Executive Briefings

Transforming Supply Chain Operations for the Digital Future

Analyst Insight: The next defining opportunity for supply chain is in digital operations. The scope of digital operations is enormous, and it presents amazing opportunities. But failure - either from moving too fast or too slow - may lead to redundancy or, in extreme cases, extinction. Companies must clearly understand where they are today to drive change successfully and must move with purpose. If they cannot, they will be history. - Peter Anderson, Principal, Advisory, Ernst & Young LLP, & Chekyiu Ng, Senior Manager, Advisory, Ernst & Young LLP

Transforming Supply Chain Operations for the Digital Future

Digital innovations are changing the way the world's leading organizations plan and execute their supply chains across all industries. For instance, the U.S. Air Force is developing a strategic plan to incorporate 3D printing technology into almost every aspect of its mission to modernize and improve aircraft maintenance. One of the largest retailers, for another example, has asked the Federal Aviation Administration for permission to fly its drones outside to test surveillance, monitor inventory and ultimately deliver merchandise to customers. Social media tweets and status updates about products, services and brands offer a wealth of big data, previously unavailable, providing invaluable input to supply chain demand planning and forecasting.

To the C-Suite, digital operations represent this generation's biggest amalgam of opportunities, but also risks and uncertainties. Will the role of the chief supply chain officer even exist in the future?

The continual rapid pace of innovation can be overwhelming for those seeking to chart their path through a highly unpredictable future (you need only watch Hollywood movies for numerous failures in predicting digital adoption). Developing a future-proof supply chain operations strategy that will be successful in the dynamic digital environment requires:

• Holistic knowledge of the “art of the possible”: A company’s digital operations vision must draw from an in-depth understanding of the digital innovations that impact the end-to-end supply chain. The span of digital operations is vast, evidenced by the number of technologies and vendors. Every day, new innovations and capabilities emerge, and the potential regulatory impacts of these need to be assessed.

• Interconnectivity with the broader business strategy: Digitizing operations does not by itself facilitate a successful outcome. Digitization only succeeds if it enhances the execution of a supply chain geared to support a broader business strategy. Investment decisions should be made with this lens; not every digital innovation should be prioritized. For example, cognitive planning tools that maximize availability and minimize inventory through optimal production and physical product placement will reap not only fiscal but customer service benefits.

• The recognition that the path to digital operations is a journey: Companies are rushing to sign off on supply chain improvement projects and investments, all in the name of digital optimization. Those that will succeed are those that clearly map out the various stages of transformation in alignment with the corporate strategy. Collaboration with emerging technology providers to optimize product and supply excellence and enhance sales and customer experience will be fundamental to success.

Maximizing the value from digital operations will require a fundamental shift, not only from a technological and process perspective, but culturally, for supply chain organizations. Specific-use cases continue to grow at a rapid pace and need to be evaluated across the value chain.

The Outlook

As supply chain professionals, we must ask ourselves whether our roles will continue to exist in their current form or be transformed into new roles aligned with managing the new norm.

Digital innovations are changing the way the world's leading organizations plan and execute their supply chains across all industries. For instance, the U.S. Air Force is developing a strategic plan to incorporate 3D printing technology into almost every aspect of its mission to modernize and improve aircraft maintenance. One of the largest retailers, for another example, has asked the Federal Aviation Administration for permission to fly its drones outside to test surveillance, monitor inventory and ultimately deliver merchandise to customers. Social media tweets and status updates about products, services and brands offer a wealth of big data, previously unavailable, providing invaluable input to supply chain demand planning and forecasting.

To the C-Suite, digital operations represent this generation's biggest amalgam of opportunities, but also risks and uncertainties. Will the role of the chief supply chain officer even exist in the future?

The continual rapid pace of innovation can be overwhelming for those seeking to chart their path through a highly unpredictable future (you need only watch Hollywood movies for numerous failures in predicting digital adoption). Developing a future-proof supply chain operations strategy that will be successful in the dynamic digital environment requires:

• Holistic knowledge of the “art of the possible”: A company’s digital operations vision must draw from an in-depth understanding of the digital innovations that impact the end-to-end supply chain. The span of digital operations is vast, evidenced by the number of technologies and vendors. Every day, new innovations and capabilities emerge, and the potential regulatory impacts of these need to be assessed.

• Interconnectivity with the broader business strategy: Digitizing operations does not by itself facilitate a successful outcome. Digitization only succeeds if it enhances the execution of a supply chain geared to support a broader business strategy. Investment decisions should be made with this lens; not every digital innovation should be prioritized. For example, cognitive planning tools that maximize availability and minimize inventory through optimal production and physical product placement will reap not only fiscal but customer service benefits.

• The recognition that the path to digital operations is a journey: Companies are rushing to sign off on supply chain improvement projects and investments, all in the name of digital optimization. Those that will succeed are those that clearly map out the various stages of transformation in alignment with the corporate strategy. Collaboration with emerging technology providers to optimize product and supply excellence and enhance sales and customer experience will be fundamental to success.

Maximizing the value from digital operations will require a fundamental shift, not only from a technological and process perspective, but culturally, for supply chain organizations. Specific-use cases continue to grow at a rapid pace and need to be evaluated across the value chain.

The Outlook

As supply chain professionals, we must ask ourselves whether our roles will continue to exist in their current form or be transformed into new roles aligned with managing the new norm.

Transforming Supply Chain Operations for the Digital Future