Is Supply Chain Vulnerability Undermining Your Business Purpose?

Paul Clark

You can fix problems right away and identify savings. You can even find new product sources early on and resolve issues before customer complaints and dissatisfaction arise. While these capabilities are critical for running a competitive supply chain, a perfect storm of environmental, social, and governance pressures is brewing deep inside these processes – potentially undermining your ultimate vision of global security and business longevity.

As companies attempt to adapt a seemingly contradictory consumer-based economy to the United Nations’ sustainable development goals, customers worldwide are watching with critical eyes. They expect their favorite brands to exhibit environmental awareness; social consciousness; ethical practices; and ideas, beliefs, and attitudes that match their own.

However, running such a purpose-driven supply chain is easier said than done. According to the UN Global Compact, supply chain practices are ranked as the biggest challenge to improving sustainability performance because of the scale and complexity of existing processes. And often, just one breakdown in the supply chain can show consumers everything they need to decide whether a brand is ethical and environmentally responsible.

Building the first line of defense

Given the high stakes of today’s supply chains, there’s consensus among experts that disruption to practices that promote a brand’s higher purpose comes down to three things: people, processes, and insights that show what’s really happening.

“Any shop floor, to some extent, is data-rich and information-poor. To enrich that data and generate insight, you may need to use sensors or an Internet of Things platform,” said Steve Shepley, principal at Deloitte Consulting LLP, during his appearance on SAP Radio. “But those two things aren’t enough. What you really need is an action or decision that you couldn’t do yesterday, which depends on how you deliver that information to individuals.”

Debbie Kupitzer, digital manufacturing and industrial Internet lead at Capgemini, who also appeared on the same panel, agreed with Shepley, adding, “So many times we get beautiful dashboards that don’t tell us anything. The data has to be valuable, provide insight, be actual, and trigger a change.”

A recent  echoed Shepley’s and Kupitzer’s insights by acknowledging that emerging technologies are turning machines on the shop floor into a living, intelligent nervous system. Although factories have been “talking” to each other and to business systems for decades, sensors are now working together to automatically solve problems and help employees make more-informed decisions.

Factory managers, for example, should see on their device the current status, potential for failure, and root cause of poor performance and then act to resolve the issue before it becomes a disruptive problem, days ahead of time. More important, the future of business will center on not only managing disruption, but also getting ahead of it and furthering a purpose-driven agenda. 

Delivering value that matters most

Technology alone cannot foster a purpose-driven supply chain, but it does allow people to accomplish extraordinary things to create one. Here’s a snapshot of how some of today’s latest digital innovations are enabling outcomes that matter most to the business, its customers, and the entire world.

1. Digital twins 

A pressing concern for any digital initiative, as reported by Deloitte, is how to clearly show benefits and sustainable value before significant time, money, and expertise are dedicated to bringing an innovation concept into reality.

With the introduction of increasingly favorable data storage and affordable high-speed computing, the application of digital twins has expanded. Companies of all sizes and industries can understand how changes in process, technology, and the business model can expose the supply chain to risks and opportunities that are not obvious before it’s too late.

2. Blockchain

Emerging from the world of finance, blockchain technology is igniting a revolution that could simplify supply chain management and seamlessly integrate digital contracts, shared inventory and logistics information, pricing, invoicing, and payments in a single flow of insight.

According to EY’s global innovation leader for blockchain Paul Brody, “Using blockchain technology to improve these operations can result in business advantages. For example, cargo in transit can insure and finance itself automatically, and tariffs, taxes, and duties can be paid instantly upon arrival at a port.”

John Schmidt, global managing director for Accenture’s aerospace and defense practice also sees blockchain as a transformational moment, especially for the world’s most vast and complex supply chains. “Blockchain technology offers a new, elegant, and secure way for the industry to track and trace myriad components while deterring counterfeiting and improving maintenance capabilities,” he said in a recent press release. “Used in combination with technologies like digital twins and digital threads, blockchain could ultimately be a game-changing innovation for this sector.”

3. 3D printing

The promise of 3D printing product on demand is a threat and opportunity for every company as it inevitably changes manufacturing models. And as the technology increasingly moves away from making prototypes and novelty items and toward mass additive manufacturing, it is predicted that the supply chain will shorten as the gaps between sourcing, manufacturing, warehousing, and distribution close up.

For United Parcel Service (UPS), 3D printing is providing a solution to significant problems that most supply chains encounter: high inventory overhead and mismatched supply and demand. Alan Amling, vice president of corporate strategy for UPS, said that its locations worldwide will manufacture product parts on demand through 3D printing, decreasing waste, lowering overhead, and raising the bar on customer service.

Bridging the divide between vulnerability and purpose-driven resiliency

Building a sustainable supply chain that embodies environmental awareness, social consciousness, and ethical practices is more than just another marketing ploy or grab for media attention. It’s a way of life for businesses – as well as their employees and customers.

The more purpose-driven supply chains become, the wider the door opens to untapped efficiencies and savings – and the chance to make the world a better place for everyone.

Hear Hala Zeine, president of digital supply chain and manufacturing at SAP, discuss the latest technology innovations that can help guide your supply chain with a common purpose. 

 

 


About Paul Clark

Paul Clark is the Senior Director of Technology Partner Marketing at SAP. He is responsible for developing and executing partner marketing strategies, activities, and programs in joint go-to-market plans with global technology partners. The goal is to increase opportunities, pipeline, and revenue through demand generation via SAP's global and local partner ecosystems.