The route to leaner, greener supply chains: Part two – What does good look like?

So, you’ve embarked on your voyage of discovery and returned with an accurate understanding of your baseline and what you currently have in place within your operation to begin digitally transforming your supply chain. But what next? You have your starting point, but where’s the end goal, the destination… what does good look like?

Gary Cassell, Industry Lead – Global Manufacturing and Automotive, Appian Corporation, claims the key lies in the ‘connected’ supply chain. The level of tiers within many supply chains can obviously be quite deep and constraints are likely to occur in many instances. “Having visibility into the supply base, movement of materials, manufacturing operations, fulfilment and return processes will enable organizations to ensure a proactive position and to make better data driven planning and execution decisions, which defines what a connected supply chain is about,” he said.

Characteristics of a connected supply chain, what good looks like, include:

1. 1. Real-time end-to-end visibility. A connected supply chain brings together siloed systems, data and processes to enable information to securely flow end-to-end across the supply chain when it is needed, both internally and externally. The goal is to reach 100% visibility in real-time to create an internal and partner operating model eco-system.
   2. It is very important to understand that the connected supply chain is not just about achieving visibility, but also orchestrating and enabling execution, again in real-time. All the parts of this system work together, sharing data and insights, predicting supply and demand mismatches and providing recommended solutions to these mismatches. Building this type of alertness and responsiveness into the supply chain gives organisations a competitive advantage in the markets they serve.
   3. A connected supply chain enables organisations to be alert, decisive and swift, whether driving continuous improvement or responding to a disruptive event. Having access to the right data across the supply chain enables organisations to discover and continuously optimise their supply chain processes, resulting in improved efficiency and cost, not to mention building more agility into their overall supply chain.

“There’s no way to completely eliminate disruption within your supply chain or operations,” Gary continues. “However, in many cases disruptions can be predicted and alerts provided enabling organizations to better mitigate the issue. From a planning perspective, organisations can run scenarios using digital twin technology and raise the bar on risk management and business continuity planning.”

If your supply base is high risk, for example, scenarios can be run which will show what would happen if there is a delay and then implement strategies to mitigate that issue should it arise. You are afforded more visibility up and downstream, which in turn enhances planning processes, and changes can be made to make supply chains more resilient, and potentially move issues from particular suppliers from high risk to moderate or low risk.

Also key in this process is the characteristic of having true third-party risk management. Gartner estimate that approximately 73% of risk management on third parties within the supply chain is on due diligence and recertification. The lion’s share of the focus within the due diligence process is the initial onboarding. However, recertification could be years away, depending on how a particular contract is structured. So, what happens in between?

Essentially the vast majority of any risk management that is taking place isn’t actually occurring during the relationship with the supplier, rather it is happening at either end of the process; hardly a ‘connected’ supply chain. Gary adds: “Only 23% of risk management activity takes place during the relationship with the supplier. A connected supply chain, however, will allow organisations to automate the monitoring of that actual relationship, from the due diligence and onboarding process right the way through to recertification.

“So, if something changes in the supplier relationship prior to the end of the contract, it can be addressed. And providing suppliers visibility to applicable data will enable them to be more proactive, rather than a reactive state.”

Knowing your end goal is just as important as knowing your starting point. It can change over time, but it’s vital that you have your eyes fixed on the end game. As was stated in part one of this article, the journey towards a leaner, greener supply chain is a marathon not a sprint and as such should be tackled in bite-sized chunks.

He adds: “Address the process in an agile way; identify your high value projects, break them down and concentrate on one piece at a time to add value along the journey. You will then gain momentum, and as that happens you will continue to get faster as you move through the process.

“Some organisations take the waterfall approach where they attempt to do everything at the same time, lay in a whole new system and replace everything they have. I see organisations fail all the time when trying that approach. Or they end up in the same place they started because the pace of change has prevented them from getting to that end point. However, by having a platform that digitises your supply chain and operations, you can get to your end goal at a very accelerated rate and add value along the way.”

Supply chain insight

“An optimum supply chain means a clear, visible line of sight from concept to disposal. Actors, channels, influences, risk, opportunities, value and sustainability is all understood and is measurable. This creates a value chain that generates competitive advantage.”
Head of Supply Chain at an aerospace and defence company

“We have utilised our historical data for optimised runs within the factory to identify the most efficient ways of executing our weekly demand requirements. In addition to this we are utilising our staff availability to ensure we’re maximising their efficiency and output based on the demand profiles, manufacturing lines and headcount requirements.”
Supply Chain Director for an international cosmetics manufacturer

“For us an optimum supply chain includes low inventory and freight cost, reliable quality and delivery performance, transparent communication and clear escalation routes and contingency planning processes in place. To achieve this, we are using EDI data links, SAP MRP software and web-based monitors with customer and transport providers.”
Plant Director for an automotive parts supplier