resources with origins that can sometimes be controversial, companies like De Beers have seized upon blockchain to provide evidence that their gems come from sources that don’t involve insurgency funding or forced labour.
De Beers’ Tracr can provide provenance data for diamonds and track them from the mine to the retail outlet. The system has been enjoying success throughout its early phases.
As a result, plans are now in place to spin it off into an industry-wide association accessible to any organisation needing to track diamonds through the supply chain. At least two jewellery retailers are already taking part in a pilot of the platform.
A platform similar to Tracr is in use with American conglomerate Berkshire-Hathaway. This multinational enterprise counts jewellery retail chains and precious-metals companies among its vast portfolio of holdings.
TrustChain Jewelry is a blockchain initiative focused on the gold and gemstones used in rings. Its objective is to give confidence to the 70% of consumers concerned about the ethical background behind their jewellery purchases.
Some smaller enterprises in the jewellery industry, too, are either taking advantage of blockchain technology already or planning to do so as a way to improve supply chain transparency.
The sector appears to be one that does not need to look for a problem that blockchain can solve. It already has one in the form of conflict gems, and reputable industry participants believe blockchain can help them disassociate themselves from the controversy by proving ethical sourcing and refining.
T is for Transparency, and Tea
Lest you perceive that blockchain solutions are exclusively for high-value products such as diamonds and jewels, one industry that produces a far-less-costly, but highly treasured commodity, is also using the technology to improve supply-chain transparency.
Not too many of us are prepared to go for more than a few hours without the restorative effects of a cup of tea or coffee. But are we sure we’re drinking the real McCoy and not something with somewhat less beneficial effects being passed off as the most delicate Darjeeling?
It appears that the tea industry, in particular, has a problem with counterfeiting. Unscrupulous merchants pass off inferior tea as that made from much higher-quality leaves originating in the world’s celebrated growing regions — and the more significant and well-known the brand, the more vulnerable it is to counterfeiting.
Even more nefarious practices exist in the tea trade, such as cutting real tea with other organic, or sometimes inorganic products to increase yield from a plantation’s crop.
It is against that backdrop that tea producers and even India’s government are hoping that blockchain will help deny counterfeiters access to consumer markets—and boost profits for producers and merchants that deal only with the best quality tea.
It’s Teatime for Blockchain
Unilever owns tea plantations in Africa and is using blockchain to improve sustainability and combat counterfeiting. It’s not that tracking and tracing tea through the supply chain is a new departure for the company: Unilever has been doing that for some time. However, blockchain technology is improving the speed and efficiency of the activity.
The blockchain solution, called Trado, is the result of a partnership between Unilever, Sainsbury’s, and the University of Cambridge’s Institute for Sustainability Leadership (CISL).
Initially convened as an experiment, the participants, including farmers who received a financial incentive to feed data into the system, have deemed it a success, claiming that it has increased visibility in the tea supply chain and brought down the costs of financing sustainability incentives.
In a similar experiment, the Indian government’s Coffee Board of India is using blockchain to monitor coffee supply, and has already received some 30,000 registrations from farmers wishing to participate. The Tea Board of India is now planning to introduce a similar system as an end-to-end traceability solution.
Examples of Blockchain in Food Supply Chains
The examples we’ve looked at so far illustrate the uses of blockchain to promote sustainability in the supply chain and assure consumers that they are buying ethically sourced products. However, this fledgling technology also has the potential to save shoppers from harm to their health or safety, and perhaps even save lives.
Walmart’s Blockchain Projects
Blockchain’s potential has been recognised and seized upon by consumer-goods giant Walmart, which has already undertaken several projects and proofs of concept in supply chain traceability. They include:
Tracing the origins of mangoes sold in Walmart’s US outlets
Tracking supplies of pork for sale in the company’s stores in China
A drone communication solution based on a blockchain platform
A new project in partnership with KPMG, IBM, and Merck to create a blockchain solution for tracing products in pharmaceutical supply chains
Among the objectives of these projects, is to enable fast responses on the rare occasions that quality issues arise in consumer-packaged-goods, requiring batches to be identified quickly and quarantined.
Walmart leaders believe blockchain technology can prevent, or at least minimise, the impacts of food contamination issues such as the e-coli contaminated lettuce and melamine-adulterated milk crises that rocked the US and China, respectively, several years ago.
