The role of supply chains is changing at breakneck speed, driven by a worldwide business movement towards digitisation. Companies of all sizes are attempting to transform their supply chain and procurement functions, with varying degrees of success.
And while the arguments for digital transformations seem to have struck a chord with executives, implementation is not happening as quickly as one might have expected. A recent industry study found that while 83% of respondents believe digital transformation will be impactful, only 5% of respondents have highly automated processes.
With such a discrepancy between aspiration and execution, companies are increasingly turning to global supply chain practices to help them devise a pathway to effective supply chain transformation and digitisation, with Deloitte being a prime example.
Key to this pathway, says Dr Stijn-Pieter van Houten, Director Supply Chain Strategy & Operations for Deloitte NW Europe, is changing the perception of consumer businesses and retailers about how effective supply chains operate.
“Companies often still pursue a ‘one size fits all’ approach when it comes to supply chain where the way they plan, produce and distribute their products all follows the same pattern from a supply chain and even technology perspective,” he comments.
“But what we are seeing increasingly is consumers are becoming more demanding, and they want to have more tailored products suit their needs. Further, established retailers are increasingly facing competition from e.g. ecommerce, discounters and convenience channels. The result of these trends is that increasingly different types of products are coming to the market and that increasingly the service levels demanded from FMCG companies are becoming more stringent. So, it makes sense for FMCG supply chains to move to a model whereby different (virtual) supply chains are created and managed for distinct groups of products and/or customers. Organisations will have to ensure that their supply chains become more differentiated and adapt them to changing customer (and consumer) demands, while managing their cost to reach the right profit levels.” Besides differentiating them, amongst others this requires synchronising supply chains end-to-end and managing them from a customer success management perspective.
“Supply chains have to become more flexible and adapt to changing consumer and customer demands at an increasingly faster pace,” Dr Stijn-Pieter van Houten, Director Supply Chain Strategy & Operations for Deloitte NW Europe
What seems clear though is that for all the talk of collaboration, there are still stark disconnects between supply chain functions such as demand planning, warehousing, logistics and customer service, all of which have often their own separate set of targets driving particular behaviours and outcomes. This is then besides the lack of integration between commercial, finance, innovation and supply chain. The lack of end-to-end planning and synchronisation, says van Houten, is hampering the supply chains of even some of the world’s largest organisations.
Analytics and increased supply chain visibility are also central to the supply chain transformation blueprint, he adds. “We know that the market place is volatile, so companies need to be aware of trends and changing customer demands. Products can very quickly become popular and gain traction cross social media, so companies need to have the insights & foresights (“sense” and capabilities that enable them to move quickly (“respond”) when that happens.
In an increasingly crowded and competitive market place, Deloitte’s clients are asking for non-traditional services in a bid to remain successful and be customer centric, according to Arjan de Witt, Manager at Deloitte Consulting.
“Across all of our projects, our clients are consistently asking us to help them adapt to this new world and advise them on new ways of working. In years gone by, a client would just want to see a presentation but now we’re providing them with proof of concepts or run pilot programmes with them.
Our clients recognise that change is going on, and expect us to inform them what that means for them as a business. For us it means that we have to work very closely with our partners and leverage our eco-system to really provide our clients with a competitive edge. What we have proven we can do is bring fresh insights that inspire them – we help them to understand ‘the art of the possible’.”
As part of the journey to understanding the ‘art of the possible,’ Deloitte leverages its ‘Digital Garages’ – with a new one soon to be opened in Amsterdam. “These are really energetic, start-up like, environments where we take our clients and hold discussions about the different digital building blocks, how they fit together and how they should operate in our clients’ companies,” says de Witt.
“For supply chain we have a specific supply chain digital experience where we also show the impact of technological disruptions, emerging trends and what you can do to adopt them in your supply chain and organisation. We do this by creating a serious game environment where we really want to not only showcase the technologies but also give them subjects to think through. We’re working in collaboration with our eco-system of partners to make the experience as valuable as it can be.”
But for any transformation to work, companies must ensure that their employees are prepared to embrace the ‘change journey,’ says van Houten.
“You can put in as many tools and new processes as you want, but if you don't change the people, if you don't change their behaviour and the way they look at their business then it's never going to work on the mid- to long term. Ultimately, we train our clients’ people to change their businesses so they work end-to-end with their customer in mind. You have to really look at a business end-to-end and ask how do day-to-day activities and decisions impact the customer and consumer at the end of the supply chain?
“It’s also really important that companies encourage collaboration across all of their departments in an effort to really break down silos and business functions. That’s the best way to think about what is best for customers and develop the optimum organisational setup to sustain and improve a segmented way of working across function, while delivering the right services in a profitable way.”