A digital supply chain (DSC) focused on customers can have a tremendous impact on an organization’s financial performance, helping to cut costs and boost revenue, according to a report last year from The Center for Global Enterprise (CGE). Improved DSCs can reduce total procured costs by 20 percent and increase revenue by 10 percent.
A true DSC is “a customer-centric platform model that captures and maximizes utilization of real-time data coming from a variety of sources,” the CGE report stated. “It enables demand stimulation, matching, sensing and management to optimize performance and minimize risk.”
Some of the most critical and difficult factors in the DSC transformation include technology, demand management and risk, according to the CGE report. But the single most critical and difficult factor for most companies is their people.
Transformation is not a shrink-wrapped solution
There are several fundamental skills missing from the current workforce. In fact, 78 percent of companies surveyed by CGE reported they were short on the right kind of people needed to execute the DSC in their company.
And there is no DSC package to buy that will make it happen. That’s why it’s critical to get the right people, with the right skills, organized and focused on enabling an effective and capable DSC, the most important core process for the majority of companies today.
“We need different skill sets — more data scientists and IT professionals conversant with Big Data, analytics, and tools to interface with data available from the web,” said Keith Miears, VP of global supply chain at Dell, and one of the 24 senior executives involved with the DSC initiative. “And we need people who understand the opportunities and risks our business faces and can figure out what data we need.”
What can companies do?
Back-end business tasks remain essential, such as minimizing inventory, utilizing low-cost/high-quality suppliers, optimizing shipping and logistics, and getting the right product to the right place at the right time. But advances in technology and social buying patterns make a back-end focus insufficient.
Most companies the lack front side-facing skills necessary to reduce costs even further and to actually grow revenue as a result of the DSC. As new people are hired, organizations must increase the efficiency and function of their back-end activities with less help from HR.
We need to develop a roadmap for recruiting people with the right skills at the right time. And staffing the DSC must include new categories of hire, such as:
- Data scientists and data stewards who know how to collect, maintain and analyze high-quality Big Data in a business context
- Maintenance technicians who serve as the new face of customer service as we move to service subscription and usage-based relationships where uptime is critical
- People who have deep expertise in technologies like blockchain, 3D printing and driverless vehicles/drones
Focus to achieve better people management
There are two requirements for managing people well. Clarity of intent means being clear about what you want from the DSC, why it is important, and when it has to happen. And accountability requires each person on the DSC team to know precisely what they are accountable for and how their results will be measured.
The DSC requires a new scorecard that communicates what is wanted, who is accountable, and how rewards and punishments will be administered. It should make clear exactly how the DSC will drive revenue growth, how much growth, who is accountable, and how progress will be tracked and incentivized.
The scorecard requires careful thought so it keeps people’s eyes on the back end while optimizing the front side. (This may sound like common sense, but it’s rarely ever done this way.) And better metrics are required in order to encourage the collaboration with a purpose mentioned previously.
A new route to the top
The DSC leader is frequently a corporate center job with direct-line authority over business group supply chain executives. The DSC head in one company has also taken on the ownership of the USA P&L, according to CGE, and in another case, the DSC transformation is managed by an individual with a strong marketing background.
It is becoming clear that being the senior executive running the DSC is great training for the CEO position. In fact, incumbency in DSC leadership is a new route to the top.
DSCs could be the most important transformation for companies over the next five years. Company leaders who recognize the importance of the people involved in this transformation will open doors for opportunity and growth.
For more on this topic, see Supply Chain Leaders Boost Value With Digital Transformation.Comments