With all movements of produce recorded immutably in a distributed ledger, tracing quality-compromised food or commodities back to the source can be achieved in hours, rather than the days, or even weeks, otherwise required for such an exercise.
Big Names are Backing Blockchain
Other opportunities presented by the use of Walmart’s blockchain solutions include the ability for consumers to scan products in-store and receive instant information about them, including their sources and the logistics processes involved in their journeys from origin to retail outlet.
Walmart has stamped its name in the blockchain early-movers hall of fame, not only with the projects already mentioned, but also as part of a partnership with several other food companies including Nestle, Dole, and Unilever, and technology behemoth IBM. The result of the collaboration is the Food Trust Blockchain, a distributed ledger solution capable of recording data associated with more than a million individual products.
Other Food Industry Blockchain Initiatives
Further examples of blockchain’s use in the food supply chain, with solutions either already operational or at the proof of concept stage, include the following:
An initiative by standards body GS1, in collaboration with IBM Food Trust, SAP, ripe.io, and FoodLogiQ, to solve interoperability challenges in food-industry blockchains.
The entry of Kvarøy Arctic, a large salmon producer, into Food Trust, as a way to facilitate the capture of provenance data for arctic salmon and the feed upon which they are raised.
The Norwegian Sea Food Association’s implementation of a blockchain for its members, enabling records about catches to be maintained relating to catch time and location, storage temperature, customs clearance, and details of fish feed used
Blockchain for Beer and Beverage
Brewing companies, both large and small, are tapping into the potential of blockchain, with benefits ranging from the visibility of ingredients and processes for interested consumers, to the empowerment of subsistence farmers in third-world and developing countries.
Farmers Can Bank on Blockchain Benefits
Anheuser-Busch Inbev is the largest brewer globally. With the help of blockchain software, this giant of a company is helping subsistence farmers in Africa become more commercially capable, and connecting them directly to its supply chain without the need for expensive intermediaries.
Working with a blockchain startup called BanQu, AB Inbev is using a distributed ledger solution to build a relationship of trust with some 2,000 farmers in Zambia that supply raw materials for its beers.
The blockchain serves two primary purposes. The first is the one most commonly acknowledged as a supply chain benefit—transparency.
The second has a direct impact on the welfare of these impoverished farmers. The immutable records generated by the blockchain allows them to prove creditworthiness, open bank accounts, and develop their farms into commercially viable businesses.
Blockchain Passes the Alpha Acid Test
Other projects in the beer industry highlight the value and suitability of blockchain for SME’s supply chains. For instance, in the United States, a regional brewer in the San Francisco Bay area, Alpha Acid, has teamed up with tech giant Oracle to develop a blockchain-technology platform that’s accelerating and automating supply chain transactions.
The venture has provided Alpha Acid with an end-to-end dashboard view of its supply chain. It allows digital sign-offs for each stage in the beer-production process, from hop harvesting, through malting, brewing, and maturation.
This level of visibility is invaluable in brewing supply chains. The consistency of beer products depends on always following a precise formula, using ingredients that are inherently volatile in their chemistry, such as yeast, hops, and malt.
Alpha Acid’s blockchain solution receives sensor data from the brewery’s fermentation vessels and the company’s yeast, hop, and malt suppliers.
With all this information on record, any issues with a finished batch of beer can quickly be traced, enabling it to be isolated for problem resolution. Before the availability of blockchain, a much broader product recall would have been necessary, as it would not have been possible to quickly identify the affected batch.
Blockchain in the Automotive Supply Chain
Vehicle manufacturers have long been among the most avid adopters of digital supply chain technology, so penetration of blockchain into the sector should come as no surprise. Ford, BMW, Renault, General Motors, and, most recently, Tesla, all have solutions either in their sights or already in use.
Ford and BMW Among the Early Movers
For Ford, the blockchain is a potential answer to assuring the ethical procurement of cobalt — a mineral increasingly used for the batteries in electric-powered cars. Like several of the companies already mentioned in this article, Ford has teamed up with IBM to develop a blockchain for end-to-endsupply-chain transparency.
