Supply Chain transformation as an example of using big data collection and analysis, the Internet of Things, investment in technology and pervasive partner collaboration to maximize value streams and manage supply chain risks for the future of manufacturing
As you face the ever-growing opportunities for and challenges of Operational Excellence, you’ll have to integrate big data, the internet, technology, and partner collaboration to achieve your winning operational excellence models of the future. Part I of this three-part look at the Smart Operations of the Future addressed this integration broadly. In this Part II, you’ll learn how to apply Smart Operations to your supply chain.
Every company has a supply chain, maybe not one near as extensive as complex (custom) manufacturing companies, but components required for operations from intellectual property to technological widgets and everything in between and beyond come into businesses from third parties. Then, once the product or service is ready to be delivered to the customer, third-party logistics (3PL) vendors often make that happen. Consider that even the company that hosts your Internet Service Provider (ISP) services is part of your supply chain.
There are countless external and internal factors that affect your supply chain, requiring that you transform it periodically and evolve it continuously. At the APICS International Conference in October 2016, about 50% of the presentations and workshops either were specifically about supply chain risk or included topics central to understanding and managing risks more effectively. Externally, everything from global politics to severe weather can determine your and your vendors’ abilities to fulfill their commitments to you, and when one link breaks down temporarily or falls off the chain altogether because of these influences, the ramifications cascade throughout your entire chain. Internally, weaknesses in supply chain analysis and management personnel and technology support are likely to make your supply chain less effective, sometime much less effective, than you need it to be.
Healthy supply chains are characterized by eleven characteristics that are present both internally and externally at all times:
- The supply chain achieves balanced score card objectives in the areas of reliability, responsiveness, agility, cost, asset management, process maturity and growth.
- Project implementation inside and out can be delivered rapidly.
- Flexible best-practice methodologies that fit the needs of your business are diligently deployed.
- Marketplace, strategy, leadership priorities, resources, and actions are aligned accurately.
- Implemented improvement projects selected have strategic impact and manageable scope.
- Improvements are largely or entirely driven by customer- or mission-focused objectives.
- End-to-end governance of performance is in place.
- Collaboration establishes desired capabilities and sustained performance.
- Outcomes in the areas of growth, increased margin, customer loyalty, innovation, sustainability, and strategic capabilities are realistic and attainable.
- Effective leadership abounds.
- Stakeholders are fully on board.
The Supply Chain Operations Reference model (SCOR) has proved itself to be an optimal framework for unifying business processes, performance metrics, practices, and people skills to optimize your supply chain. Learned and implemented effectively, SCOR will transform your supply chain from a survivor to a thriver if that’s what is needed, or give you the ability to identify and correct issues with the one or two weak links in your supply chain that might be putting you second or third in your thriver category. SCOR can make your supply chain a Smart Operation. For example:
- SCOR helps professionals understand and maximize the 11 components of a healthy supply chain especially when you have good, even great, capabilities of big data collection and analysis. In the area of balanced score card objectives alone, being a Smart Operation means you have obtained, tracked, analyzed, determined the importance of, and implemented adjustments in your SCOR framework deployment based on data about the responsiveness, agility, cost, asset management, process maturity and growth. Not just internally, but within the business model and delivery of your supply chain vendors. The records we keep and even create without intention give us deep insight into our own company’s strengths and weaknesses, and those of our vendors and their competitors. That gives us the edge Smart Operations offers: knowing what’s going on end-to-end in our supply chain, and knowing through leveraging SCOR- defined best practices how to respond to that knowledge to implement transformations for optimal outcomes.
- The Internet of Things brings countless benefits to a Smart Operation that utilizes SCOR. Perhaps the most important ones are the connectivity that allows us to assimilate a lot of the big data, even use online tools to analyze it to some degree, understand our customers so we’re aligned with their needs and expectations, and communicate with our vendors so we can collaboratively deliver with greater agility and profitability. If your company is using the power of the internet in a limited way to support your supply chain, employing SCOR principles along with suggested best practices and Smart Operations can take you from limited data exchange with customers and channel partners to fully automate intercompany processes and customer demands to increase speed and accuracy throughout the entire chain and decrease problem solving, downtime and many other profit and reputation killers.
- Increased investment in technology for all types of businesses is inevitable. In supply chain operations, only technology can work at the speed of light we’re all trying to reach in order to thrive. Of course it’s the people who innovate and establish direction, but the volume of actions that must be taken demand optimal technologies are on board. Without the right technology, big data can’t be managed and interpreted and intercompany processes can’t be automated. Your leadership and teams in SCOR-based Smart Operations all need to be in alignment with the technologies that really work for your supply chain operational excellence objectives.
- Pervasive partner collaboration is the “people-part must have” in the future of business. It requires a steady flow of information both ways, to and from your company to your channel partners (and your customers). At the speed of today’s and the future’s business activity, ongoing, agile, and effective collaboration and adjustment and transformation therefrom requires capability in each of the areas overviewed in paragraphs one through three immediately above. On both the buy- and sell-side of your value chain, your partners’ people can solve knowledge gaps you may have and put their people in place to close your immediate talent gaps… allowing you to do what you do best more effectively.
Supply chain leadership and teams that embrace SCOR, implement it and add the four key elements of Smart Operations capabilities to business practices are the thrivers of today and tomorrow. If you embrace the principles of Smart Operations — in your supply chain model, for example — your business will thrive. It’s a big challenge for every organization, and an equally tremendous opportunity.
In part three of this series, we’ll take a look at a variety of snapshots of how Smart Operations capabilities can optimize other key areas of OpEx, and further transform their organizations into Smart Operations.