It’s a question for the ages: Which came first, the chicken or the egg? Aristotle apparently said both had to exist simultaneously.
A similar question emerges with regard to digitizing the supply chain. Which comes first: collecting and analyzing data, or collaborating with customers and partners?
At Tyson Foods — the world’s largest processor and marketer of chicken, beef, and pork—this is a serious question. Our supply chain is integral to our ability to compete and win in the marketplace.
And I’ll have to agree with Aristotle on the chicken and egg existing simultaneously. Achieving supply chain digitization — and competitive advantage — requires that you digitally capture and analyze data, and at the same time digitally connect and collaborate with stakeholders up and down the supply chain.
From data to digital
Different people mean different things when they talk about digital business. To me, digitizing the supply chain involves four interconnected activities:
- Capturing what’s happening in your operations and in the marketplace
- Reporting on that data in a format that can be easily consumed by decision makers
- Sharing that information up and down the supply chain
- Taking immediate action to keep your supply chain aligned with internal and external realities
What’s different about a digitized supply chain is that you’re capturing, analyzing, sharing, and acting on information digitally. In the past much of these activities were manual. Digitization lets you capture more data, analyze it more effectively, share it more quickly, and act on it more accurately.
To start digitizing your supply chain, you first have to define what the supply chain means for your company. For some, the supply chain might just be logistics. For a company like Tyson Foods, the supply chain starts with farms and extends through our own operations, our corporate customers, and all the way to end consumers.
Next, you need to digitally capture data from all relevant sources — in our case, everything from weather impacts to cash-register rings. You also need data analytics to understand that data and make predictions that lead to action. Finally, you need to make the information and the analysis available on mobile dashboards for easy consumption by decision makers — and do that not monthly or weekly, but daily.
Making the connection
The digitized supply chain isn’t just about data. It’s also about connecting and collaborating. That interaction needs to take place with three core constituencies:
End consumers — In the consumer packaged goods (CPG) industry, as in many sectors, we want to leverage supply chain data to get closer to end consumers. Consumers are changing. They use mobile devices and social media, and they actively share views about the brands they consume. Companies need to place themselves in the middle of those dialogs to better understand consumer desires.
Consumer use of social media might not seem like the domain of the supply chain. But in many companies, the supply chain now touches every aspect of operations. Understanding consumer sentiment can give you tremendous insights into demand — a leading supply chain indicator. For instance, if you can see in real time that a product is selling better in one region than another, you can take actions like altering your demand plan or moving production closer to demand.
Intermediate customers — For a company like Tyson Foods, we also have to connect with corporate customers such as grocery chains. These customers are also changing. A major ecommerce player that started as an online bookseller is now delivering groceries and opening bricks-and-mortar stores in some areas to capture more of the book market. Some of our grocery customers are setting up networks with capabilities to deliver direct to end consumers.
By being digitally connected with such customers, you can adapt your supply chain to their changing needs — and provide them with value-added services that differentiate you from the competition. That might mean collaborating on demand planning or benefiting them by shipping to a distribution hub closer to their end consumers.
Partners and suppliers — Finally, you need to collaborate with partners and suppliers. In the past, companies held onto supply chain data because they thought it gave them power. But the ability to digitally share insights in real time can give you even greater power. You benefit from multiple sets of data for better insights and multiple sets of analysis for more accurate action.
Just as important is visibility into your partners’ and suppliers’ operations. For Tyson Foods, that goes all the way back to the egg on the farm, and even to the chicken laying the egg. As an example, chickens grow at different rates as the temperature fluctuates. So if we know that certain suppliers are experiencing a heatwave, we can make more informed decisions.
The supply chain used to be a necessary evil, your ante into your industry’s game. Today the supply chain can be a competitive advantage — or disadvantage. For many businesses, the supply chain will become a central activity. And a digitized supply chain is what will enable them to succeed.
Learn more about digitizing your supply chain at APICS 2016, September 25 – 27 in Washington, D.C.