Currently running as a pilot, the platform traces the provenance of cobalt and records all supply-chain events—from the bagging of the mineral at the mine, through refining and shipping, to delivery at car manufacturing facilities.
BMW, meanwhile, has piloted its PartChain platform, initially using it to track the supply chain movements of vehicle headlights, including all raw materials and components, and intends to broaden the scope to include suppliers of several other car parts.
Tesla is Trying it Too
As for Tesla, a blockchain partnership with port and shipping companies is all about improving supply chain speed and effectiveness. The progressive carmaker, known for its focus on clean fuels and electric power, has tested a blockchain application for imports to its factory in Shanghai, China.
Working alongside COSCO Shipping and Shanghai International Port Group, Tesla successfully used the technology to streamline the inbound supply chain to its production plant, achieving the following benefits, according to a report by Business Blockchain HQ:
Accelerated cargo pickup processes
Shortened release times for cargo offloaded at Shanghai port
Faster delivery times to the factory
Improved efficiency in the supply chain
All these gains arose because the blockchain solution enables faster transactions, helping materials move through the supply chain faster than would be possible using conventional handoffs.
Blockchain Gaining Real Traction in the Supply Chain
From high-value products such as jewellery and motor vehicles, through to everyday commodities like tea and packaged consumer foodstuffs, enterprises are finding thatshared ledger systemscan solve some of the issues they face, at least those relating to visibility and information flows.
Blockchain is proving itself a versatile solution, as applicable in the small-business environment as it is among the corporate giants. The examples we’ve looked at in this article are just a few of many projects, pilots, trials, and tests that companies across the world are undergoing.
Blockchain might not be a silver bullet to end all supply chain ills, but, like many other emerging digital technologies, it appears to be a welcome tool toaid supply chain management in most, if not all, industrial sectors.
We’ll be sure to keep an eye on its progress here at Logistics Bureau, and will continue to update and inform you about the growth and development of blockchain in the supply chain.
Here at Procurious, we saved the best for last. Register today to reflect, re-energise and refresh for another year of innovation at the most inspiring supply chain and procurement conference of the year.
We’ve (finally) entered the homestretch. However, before we can bid farewell to 2020 – the year that quite literally turned our world upside down – we still have quite a bit of planning and ideation left to do. That’s why now, more than ever, you deserve a distraction.
But do not head for the couch and sign into Netflix just yet. Instead, step back from the day-to-day chaos and join us virtually for the 2020 Big Ideas Summit (BIS). Reflect on the year that was and the opportunities ahead; represent your organisation and all its accomplishments despite the pandemic; regroup and re-energise among like-minded professionals.
Procurious itself is proof that great things can happen when we come together. As a community of 42,000-plus supply chain and procurement professionals, we adapted to survive and thrive under the conditions of the “new normal”.
BIS 2020 takes us a step further. Since the beginning of the pandemic, we’ve gone above and beyond what was asked of us. Now, together, we’ll welcome 2021 stronger than ever – both individually and as a community.
Take, for example, our response to the challenges McKinsey & Company presented us with earlier this year:
We redefined the procurement mandate and fostered a culture of innovation to evolve beyond the traditional, transactional stereotype.
We made investments in digital and analytics, integrating automation and digitisation to optimize performance and leverage untapped data that enhanced productivity across the board.
We future-proofed our organisations by making proactive investments that develop existing talent and enable a more agile workforce.
Somehow, we were able to find the silver lining, increase our influence and succeed against all odds, positioning our function for a watershed 2021. So, together, let’s make next year full of innovation and shared success. That journey starts at BIS 2020.
Big Ideas: Make a Difference and Get Ahead
All it takes is one idea. A single idea can change the trajectory of your company and your career. A single idea can make a difference. A single idea can solve problems for people and businesses across the world.
But good ideas don’t always come easy.
You need time to think, create, learn and share. We’ll provide this in a BIG way at BIS 2020 – and give you everything you need to ignite your passion, fuel your creativity and THINK BIG.
BIS 2020 will have dedicated sessions on everything that’s top of mind for you right now: leadership, supply chain threats, supplier management, digital transformation, supply chain continuity and more.
Together, our community will present and share hundreds of ideas and best practices to help you make a difference, advance your career and get ahead in 2021. But remember, you only need one.
