6 Essential Tips for Managing Supply Chain Performance in the On Demand Economy

Is your supply chain delivering what your customers want, when they want it, while costing your organization as little as possible to accomplish that goal? If your answer isn’t a resounding yes, then you are probably missing opportunities to improve your supply chain and deliver significant value to your organization.

The on-demand economy is all about satisfying the needs of consumers in the most cost-effective, scalable and efficient way. Companies like Uber, Airbnb and Netflix have accomplished this goal by identifying opportunities to create competitive advantage and drive top line revenues through supply chain innovation.

In response, many companies have transformation programs under way to modernize how they deliver products and services to consumers. But identifying and agreeing on the correct path forward has become an insurmountable challenge for many organizations. Bain & Company reports that only 5% of companies involved in digital transformation efforts reported that they had achieved or exceeded the expectations they had set for themselves. For conventional transformations, the success rate only increases to 12%.

While most organizations are well versed in managing distinct supply chain phases, they often lack a clear end-to-end picture of the risks and opportunities for improvement across dynamically complex global supply chains. This makes moving forward with any significant supply chain optimization or digital transformation program difficult.

Fortunately, new business dynamics management (BDM) tools are helping supply chain stakeholders across industries meet the speed, risk and profit performance demanded by the Fourth Industrial Revolution (4IR). By digitally replicating the real world, end-to-end dynamics and interdependencies of global supply chains, organizations can expose the hidden causes of performance problems, prove whether a proposed change program will meet the stated business objectives and better manage risks that traditional supply chain management tools often miss.

If you are looking for ways to improve how you deliver products and services to customers or dramatically reduce supply chain costs, consider these six essential tips for managing supply chain performance in the 4IR.

  1. Earn Board Level Support. Treat your supply chain as a critical business process, not a business function. With board-level support, your supply chain can deliver significant value to your organization. But first, your CEO must understand the opportunities and have confidence in your ability to deliver the promised business value. Use predictive capabilities that have been proven accurate in real world scenarios to explore new models and present innovative strategies that can deliver measurable success. Always communicate performance metrics and the tradeoffs of any critical decisions in terms business leaders can understand—including clear and concise measurements of expected ROI, productivity, quality and costs.
  2. Understand the Impact of Cross Domain Dynamics. The root cause of your supply chain performance problems may be hiding in the gaps between domains. Eliminate supply chain blind spots by shifting away from silos towards a unified methodology that provides visibility across your entire, integrated supply chain ecosystem. Creating and managing an end-to-end model of a highly dynamic global supply chain used to be a complex and cost prohibitive goal, but new emulative technologies that leverage a computer-aided design (CAD) approach now make it easy to model all of your supply chain business processes, applications and infrastructure—including cross domain dynamics—in a matter of weeks and with surprising accuracy.
  3. Make Efficiency and Optimization a Top Priority. As consumer expectations rapidly evolve, your organization must be able to agilely deliver optimized customer experiences at the required speed and cost—all without adding unwanted operational risks or long-term maintenance issues. This means you must have efficient processes and tools in place to identify which transformation strategies will translate into execution plans and end products that support the speed, efficiency and resilience demanded by the 4IR. A predictive model-based approach helps cross-functional teams efficiently communicate, validate and fine tune plans throughout the lifecycle.
  4. Take a Top Down Approach. Too often businesses seek to leverage the latest technologies, like blockchain, IoT, robotics and AI, without first quantifying and then validating whether the proposed changes will actually meet the business’ cost, scale and efficiency requirements. Starting from a strategic level and then drilling down into technology and infrastructure layers makes it easier to clearly communicate how investments into new assets or the sunsetting of legacy models may help or hinder the goals of the business.
  5. Stop Worrying About Probabilities. An outage may prevent you from delivering products to customers, but it’s irrelevant whether the outage was caused an expected or highly improbable event. The solution to the outage will be effective regardless of what caused it. Create an exhaustive list of the conditions, not events, that can disrupt your supply chain (e.g. transaction processing capabilities at the main datacenter fall below a certain threshold), then proactively put into place the appropriate risk management practices. While the unexpected may still happen, you will be better prepared to spot new patterns earlier and respond more appropriately.
  6. Manage Change Using a Step Wise Approach. Transformation programs put enormous pressure on all aspects of an existing business, which must maintain current profits, while pivoting the legacy customer experience, products, services and operations to a new, reimagined future. But digital transformation programs can be executed using an agile approach that enables you to make small improvements that you can build upon. Using a model-based architecture at each step will help ensure that supply chain stakeholders have sufficient information and time to identify and resolve any risks before moving to the next step of system definition or implementation.