Technology continues to transform business operations and outcomes, especially in supply-chain management. Procter & Gamble and Ocado, pioneers in the application of advanced data technology to supply chains, have launched bold initiatives in this space. Impacts on visibility, decision time and speed to efficiencies are among the major takeaways from their efforts.
P&G has been successfully reimagining procurement. It’s a couple of years into a multi-year transformation of its global supply chain through the structuring, translation and encoding of market, human and supply-chain processes to enable machine models, algorithms and analytic outputs. The near-200-year-old company is advancing digitization to capture meaningful data and insights, resulting in previously unimaginable levels of end-to-end supply-chain visibility and significant cost savings.
While P&G is heading into a third century, Ocado is barely 20 years old, but has already forged a powerful grocery retail platform, with its rigorous application of data and artificial intelligence to connect consumer packaged goods with buyers. In addition to being one of the largest online grocery delivery companies in the U.K., Ocado has deployed its unique platform and data model to assist retailers outside the country. As a result, it has been able to profit from the use of data to transform both the consumer experience and the economics of the grocery sector.
As the velocity of transformation accelerates, the ability of supply-chain partners to collaborate becomes critical to companies’ success. Walls come down, and functional silos evaporate, as they realize dramatic improvements in real-time visibility for consumers, retailers, manufacturers and raw-material suppliers. The old zero-sum, pass-the-buck mentality has given way to a need for timely and accurate data available to all.
There’s more to data transparency than obliterating inefficiencies. “Language is the true change,” says Ana Elena Marziano, P&G’s chief purchasing officer. “We speak with one language now, and are able to see the end-to-end supply chain with one set of eyes.”
In the traditional grocery environment, store managers don't always receive the products they’re expecting. Luke Jensen, chief executive officer of Ocado Solutions, blames the situation on two problems: mistakes within the retailer's own upstream supply chain, and a poor match of data and product coming from suppliers to the retailer's distribution network. “It leads to waste and loss,” he says. “There’s the loss of labor because you're correcting things, and loss of product because if you don't have the right things in the right place, you're less likely to sell it.”
Ocado's waste in the U.K. makes up less than 0.4% of sales. For typical retailers, says Jensen, the number is usually between 2.5% and 3%. “It is always better for the suppliers if the retailers are accurately ordering what they want,” he says.
Leading established companies like P&G, and startups like Ocado, are building the foundation for a level of future digital connectivity that will drive additional value. They’re developing talent capabilities and data-driven insights into demand that will help to determine what they need to do in the next three to five years, and beyond.
Cheryl D'Cruz-Young is CPO COE leader with Korn Ferry.
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