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How Prepared Is Your Organization For Supply Chain Disruption?

Marcell Vollmer

Driven by demand for lower manufacturing costs and access to specialist capabilities and technologies, most supply-chain operations rely on a complex mix of large and small businesses. Every single one of these companies depends on each other to deliver as promised, and shares information, advice, and data – all on a mission to provide quality products and services to the end consumer. And as beneficial as these large supplier networks are, they risk bringing the operation to a complete standstill.

Although it is common sense to protect supply chains from severe and costly disruption, many executives compromise this wisdom to provide service levels and products that customers demand while optimizing profitability. Yet growing awareness of reputation, brand issues, and supplier sustainability and labor practices are shedding light on the underlying risks of today’s supply chains.

Emerging risks that could impact your supply chain in 2017 and beyond

In recent years, procurement organizations have focused on making supply chains leaner, more responsive, and highly cost-effective. In turn, businesses can operate with as little inventory in stock as possible and get the right products to the right customers at the right time. However, these advantages are often eaten away by the growing vulnerability and rising risk of damaging disruption of the supplier network.

Because very little inventory is available to act as a buffer against lost manufacturing time and low productivity, hiccups and failure anywhere in the supply chain could potentially impact the entire value chain. And it’s not just direct suppliers that present concern; in fact, greater risk may reside within a supplier’s network of suppliers.

Such impactful disruptions can arise from a number of sources, including:

  • Natural catastrophes: The output of magnetic hard drives declined 30% worldwide when Thailand suffered widespread flooding after months of unusually heavy rainfall.
  • Human-made disasters: The radiation leak at the Fukushima Daiichi nuclear plant, following an earthquake, contaminated the local food chain and created a global ripple effect of severe price spikes, falling stock prices, and component shortages.
  • Supplier delivery delays: Reliance on a single supplier impacted 28,000 employees across six out of Volkswagen’s ten factories in Germany when its seat-cover provider did not deliver on time – leading to a €100 million loss in revenue.
  • Financial or economic crisis: After Lehman Brothers announced its bankruptcy in 2008, the manufacturing sector suffered a significant drop in customer orders of up to 42%, collapsing entire supply chains as a growing number of providers went out of business.
  • Government regulations: An ever-growing set of local, national, and international mandates impact everything from operational processes to product ingredients, especially restrictions on chemicals, hazardous substances, and suppliers financing conflicts and terrorist organizations.

These are just a few of the many incidents that have given chief procurement officers (CPOs) great cause for concern. Even cyber hackers are tricking employees to unintentionally make fraudulent wire transfers, steal or corrupt information, and disrupt operations of multiple businesses.

How procurement can help prevent supply chain disruption

Risk is often manifested in supplier-related issues that present challenging dilemmas for the procurement function. It may seem easier to resolve the problem by identifying and onboarding alternative suppliers, but very rarely is this the case. What’s needed is a clear understanding of which factors drive inventory and how to best manage any looming risks.

Such clarity is possible only with an end-to-end view of the entire supply chain. However, most procurement organizations are unable to achieve such visibility due to:

  • Information residing in multiple systems – internally and externally – that are not tied to each other
  • Fragmented processes that are forcing procurement to work with multiple lines of business individually to maintain due diligence that comes from ongoing process monitoring
  • Risk management processes that cannot be scaled beyond top suppliers to address secondary and tertiary suppliers

Supply chains may be complex, but they don’t have to be unpredictable. By automating and integrating technology into other corporate systems, CPOs can have a better sense of the overall purchasing life cycle. They can precisely correlate how cost savings can impact quality, operations, and delivery. Supplier performance is auditable so that the company can help ensure that every business contributing to the value chain is compliant with all government regulations, corporate policies, and labor practices. More important, procurement can intelligently sense emerging disturbances and define a strategy to counteract them before they occur.

By understanding the how, where, what, and why behind every supplier decision and using tools to measure, report, and validate perceived advantages, businesses can engage a comprehensive risk management program that drives continuous operations, increases reputational and investor value, and improves accountability for the overall chain. Accurate and up-to-date supplier information for all your trading partnerships, readily accessible across your organization—that’s what you need to manage supplier performance and risk.

The thing is, without the help of technology you’ll have a hard time getting your hands on it. Because you’re managing hundreds – if not thousands – of relationships, with new suppliers coming online in the digital economy every day.

For more insight on supply chain management, see Conquer Supply Chain Resource Scarcity With These 7 Technologies.

