3 minute read 27 Mar 2019
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How to future-proof your supply chain with an agile transformation

By

EY Global

Multidisciplinary professional services organization

3 minute read 27 Mar 2019

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An agile transformation will better align your supply chain with your strategic imperatives.

Change and disruption are attacking the supply chain from multiple directions:

  • First, there are channel shifts due to new consumer habits, the speed of orders and customers’ expectations of delivery standards. 
  • Second, the C-suite is putting pressure on the supply chain to perform financially in terms of costs and working capital. 
  • Third, there is now a requirement for the supply chain to become a strategic differentiator to help a company effectively compete in its market. 
  • Fourth, supply chains are moving from a linear model of bringing products and services to market — to a networked one where data resides in the cloud and is accessible to everyone in the network to act upon simultaneously when events occur.

In the light of this new normal, what worked in the past doesn’t cut it any more. For example, multiyear enterprise resource planning (ERP) and advanced planning systems (APS) implementation projects were once viewed as solving most of an organization’s supply chain challenges. Now, most companies understand that a strong association among process improvement, organizational change and technology implementation is critical in driving agile, purpose-led and transformative change.

What’s driving change?

With the advent of more demanding consumers, the old supply chain model of “stack it high” with full truckloads arriving daily at the retailer is being replaced by home delivery, order and pick up at store, order and pick up at delivery station and other new retail models. In addition, start-ups are arriving in the market with completely new business models and supply chain designs. These firms can make advanced products available quickly with very little capital investment.

Supply chain digitalization is another source of pressure. Every supply chain executive is now exposed to terms such as blockchain, artificial intelligence (AI), robotic process automation (RPA), cloud computing and the Internet of things (IoT), just to name a few. But what’s the best way to leverage these new technologies, and how do they best integrate with today’s ERP and APS systems?

What the future supply chain should look like

Supply chains must embrace the concept of achieving more, in a shorter time, with new digital technologies. This is what we call the agile supply chain. In such a model, end-to-end processes across planning, manufacturing, logistics, procurement and other activities are enabled by the latest technologies. This includes leading-class ERP and specialized software such as applications offered by SAP, blockchain, RPA and AI.

The major software vendors have embraced this new digital reality and are moving to provide their clients with a more solid data foundation and more integration among financial data, transactional data and planning data, which allows faster and deeper insights into the way a company works. And of course, software companies are leveraging the cost-efficient capabilities inherent in cloud computing to offer their customers a more agile approach in leveraging their own data.

Supply chains must embrace the concept of achieving more, in a shorter time, with new digital technologies. This is what we call the agile supply chain.
Tanguy Caillet
EY Global Supply Chain Planning Capability Leader

One of the most important areas of agile supply chain transformation is process re-engineering. This has, for many organizations, been an uphill battle for years. But more and more companies are coming to the realization that their own entrenched ways of working are not necessarily best practice. With this in mind, they are turning to a new version of the supply chain that blends a transformation journey with an agile methodology, change management and specific ways of helping adapt people to a new way of working.

Another old way of doing things in supply chain is taking user requirements and then adapting a software solution to the specific needs of the company. This is a costly and time-consuming way of doing things. Instead, today many companies are taking a “greenfield” approach to leverage the leading-practice processes embedded in the latest and most-advanced software. This offers a faster implementation by erasing the past and starting fresh by adding clean data into a new state-of-the-art system.

A greenfield approach to your supply chain also creates opportunities to rethink the workplace and the tasks of your employees to render their work more interesting and less repetitious. This is important because millennials and Generation Z employees see work differently from their predecessors and expect a digitized workplace. With manual and repetitive processes out of the way, now employees can focus on handling the exceptions, making better decisions and satisfying customers.

Are you ready for an agile supply chain transformation?

One of the greatest benefits of the agile supply chain transformation is that it creates cross-functional and collaborative ways of working. Such a transformation helps break down siloes and enables an agile project mentality to get work completed faster and with high quality.

To gauge how urgently your organization needs an agile supply chain transformation, supply chain executives should answer these two questions:

  • Does your supply chain team find it easy to respond to new requests for information or new directions taken by the business, quickly and profitably?
  • Does your business have the right data to support decision-making?

Unless the answers are an unequivocal yes, it’s highly likely that your supply chain activities are in need of an agile transformation. Embarking on such a journey will ultimately bring your supply chain into closer alignment with the strategic imperatives of the organization, become more nimble and responsive, and help you serve your customers better.

Summary

Faced with constant, fast-moving change and disruption, supply chain executives need to ask themselves, “Are we going to carry on doing things the old way? Or must we embrace a paradigm shift to make ourselves fit for the digitalized future?”

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By

EY Global

Multidisciplinary professional services organization