The headlines over recent months have shown how the supply chain has moved to become front and center of people’s attentions - whether personally as consumers or professionally as corporations.
Dominic Regan, Senior Director, EMEA Logistics Applications, shares some of the latest challenges and trends with us.
During the pandemic, the supply chain community focused on keeping our society fed, supplied and healthy in the midst of disruption. What are the weaknesses that have been brought to light?
Before talking about the weaknesses, I think that first it is important to recognize how well many supply chains have coped during the pandemic. Very often as supply chain professionals we spend a lot of time fire-fighting, and perhaps don’t step back and appreciate what we have actually achieved. If nothing else, the headlines over recent months have shown how the supply chain has moved to become front and center of people’s attentions - whether personally as consumers or professionally as corporations.
So, when faced with the scale and size of global disruption that simply could never have been anticipated, I believe supply chains have in many cases proven to be both remarkably agile and resilient. We have seen customers managing unprecedented spikes in demand, customers who have successfully found new suppliers at short notice, and even customers who have switched entirely the products that they are manufacturing or distributing. We have also seen companies which have had to stop production entirely for diverse reasons. The automotive industry is perhaps a classic example of this, where McKinsey reported only last month that “the COVID-19 crisis has compelled about 95 percent of all German automotive-related companies to put their workforces on short-term work during the shutdown.”
So why is it that some industries and companies have coped, whereas others have not?
I believe a lot of this comes down to transparency, whether in terms of understanding the supply chain network and how it is made up of many interconnected players, or in terms of understanding the location and availability of inventory, whether in motion or at rest. Without this transparency it proved impossible for companies to put contingencies in place, certainly in the timescales that the pandemic required. So, we saw, for example, how single-country sources of supply meant that sometimes complete industries had to shut down, but also how the absence of inventory visibility meant that companies could not guarantee delivery times or certainty of supply.
“By gaining this transparency, and then understanding how to analyze and act upon it, it will enable companies to become more agile and resilient”
What does this mean for the future?
Well I think the drive we have seen in recent years to get more accurate, granular and real-time data will become embedded as the foundation for supply chain transparency going forwards. This transparency will embrace the physical, financial and informational supply chains - meaning that companies become better at understanding the supply chains they personally operate as well as those other networks and partners they interact with, but also how the dependencies these supply chains have with other business functions such as Sales & Marketing, Research and Development and Post-Sales Service. By gaining this transparency, and then understanding how to analyze and act upon it, it will enable companies to become more agile and resilient, which I believe will become as important measures for the supply chain of the future as efficiency has been in the past.
Aligning corporate and supply chain strategy
Working with many companies globally and in Switzerland, what are the main inhibitors for supply chain viability and how is Oracle helping find solutions?
The study we just released with the University of St Gallen “The Rise of Supply Chain Viability - digital solutions as a boosting role” highlights the steps necessary to achieve supply chain viability, and clearly companies that lack these foundations will find it difficult to progress. Lack of visibility and transparency, for example is one area. “If you can’t measure it you can’t manage it”, this saying is equally true for factors as diverse as freight spend, shipment utilization or the impact of the supply chain on carbon footprint. Clearly without visibility and transparency it is difficult to know what needs addressing, let alone where to start.
However, there are other factors that also come into play. In particular I think a failure of alignment between the broader corporate strategy and the specific supply chain strategy can be a major inhibitor. This is perhaps one of the areas where I see differences in companies around the world, with many European companies - including those headquartered out of Switzerland - having perhaps a stronger focus on their Corporate Social Responsibility agendas than those based elsewhere.
For example, one can look at companies in the Consumer Goods sector, such as Unilever and Tetra Pak, or in the automotive sector such as Volvo, whose websites speak to how sustainability is embedded as much in their culture as in their operations, whether this is in terms of ensuring products and components are ethically sourced or in terms of looking to reduce carbon-usage or the prevalence of single-use plastics across the supply chain. I believe companies such as these, who have become strongly customer-centric and who see sustainability as a corporate - if not societal - objective, will be better aligned in terms of achieving supply chain viability.
In terms of how Oracle can help, if I look at my own area of logistics then clearly our execution level solutions such as Transportation, Global Trade and Warehouse Management can deliver the foundational requirements for supply chain efficiency. There are also technologies such as blockchain which feature in our Intelligent Track & Trace application that can help companies gain visibility into their multi-tier networks and understand the chain of custody.
We also see how Machine Learning and Adaptive Intelligence can be used to deliver the type of automated predictions, and tracing of products and processes, that would otherwise go untapped. This ability to maximize the value of newer technologies, along with the ability to run scenario planning that helps deliver agility and resilience, is what I believe results in Oracle having an unrivalled portfolio to help companies progress towards supply chain viability, regardless of their current IT landscape.
Starting by gaining that visibility and transparency is the bedrock for progression, as without this transparency companies run the risk of doing things based on gut feel and emotion rather than empirical evidence. It is surprising how many times gaining some simple visibility either highlights deficiencies in an operation, or presents some unexpected opportunities. But even visibility takes time, so you might want start in a specific operational area such as transportation, which has the by-product that it can also help deliver improvements in customer service.
Ultimately what is important is not to focus on having visibility, or how you get it, but rather on what you then do with it. Clearly in terms of supply chain viability it is the case that visibility and transparency are just one step along the journey, albeit an important one. So, identifying the resulting business value that will come from this visibility, and then using that to drive ongoing rollout and adoption is key.
Tetra Pak, for example, decided to become a global supply chain leader in the food packaging and processing industry by 2020. They leveraged Oracle Transportation Management (OTM) Cloud to gain a competitive advantage by completely overhauling their transportation management platform to improve their logistics capabilities, obtain real-time predictive shipment visibility and coordinate efforts on a global scale. Whilst visibility was important to them, it was not an end goal in itself. So, their supply chain control tower project was defined with a clear progression that moved from an initial focus on improving logistics efficiency, then to ensuring world class customer experience, to finally enabling optimized and sustainable transport management. This approach allowed them to start small, with a number of pilot deployments, before moving to several regional streams that together will deliver global visibility. All of this was done with a clear vision of both their corporate and supply chain strategies. To me this approach is ideal, and provides a model to follow for other companies progressing towards a vision of supply chain viability.