 

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Marcell Vollmer

About Marcell Vollmer

Marcell Vollmer is the Chief Digital Officer for SAP Ariba (SAP). He is responsible for helping customers digitalize their supply chain. Prior to this role, Marcell was the Chief Operating Officer for SAP Ariba, enabling the company to setup a startup within the larger SAP business. He was also the Chief Procurement Officer at SAP SE, where he transformed the global procurement organization towards a strategic, end-to-end driven organization, which runs SAP Ariba and SAP Fieldglass solutions, as well as Concur technologies in the cloud. Marcell has more than 20 years of experience in working in international companies, starting with DHL where he delivered multiple supply chain optimization projects.

Fast – But Not Too Fast – Wins The Race In Supply Chain Management

Richard Howells

Bonnie D. Graham, host of The Digital Transformation of Your Supply Chain with Game-Changers podcast, opened her recent show by recounting the tale of “The Tortoise and the Hare.”

You know the story: A slow but steady turtle beats a swift yet arrogant rabbit in a footrace.

Bonnie used the Aesop fable to illustrate two points about supply chain management:

  1. If you respond too slowly to your customers’ needs, you risk being left behind.
  1. If you respond too quickly, you risk acting without the proper insight.

The truth is, you need to strike the perfect balance, responding in a timely fashion with sound information that adequately supports your response.

One of the panelists on the show, Eric Simonson, director of solution management at SAP, likened this to another well-known tale: “Goldilocks and the Three Bears.”

Your supply chain organization, he suggests, needs to respond to its consumers just right.

Don’t just respond – predict

Responding to the needs of your supply chain customers is one thing. Anticipating consumers’ needs is something else altogether.

“Basically, if we look back into what we’re trying to do traditionally in supply chain management and supply chain planning, specifically,” said guest Jeroen Kusters, senior manager of supply chain management at Deloitte, “is we’re trying to predict the future.”

He admits, however, that “we’re always a little bit wrong.”

How can we change this?

The key is gaining an optimal view of the information you have at your disposal. In addition to taking a deeper dive into your own data, it’s important to have some insight into your supply chain partners’ information. This will enable your company to respond earlier – with greater accuracy – and even help you predict future demand.

Supply chain in the year 2020 and beyond

At one point during the podcast, Bonnie asked her panel of experts what they think the future holds for supply chain management.

Jeroen envisions organizations better integrating their planning, response management, and other operations across the entire supply chain. This will allow companies and their partners to more easily share – and capitalize on – customer insight and other key data.

Eric foresees a world where digital collaboration is much more prominent.

“[M]aybe it’ll start with the supplier side of things,” he says, “and then, eventually … we can get to some of the customer collaboration type, too, to get some better demand visibility.”

With a more holistic view into what’s happening across the entire supply chain, your business is primed to provide well-informed, timely responses to ever-evolving consumer demands.

Srini Bangalore, managing director at Deloitte, believes the immediate future of supply chain revolves around digitalization. But his long-term outlook is more focused on cognitive intelligence.

“I look at cognitive supply chain as a 20-year journey,” he says, “where your machines and computing systems that you use within your supply chain have machine-based intelligence. They can learn, they can problem solve, and they can make decisions on your behalf in the processes in your extended supply chain. The role of a human being is to actually augment the machines.”

A first-rate lesson in digital response and supply chain management

As discussed on the show, predicting the future isn’t easy. But if you’re going to listen to anybody about what direction supply chain is headed in, it ought to be industry thought leaders like Eric Simonson, Jeroen Kusters, and Srini Bangalore.

Check out the entire episode of The Digital Transformation of Your Supply Chain with Game-Changers to hear more expert opinions on digital response and supply chain management from Bonnie and her panel of guests.

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Richard Howells

About Richard Howells

Richard Howells is a Vice President at SAP responsible for the positioning, messaging, AR , PR and go-to market activities for the SAP Supply Chain solutions.

Is Your Supply Chain Prepared For The Digital Future?

Kristin Ulrich

Ninety percent of CEOs believe the digital economy will have a major impact on their industry, but only 25% have a digitalization plan in place, according to SAP research.

Most global supply chains are unequipped to cope with the world we’re entering. For that reason, supply chain managers need to shift their attention from cutting costs to enabling new processes and increasing connectivity and agility. Speed is also crucial, as product cycles are becoming shorter and more fluid. Additionally, as customers demand faster product and service development and delivery, organizations must transform their existing business processes to reduce response times.

A key part of this transition includes the transformation of traditional supply chains into demand-sensitive business networks. Standardized supply chain and logistics approaches pose threats for companies. Enterprises can use the latest digital technologies to overcome these threats a couple of different ways:

  1. Gaining a better understanding of what the customer wants while enhancing customer relationships
  1. Transforming supply chain processes and responding to the rising tide of global uncertainties and business complexities

The big move toward digitalization is coming sooner than many companies expect, according to Digital Supply Chain Management – 2020 Vision. This white paper presents an overview of supply chain digitalization best practices, courtesy of several leading enterprises. The document also provides a view of today’s challenges and trends versus the vision of a digital supply chain in 2020.