Think the Unthinkable and Prepare for Anything
Those that have joined us at Big Ideas in the past have learned the importance of thinking the unthinkable. Never has this lesson been more true than in 2020.
We’re in the midst of a transformational journey that is changing business and life as we know it.
The good news: our digital-first network is designed to change the face of the profession from the inside out, starting with each individual member of the community. The BIS and our Procurious community will help you think differently: we provide big ideas, first-hand experiences and lessons learned – from the best and brightest from across the world – to help you navigate through this unchartered territory and stand out from the rest of the pack.
Trust me, events don’t have to be in-person to be inspiring. Come ready to share what you are proud of and encourage others to do the same. The more you put in, the more you get out. It’s time to lead, thrive and take back control of your professional development. Rest assured; you’ll leave with everything you need to do just that.
If you’re an ambitious procurement or supply chain professional, there’s plenty to learn from Dawn Tiura about the power of networking, and upskilling yourself in the important areas of third party risk.
“You’ve got to meet Dawn,” said Gabe Perez from Coupa.
“You’ve got to meet Dawn,” said Chris Sawchuk from Hackett Group.
“You’ve got to meet Dawn,” said Alpar Kambar from Denali.
So, I said to myself – “I’ve really got to meet Dawn!”
There’s literally only a handful of women in the world who own and operate their own businesses serving the profession.
So… it was great to finalIy meet the much-admired Dawn a few years ago at the LevaData conference in San Francisco. Finally – I had found someone out there just like me – someone who also believed in the power of bringing our profession together.
Dawn and I are still really getting to know each other. We next met up at the SAP Ariba conference in Austin. Then she did a fantastic job keynoting at our Big Ideas Summit in Chicago last year (on third party risk…which is her specialty and very timely for what we were about to experience this year!).
So, I wanted to make sure the Procurious community knows all about Dawn and her amazing company….so I asked for this interview..
When you started SIG, what was your vision? Were you trying to build the largest sourcing network in the U.S.?
I actually am not the founder of Sourcing Industry Group (SIG). I took over the leadership in 2007 and my original intent was to remake it from a “good ole boys” network into the leading organization for sourcing, procurement and outsourcing professionals. My vision was to be a disrupter to the industry, pushing the latest ideas to members and to help elevate the role of the CPO.
Has your vision become a reality? Has SIG become what you thought it would be?
Yes and we’re making progress everyday as we continue pushing the envelope to adopt emerging technologies and find new ways to streamline the process of procurement. Over the last 10 years, SIG has become the largest network for sourcing professionals in the world. But more important than the size of our membership is the collegial nature and information sharing that we have fostered. SIG brings people together to share best practices and next practices in a non-commercial manner that creates success.
What have been your secrets to success? And what advice would you give to others thinking about starting their own entrepreneurial venture?
The secret to my success is surrounding myself with people who are smarter than me. They are my inspiration and they never say “no” to my new ideas. I also pride myself with only hiring people who volunteer in some capacity in their personal lives. For me, I think that people who give back to their local community or for a nonprofit says a lot to me about their character. We also allow people to take time off work, with pay, to support their own causes. The people I have recruited to the team often come from my volunteer work where I’ve seen their work ethic up close and personal.
Why do you think people join networks? And, in particular, your network, SIG?
The reason people join is most likely not the reason they ultimately stay. People join SIG to network, share best practices and to become better educated. They stay largely due to the network itself and the fact we are non-commercial. People enjoy the camaraderie, the fun we have and most importantly how we lift one another up and help each other. Our members are all great people, they participate fully and care for one another.
Why did you decide to have both buyers and suppliers in your network?
This was easy for me, I came from the supplier side, having consulted in sourcing for more than a decade. I know first hand that consultants/suppliers/advisors/tech companies each work with hundreds of clients and therefore bring a wealth of knowledge to the table. I encourage this interaction and these relationships.
I really admire how you have very clear guidelines on how your suppliers, vendors and sponsors can interact with your members. What are some of those guidelines and why did you put them in place?
