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PA OPINION

Turn ambition into action: how to realise the smart supply chain opportunity

There’s a palpable sense of excitement around the potential of digital technologies to transform supply chains. At two recent international manufacturing summits, we were struck by the number of hardware and software providers showcasing the latest and greatest solutions with the promise of improved supply chain performance. And business leaders were encouraged by the potential of digital technologies to enhance transparency, improve performance and reduce costs.

What we hear on the ground is borne out by our recent survey of over 100 global supply chain leaders. Two thirds of respondents said they plan to implement significant improvements, aided by digital technologies, into their supply chain within the next three years.

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Stuck in the starting blocks

And yet, despite the ambition, many organisations find themselves stuck in the starting blocks. Even those that deliver pilots successfully are struggling to scale these up and kick-start the transformation they want to see. And the challenge of executing business as usual often stands in the way. Short-term, operational targets inhibit leaders from thinking about what the future supply chain might look like.

Legacy structures can be a problem too. Functions built over decades find it hard to collaborate. Yet it’s precisely by rethinking the operating model and linking capabilities across functions that organisations can unleash the transformative impact of digital.

Functional insularity also impedes investment. Implementing digital technologies demands a budget that individual functions are unlikely to deliver. Only when an organisation truly understands the value opportunity for the whole business – and makes a strategic commitment to invest – are funds likely to be forthcoming.

But one of the biggest reasons why organisations are struggling is the sheer complexity of the technologies and systems associated with the smart supply chain. What technologies are right in which contexts? Which platforms deserve investment? How to apply them in practice? Essentially – where to begin?

Archetypes can give shape to ambition

In our experience, organisations need to identify their ‘archetype’ to bridge the gap between ambition and action – and start to bring functions together to collaborate and align around a shared idea of what the future smart supply chain could look like.

Our three smart supply chain archetypes steer organisations away from thinking about specific digital technologies. Instead, they put the emphasis firmly on the outcomes the business wants to achieve from smart supply chain investments. These archetypes are:

  • a performance-led model, where the organisation looks to optimise within the supply chain functions, adopting digital technologies to improve day-to-day operational performance
  • a connectivity-led model, where the organisation seeks to optimise the system as a whole – using technology to make connections from the customer, through the enterprise and out to suppliers
  • and agility-led, where the organisation puts the customer at the heart of the supply chain, and embeds a culture of innovation and built-in flexibility that allows for rapid response to customers’ needs.

Which archetype an organisation chooses will vary according to a number of factors: the organisation’s industry, the type of products or services it delivers and the current state of its smart capabilities. There will even be an element of ‘mix and match’ as organisations target different goals in different parts of the business. Yet the basic archetypes help to bring a cool, clear focus to a field where excitement around the potential of digital technologies often generates more heat than light.

Switching focus from technology to value

Above all, the archetypes shift thinking towards the value that digital technologies can deliver and away from the technologies themselves. This helps break down the barriers that are so powerful in preventing an organisation-wide approach and the investment that flows from this. Instead, the conversation should centre on how all the elements of the supply chain come together to transform through building new capabilities.

A shared view of what smart supply chain investments can deliver – and a better understanding of the total value opportunity across the end-to-end supply chain – makes the perfect launchpad for organisations embarking on their smart supply chain journey.

Deploying the right archetype eliminates the paralysis that complexity can impose. With our archetypes, we’ve found an effective way to help organisations move from the excitement around individual technologies to start making practical progress shaping a digitally-enabled supply chain that will be a feature of every future successful business.

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