We have developed a digital maturity assessment tool based on our findings. By filling out this brief questionnaire designed for IT, operations, and supply chain managers, you’ll be able to evaluate your company’s level of digital maturity in the following categories:

  • Design
  • Plan
  • Respond
  • Produce
  • Make
  • Deliver
  • Operate

Following the completion of the questionnaire, you will receive a customized summary of your individual results, free of charge. We’ll also send you a global analysis of industry and peer-group maturities at the end of the year.

Early adopters of digital transformation have increased revenue by nine percent, market valuation by 12%, and profitability by 26%, according to SAP research.

Take your first step toward digitalizing your supply chain today by completing your very own digital maturity assessment.

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Kristin Ulrich

About Kristin Ulrich

Kristin Ulrich is a business consultant for Supply Chain Management of Business Transformation Services at SAP. As part of her responsibilities, Kristin developed a digital maturity model, the underlying concept behind the SAP Digital Supply Chain Maturity Assessment. Prior to her role at SAP, Kristin has worked in different industries in operations management, procurement, and supply chain management while gaining a broad understanding of trends and challenges of the digitalization of business processes. For further inquiries, please contact her at kristin.ulrich@sap.com.

Taking Learning Back to School

Dan Wellers

 

Denmark spends most GDP on labor market programs at 3.3%.
The U.S. spends only 0.1% of it’s GDP on adult education and workforce retraining.
The number of post-secondary vocational and training institutions in China more than doubled from 2000 to 2014.
47% of U.S. jobs are at risk for automation.

Our overarching approach to education is top down, inflexible, and front loaded in life, and does not encourage collaboration.

Smartphone apps that gamify learning or deliver lessons in small bits of free time can be effective tools for teaching. However, they don’t address the more pressing issue that the future is digital and those whose skills are outmoded will be left behind.

Many companies have a history of effective partnerships with local schools to expand their talent pool, but these efforts are not designed to change overall systems of learning.


The Question We Must Answer

What will we do when digitization, automation, and artificial intelligence eject vast numbers of people from their current jobs, and they lack the skills needed to find new ones?

Solutions could include:

  • National and multinational adult education programs
  • Greater investment in technical and vocational schools
  • Increased emphasis on apprenticeships
  • Tax incentives for initiatives proven to close skills gaps

We need a broad, systemic approach that breaks businesses, schools, governments, and other organizations that target adult learners out of their silos so they can work together. Chief learning officers (CLOs) can spearhead this approach by working together to create goals, benchmarks, and strategy.

Advancing the field of learning will help every business compete in an increasingly global economy with a tight market for skills. More than this, it will mitigate the workplace risks and challenges inherent in the digital economy, thus positively influencing the future of business itself.


Download the executive brief Taking Learning Back to School.


Read the full article The Future of Learning – Keeping up With The Digital Economy

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Dan Wellers

About Dan Wellers

Dan Wellers is the Global Lead of Digital Futures at SAP, which explores how organizations can anticipate the future impact of exponential technologies. Dan has extensive experience in technology marketing and business strategy, plus management, consulting, and sales.

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Why Millennials Quit: Understanding A New Workforce

Shelly Kramer

Millennials are like mobile devices: they’re everywhere. You can’t visit a coffee shop without encountering both in large numbers. But after all, who doesn’t like a little caffeine with their connectivity? The point is that you should be paying attention to millennials now more than ever because they have surpassed Boomers and Gen-Xers as the largest generation.

Unfortunately for the workforce, they’re also the generation most likely to quit. Let’s examine a new report that sheds some light on exactly why that is—and what you can do to keep millennial employees working for you longer.

New workforce, new values

Deloitte found that two out of three millennials are expected to leave their current jobs by 2020. The survey also found that a staggering one in four would probably move on in the next year alone.

If you’re a business owner, consider putting four of your millennial employees in a room. Take a look around—one of them will be gone next year. Besides their skills and contributions, you’ve also lost time and resources spent by onboarding and training those employees—a very costly process. According to a new report from XYZ University, turnover costs U.S. companies a whopping $30.5 billion annually.

Let’s take a step back and look at this new workforce with new priorities and values.

Everything about millennials is different, from how to market to them as consumers to how you treat them as employees. The catalyst for this shift is the difference in what they value most. Millennials grew up with technology at their fingertips and are the most highly educated generation to date. Many have delayed marriage and/or parenthood in favor of pursuing their careers, which aren’t always about having a great paycheck (although that helps). Instead, it may be more that the core values of your business (like sustainability, for example) or its mission are the reasons that millennials stick around at the same job or look for opportunities elsewhere. Consider this: How invested are they in their work? Are they bored? What does their work/life balance look like? Do they have advancement opportunities?