I am proud of our Provider Code of Conduct and it is critical that providers acknowledge the fact that our practitioners are very sophisticated and won’t buy from you if you are a “slick salesperson.” They engage you because you have the right thought leadership that strikes a chord, or the right technology at the time they are ready to investigate it. They don’t buy from brochures or from being “sold to.” If you are found to be actively selling, you are given one warning and the second time your membership is revoked and you have to sit out of SIG for two years. At that time we will allow you to come back into the SIG Tribe.
When we caught up last year at the Big Ideas Summit in Chicago (by the way, you did an amazing job talking about Third Party Risk! Very timely!), I really learnt how busy your life is – running your business, organising your major events, hosting webinars, mentoring young people….you fit a lot into your day, week, month, year! What’s your advice to others who are trying to manage and prioritise their time better?
I feel best when I have a lot of projects to take on, from building curriculum, to mentoring and parenting. The more I have to do, the more deadlines I have, it motivates me. Without deadlines, I would achieve very little. For example, you didn’t ask me for a deadline for this article, so it didn’t get done for over a month. I set my priorities by keeping them balanced. I must do something to help someone else every day, that is one thing that I believe in. Whether it is donating time or money to a good cause, shopping for an elderly neighbor or mentoring youth, we have an opportunity to be kind and to give back every single day and we should take advantage of that opportunity.
What’s your advice to ambitious professionals out there? What should they be doing right now to make sure they succeed into the future?
Learn to open your mouth wider so you can drink more easily from the fire hose, because technology is going to change at an increasing rate of acceleration. Accept it, embrace it and never fight it. Also, bring your authentic self to your role, whatever it is. You can’t be successful without living your own truth. Don’t try and be what someone else wants you to be, be who you are and who you want to become. Err on the side of kindness always.
Most importantly, how are you personally right now? Florida is being hit hard by COVID. Are you and your family OK? What’s happening in Florida right now?
Thank you for asking, we are doing well. I have a high school senior in virtual school and kids in college all working from their apartments.
Wow! Whichever way you look at this, Dawn is an inspiration.
If you’re a budding entrepreneur out there, you have hopefully been inspired by Dawn’s vision and determination.
If you’re an ambitious procurement or supply chain professional, there’s lessons to be learned in the power of networking and upskilling yourself in the important areas of third party risk.
If you’re a supplier, looking to truly partner with our profession, SIG provides a trusted and valuable conduit into the important buying community.
What did you learn from today’s story? Let us know.
And as volatility went up, people focused on the basics – paying off debts and stashing cash to weather the storm.
Suppliers and consumers were equally frustrated by empty shelves, never knowing when the next shipment was coming in.
The truth is, we had this disruption coming. The pandemic exposed three fatal flaws that were otherwise laying dormant in supply chains.
It’s no secret many supply issues during the pandemic stemmed from an over-reliance on Chinese suppliers. When major industrial cities in China went into lockdown, production ground to a halt.
Companies developed a reliance on Asia by wanting the lowest cost at all costs. It didn’t matter where material came from, as long as it was at the right price.
Who wouldn’t love a just-in-time supply strategy? It works wonderfully well, as long as you stay within a certain degree of volatility.
It’s cost effective, and ensures you aren’t left with mounds of unsold product taking up space.
But then a pandemic hits and volatility skyrockets. The result? A huge unmet demand for basic staples like flour and toilet paper.
Reliance on suppliers to manage inventory
Someone has to keep an eye on all that stock. Since retailers don’t want to, they pass that responsibility to suppliers.
The issue is those suppliers are also relying on suppliers, and if you don’t know who they are, you don’t know the extent of your supply chain weaknesses and risks. That’s why so many companies were caught off guard.
So where do we go next?
We’re already seeing a monumental shift in the way companies approach supply chain management.
The first trend is multi-sourcing, to make sure a chain is not dependent on a single point of failure.
The second, is planning for a higher degree of volatility. Because the world will continue to experience volatile events, like natural disasters, with greater intensity and frequency moving forward.
And the third, is becoming risk balanced. Rather than the absolute lowest cost, companies are looking for a better balance between delivering value and managing supply risk.
What successful procurement will look like
All of these fatal flaws – and the new strategies emerging as a result – all point to one crucial need: end-to-end supply chain visibility.
It might sound like a dream, but it’s actually possible.
The most resilient companies are using control towers to keep eyes on the entire supply chain, and gain advanced warning to avoid disruption.
