The new reality of 2020 pushed organizations to realign operations and supply chains to thrive. The focus is now on adaptability, speed, risk reduction, and sustainability whilst adopting more flexible sourcing and distribution strategies as regionalization has become a trend.
The Institute of Supply Chain Management of University of St Gallen just released its latest study in collaboration with Oracle called “The Rise of Supply Chain Viability - Digital Solutions as a boosting Role”. The study's goal is to assess the triggers of Supply Chain Viability and look at the role of digital solutions in achieving Supply Chain Viability. Find the full study here.
Professor Hofmann, Director, Institute of Supply Chain Management, University of St Gallen, shares some of the takeaways.
Cloud solutions for Supply Chain Viability What are the main take-ways of your study?
The increasing emergence of trend breaks, the shift of ecological and social imperatives and customer advocacy forces traditional supply chains to change. The need for sustainability and resilience is higher than ever before, which should be strongly focused by Supply Chains to survive in the future. Supply Chains should push the implementation of sustainability to survive on a long-term basis. The key enabler for supply chains to become viable is seen in the digital transformation. Today Cloud Solutions are the most promising technology to achieve a viable supply chain.
What is specific for Switzerland? Do you see any threats or opportunities for Swiss companies?
The global interrelation of Swiss supply chains and dependencies on international supplier networks paired with the strong export and transit orientation forces Swiss Supply Chains to implement transparency and sustainability as well as resilience to survive in the future, react to regional and global changing conditions and sustainability requirements. Due to the global relations and dependencies of Swiss supply chains, various changes not directly impacting the swiss economy can have huge influences on their Swiss supply chains. However, focusing on Supply Chain Viability and the implementation of sustainability and resilience in line with digital transformation can foster the global strength of swiss supply chains especially in times of emerging disruptions and global shocks.
How have Swiss executives so far reacted to the findings and what do you expect over the next few months?
Swiss executives realized the rigidity and complexity of current supply chains and the need of change to become resilient and sustainable to survive in the future. Within the next months supply chains will still struggle to survive the COVID-19 crisis as it will have tedious, far-reaching consequences. Despite this, supply chains will implement first instruments to predict future risks and changes and develop scenarios to overcome them. However, the transformation to viable Supply Chains will be a longer journey for some.
What is your advice to Swiss companies wanting to ensure that their supply chain is ready for 2021?
Focusing strongly on sustainability implementation and resilience as well as driving the digital transformation is key to achieve Supply Chain Viability. Supply Chains need to establish ecological and social orientation and long-term sustainability of all measures in their supply chain by using technological innovations to improve sustainability within and across Supply Chains. At the same time, adaptability should be built up in order to be able to react to disruptions.
Data and analytics for agile and resilient supply chains
“Ultimately, the companies that have their data under control and that use the appropriate technology to collect it will have the most agile and resilient supply chains.” Darko Belic, CEO of DHL Automotive GmbH and Head of DHL LLP Ford of Europe
Much of the vulnerability related to supply chains is about the lack of visibility of inventory, whether static or in-transit, and how it can be affected by factors that are typically beyond the scope of a company’s own supply chain. This is why Oracle has been working alongside DHL Resilience360 a web-based Big Data Supply Chain Risk Management Solution, to provide logistics planners and customer service clerks using Oracle Transportation Management with the ability to achieve enhanced visibility of potential risks on a global level to supply chain operations in order to react to near real-time incidents during both planning and execution, including the ability to re-plan shipments where necessary to avoid disruption and to pro-actively inform end customers of potential delays and delivery disruptions, offering value-added information services, avoid loss of reputation and protect their company’s top line.
For some time DHL Supply Chain has been leveraging the integration of both solutions to offer their Lead Logistics Partner service to global shippers across multiple industries including Automotive and Life Sciences.
Darko Belic, Managing Director of DHL Automotive GmbH and Head of DHL LLP Ford of Europe tells us more.
What is your strategy to build resilience and transparency in the face of global disruption and how is Oracle’s technology helping?
In order to create resilience and transparency managing and interpreting data efficiently is crucial. The team can react to unplanned disruptions if it rapidly knows where the material is located, if it is impacted by a local disruption like a local lock down for example, if regions on route are impacted and if the destination is accessible. This information is required in real time to allow for rapid decision taking. DHL uses “Resilience 360” in order to collect data from different sources like the www, social media or others and overlay the gathered data with its network. Ultimately, the companies that have their data under control and that use the appropriate technology to collect it will have the most agile and resilient supply chains.
What about the human relationship within the supply chain? How do you develop the talent and culture to support innovation?
Innovation and digitalization won’t be televised. An environment and organizational set up which does not give room for creativity will not empower its people to develop new ideas. One intuitive option to foster continuous improvement is to implement “think tanks” or dedicated teams in operations which solely focus on innovation and service or process improvement. Digitalization is mistakenly perceived as equal to efficiencies and reduced workload. The truth is that digitalization is key for companies to succeed in a global economy and supply chain as it helps not only to secure jobs but also can to enrich them. It not only attracts employees but offers existing ones the possibility to learn new skills. Robotics for example can replace repeating copy & paste tasks and enable the employee to focus more on value added services which are on the other side leveraged by digitalization. A good example is Track & Trace. Instead of calling the carrier to localize a truck, this solution can provide the information real time and the employee can focus on tasks like optimizing the routes instead, using the information to improve dock schedules at destination, keeping the inventory levels under control and planning contingencies earlier if needed. In this case a rather time-consuming low value task (phone call) is being replaced by other more strategic ones.
What are your recommendations for companies embarking on a journey to a viable supply chain?
Start with the current state mapping and define where you want to be in 1 to 5 years. Reduce the complexity of your long-term strategy by breaking down the rather complex and intangible vision into less complex and more tangible shorter-term actions and be open to adapt and amend your strategy during your journey if new technological developments offer better solutions. For example, if you are currently storing your data in Excel sheets and ordering your transports via phone, do not try to implement blockchain or internet of things but rather focus first on setting the basics like smarter connectivity tools with your stakeholders, implementation of master data like data lakes and a proper TMS and data managing system like Oracle. Once the basics are set review and re-asses your next steps and strategy and adjust if needed on learnings and new developments.