Ping-pong tables and bringing your dog to work might be trendy, but they aren’t the solution to retaining a millennial workforce. So why exactly are they quitting? Let’s take a look at the data.

Millennials’ common reasons for quitting

In order to gain more insight into the problem of millennial turnover, XYZ University surveyed more than 500 respondents between the ages of 21 and 34 years old. There was a good mix of men and women, college grads versus high school grads, and entry-level employees versus managers. We’re all dying to know: Why did they quit? Here are the most popular reasons, some in their own words:

  • Millennials are risk-takers. XYZ University attributes this affection for risk taking with the fact that millennials essentially came of age during the recession. Surveyed millennials reported this experience made them wary of spending decades working at one company only to be potentially laid off.
  • They are focused on education. More than one-third of millennials hold college degrees. Those seeking advanced degrees can find themselves struggling to finish school while holding down a job, necessitating odd hours or more than one part-time gig. As a whole, this generation is entering the job market later, with higher degrees and higher debt.
  • They don’t want just any job—they want one that fits. In an age where both startups and seasoned companies are enjoying success, there is no shortage of job opportunities. As such, they’re often looking for one that suits their identity and their goals, not just the one that comes up first in an online search. Interestingly, job fit is often prioritized over job pay for millennials. Don’t forget, if they have to start their own company, they will—the average age for millennial entrepreneurs is 27.
  • They want skills that make them competitive. Many millennials enjoy the challenge that accompanies competition, so wearing many hats at a position is actually a good thing. One millennial journalist who used to work at Forbes reported that millennials want to learn by “being in the trenches, and doing it alongside the people who do it best.”
  • They want to do something that matters. Millennials have grown up with change, both good and bad, so they’re unafraid of making changes in their own lives to pursue careers that align with their desire to make a difference.
  • They prefer flexibility. Technology today means it’s possible to work from essentially anywhere that has an Internet connection, so many millennials expect at least some level of flexibility when it comes to their employer. Working remotely all of the time isn’t feasible for every situation, of course, but millennials expect companies to be flexible enough to allow them to occasionally dictate their own schedules. If they have no say in their workday, that’s a red flag.
  • They’ve got skills—and they want to use them. In the words of a 24-year-old designer, millennials “don’t need to print copies all day.” Many have paid (or are in the midst of paying) for their own education, and they’re ready and willing to put it to work. Most would prefer you leave the smaller tasks to the interns.
  • They got a better offer. Thirty-five percent of respondents to XYZ’s survey said they quit a previous job because they received a better opportunity. That makes sense, especially as recruiting is made simpler by technology. (Hello, LinkedIn.)
  • They seek mentors. Millennials are used to being supervised, as many were raised by what have been dubbed as “helicopter parents.” Receiving support from those in charge is the norm, not the anomaly, for this generation, and they expect that in the workplace, too.

Note that it’s not just XYZ University making this final point about the importance of mentoring. Consider Figures 1 and 2 from Deloitte, proving that millennials with worthwhile mentors report high satisfaction rates in other areas, such as personal development. As you can see, this can trickle down into employee satisfaction and ultimately result in higher retention numbers.

Millennials and Mentors
Figure 1. Source: Deloitte


Figure 2. Source: Deloitte

Failure to . . .

No, not communicate—I would say “engage.” On second thought, communication plays a role in that, too. (Who would have thought “Cool Hand Luke” would be applicable to this conversation?)

Data from a recent Gallup poll reiterates that millennials are “job-hoppers,” also pointing out that most of them—71 percent, to be exact—are either not engaged in or are actively disengaged from the workplace. That’s a striking number, but businesses aren’t without hope. That same Gallup poll found that millennials who reported they are engaged at work were 26 percent less likely than their disengaged counterparts to consider switching jobs, even with a raise of up to 20 percent. That’s huge. Furthermore, if the market improves in the next year, those engaged millennial employees are 64 percent less likely to job-hop than those who report feeling actively disengaged.

What’s next?

I’ve covered a lot in this discussion, but here’s what I hope you will take away: Millennials comprise a majority of the workforce, but they’re changing how you should look at hiring, recruiting, and retention as a whole. What matters to millennials matters to your other generations of employees, too. Mentoring, compensation, flexibility, and engagement have always been important, but thanks to the vocal millennial generation, we’re just now learning exactly how much.

What has been your experience with millennials and turnover? Are you a millennial who has recently left a job or are currently looking for a new position? If so, what are you missing from your current employer, and what are you looking for in a prospective one? Alternatively, if you’re reading this from a company perspective, how do you think your organization stacks up in the hearts and minds of your millennial employees? Do you have plans to do anything differently? I’d love to hear your thoughts.

For more insight on millennials and the workforce, see Multigenerational Workforce? Collaboration Tech Is The Key To Success.

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