And I don’t mean the spreadsheets that people call ‘control towers.’ I mean genuine systems that pull in essential data from across departments and across suppliers. Without that total oversight, you’ll never have the visibility you need to make informed decisions.
For example, IBM’s global supply chain uses IBM Sterling Control Towers so that we’re alerted to potential issues far earlier than our companies.
That gives us time to react, and avoid much of the disruption.
Control towers can help you understand the next steps to take, so you’re much more resilient to shocks.
Investing in control towers is the right way to start improving supply chain visibility. But you also need the right tech infrastructure to match.
For example, I’ve noticed retailers making great strides in becoming omnichannel. Without that seamless experience in store and online, companies risk becoming irrelevant in the next decade.
The fact is, there are tools out there to help your company survive and thrive during this crisis. It’s truly an amazing time to be a supply chain leader, and with the right partner you can offer the answers your company sorely needs right now.
Invest in the right technology and gain end-to-end visibility across your supply chain. You’ll spot opportunities, and you’ll be prepared the next time an ‘unprecedented’ event hits.
IBM’s Takshay Aggrawal recently sat down with Procurious Founder Tania Seary to discuss end-to-end visibility, and how supply chain management will never be the same. Listen to their full discussion now.
Technology will only make a difference in supply chain management if it’s tailored directly to your company’s needs.
Let’s get this straight: technology can’t fix everything. There’s no magic wand to solve every supply chain problem.
But technology can make your processes better. That means more time, money, efficiency, happy customers, and happy bosses.
And who doesn’t want that?
I’ve seen companies of all sizes improve their process flow with technology and make huge savings.
But that only happens when two conditions are met:
1) They choose the right technology. What does “right” mean? It depends on a host of factors, but in essence it’s solving a need or filling a major gap. Understand the business need first, then find the tech that fits – not the other way around.
2) The system is used the right way. That means getting full use out of it without exceeding the intended purpose. You get the maximum benefit without depleting other resources.
Don’t get wet
Consider this analogy: you need to go from one side of town to the other in the middle of a storm without getting wet. You know a motorcycle and a car can both get you there in time, but only the car would get you there dry.
This is what selecting the right technology is about. To borrow another vehicle metaphor, don’t use a Ferrari when a Ford will do. An all-singing, all-dancing system might look flashy, but it might be way too much for what your company actually needs.
Procurement and Supply Chain work the same way; getting to the other side of town means nothing more than sustainable profitability, competitive edge and market share. And the storm? Well, that’s just risk mitigation in the business world.
Getting the job done
Here’s a look at how real companies are using the right tech to save money and be more resilient.
Look no further than a global distributor of chemicals who recently chose a full guided-buying suite. They took away the manual labour by processing POs automatically. The result? Increased supplier payment compliance, reduced tail spend, and more resources for tactical and strategic decision making.
The right technology enables and accelerates communication. Your ability to react effectively to market conditions relies heavily on promptness and clarity. Technology can link your business operations to your supply base so you never miss a beat.
Suppliers need to know where things are at any given point. And equally, you need to know what is going on with your supplies, assessing all potential risks. That way, you can mitigate disruption in real-time.
Take a US leader in food distribution for example. We recently led them through a full spend analytics effort to identify cost savings opportunities. The result? They saved USD $10M in one year.
Interpret and analyse data
Data analytics is no longer a competitive advantage; it’s a core necessity. Even something as simple as spend analytics is a powerful tool that can inform strategic decisions at the top level.
Break down silos and bridge functions
From Procurement to Accounts Payable to Operations, technology can provide a collaborative platform that everyone can access and understand. Everyone has access to the full information across the board, taking what they need and staying aligned.
That level of visibility across different functions can showcase how valuable you are to the company. Like a global leader of consumer products who recently leveraged a mix of eSourcing technology and advisory services.
They were able to demonstrate savings on a multitude of sourcing and category events while tying them to the financial goals of the organisation, effectively impacting the EBITDA and Cash metrics.
What CEO wouldn’t love to hear that?
Decrease redundancy, increase efficiency
Technology provides a platform for businesses to digest more, process more and err less. This alone saves significant resources, making the organisation and its suppliers more productive.
Within the supply chain commitments, adequate performance and managed expectations are as critical as regulatory compliance. Technology can provide a platform for managing relationships, honouring commitments, and upholding agreements. All of that leads to better relationships.
Just look at a global pharmaceutical leader who implemented a supplier management module across the board. As a result, it can now classify its entire supply chain based on critical risk metrics.
That means the global operations are adequately diversified and critical suppliers are handling processes and data with the highest security compliance, privacy, and environmental sensitivity.
The smooth road to resilience
All of the companies I mentioned had different priorities. That’s why you need to choose technology that meets your specific needs.
And as you can tell, there are infinite combinations of tools and applications that can be used to “get to the other side of town”. But the idea is to get to the other side not just in one piece, but also in sturdier conditions. It’s about learning in the way, enduring and increasing resilience.
The key to come up with a combination that balances needs with budgets and aligns with your strategic vision, starts with defining what success looks like for your supply chain and those entities who manage it.
Modular, cloud based, and service driven technologies provide the needed flexibility toward the easiest and most yielding path to success.
Are our supply chains tunnel-visioned, or do they support a diverse range of ethnic minorities, women, military veterans, people with disability, or ex-offenders trying to build a new life?
A few months ago, Beyoncé dropped a surprise new single. Hang on, what’s that got to do with Procurement with Purpose (PwP), I hear you say?
Well, apart from the fact the sing is really rather good, Black Parade is linked to her wider initiatives around charitable work (through her BeyGood initiative), black empowerment and consciousness. Revenue from the track is being used to benefit BeyGood’s Black Business Impact Fund – administered by the National Urban League – to support black-owned small businesses in need.
She has also launched a directory of black-owned businesses ranging from art & design, restaurants, beauty products, lifestyle, wellness, bookstores and more. It’s a fairly basic site, and pretty much all the firms listed there appear to be B2C (consumer focused) rather than B2B. But her move may raise more questions about how organisations approach their corporate buying, in particular when it comes to minority-owned businesses that could be used as suppliers. Recent events and the Black Lives Matter movement have made many of us think about racism and bias in our lives, and that applies in the supply chain as much as it does anywhere. So, that takes us back to procurement with purpose.
Diversity (broadly speaking now) in the supply chain is actually one of the most fascinating topics within the whole PwP world. For a start, there are any different types of diversity. Should you buy more from firms owned by people from black and other ethnic groups? What about female-owned businesses? Or those owned by folks with disabilities or health issues – or maybe those firms that employ such people? What about firms that are owned by support military veterans, or ex-offenders trying to build a new life?
Or maybe it’s not the ownership that matters. What about SMEs (smaller firms)? Some would suggest that those businesses drive successful economies and by supporting them at an early stage, buyers can capture innovation and also promote wider social and economic benefits. Others, particularly in the public sector, look to support local business, on the grounds that this will keep the money flowing in the local economy rather than being sucked up to some distant head office.
All these options mean it can be hard to know where to start. But in many countries, it is clear that minority-owned businesses in particular do have a tough time as they have to overcome all the usual hurdles faced by start-ups anywhere, plus they face the bias (conscious or unconscious) that does exist.
We’re not going to solve that problem in one article today, but as well as highlighting that this may develop into a high-profile issue, a few suggestions for now.
· Firstly, take a look at how easy it is for any new or small firm to become a supplier to you. How can they put themselves forward? Are your supplier qualification and selection processes designed for huge firms, rather than start-ups? Do you put accidental barriers in the way, demanding onerous contract terms, expensive insurance and so on? Too many large firms are virtually impossible to break into, which is not good for the agility and dynamism of their supply base, never mind the difficulty for minority-owned suppliers.
· Secondly, if you haven’t looked at these issues, seek out organisations that can help you work out an approach. MSDUK has done good work in the UK to promote minority owned businesses, WEConnect International does the same with female owned enterprises, and there are others covering different groups and issues and across different countries. The good news is that large organisations don’t have to move very much of their spend into supporting these causes to really make a difference.
· Thirdly, there are some good case studies around. Accenture has been one of the leaders in this area with their supplier inclusion and diversity programme, and there are others who have made strides in this field.
· And finally, how about Beyoncé for US Vice-President?
This article was originally published by Procurement With Purpose on 20 June 2020 and is republished here with permission.