The ongoing COVID-19 coronavirus pandemic presents a host of challenges to cross-functional supply chain management teams. In this Supply Chain Matters blog commentary we particularly focus on strategic sourcing and procurement teams and their respective managing of global, regional or domestic direct material suppliers.
History can sometimes provide learning from similar types of disruptions while disruptions such as a global-wide pandemic provide more unique challenges. A further important consideration at this point is the leveraged use and/or prioritization of advanced technology, within the constraints of existing investment budgets.
This supply chain industry analyst had the opportunity to speak with Michael Roesch, Senior Vice President for Customer Engagement at JAGGAER. Our conversation focused on procurement’s role in near, mid, and longer-term windows of direct procurement strategies, with a particular emphasis on why procurement teams must be able to influence more timely decision-making needs in end-to-end supply chain management.
Clearly, supply risk management is a top agenda activity for many multi-industry direct materials supply management teams. The unprecedented scope of the ongoing economic and supply chain disruption leaves little doubt to such significance. Teams require a lot of data, very quickly, for large populations of suppliers. The information gathered is of significance to other teams as-well.
Regarding past disruptions, the global financial crisis that began in 2008/2009 provided a number of important lessons related to continual supplier assessments and providing specific financial or other assistance when required to strategic suppliers.
In the area of breaking down of silos among procurement and other functions, Roesch indicated that he reminds customers and prospects that 60 percent of overall material cost equates to original purchase price while the remaining 40 percent relates to costs incurred beyond original purchase price. Thus the importance of ongoing proactive supplier engagement and the need for cross-functional internal collaboration, especially with lines of business product management, sales and operations planning or supply chain planning and logistics teams.
Technology Strategies
In the area of advanced technology, Roesch noted a priority of technology investments that compliment or enhance other existing investments, especially in areas of process automation, leveraging of predictive or prescriptive analytics, or the sharing of supplier information and intelligent among cross-functional teams. That emphasis is not just focused on procurement processes alone, but in receiving and providing important informational links among end-to-end and cross-functional supply chain management business processes.
JAGGAER’s ongoing emphasis has centered on supply management digital transformation, namely automating manual procurement process and converting data and information into digital formats to be the basis of more actionable, context aware decision-making. Areas of emphasis are improving awareness to supply risks across multiple supply network tiers, responding faster by leveraging harmonized intelligence and streamlined action plans.
An important point emphasized by Roesch is leveraging existing technology that customers might already have. That is not limited to just procurement applications alone. Supply chain mapping technology can play an important role as is supply chain planning.
JAGGAER is further leveraging a Data Lake strategy allowing intelligent algorithms to identify key information more quickly and provide additional levels of intelligence. While different industries have differing planning and supplier assessment models, the ongoing COVID-19 disruption has once again exposed weakness and blind spots in lower tiers of the supply network. Fragmented data silos and lack of visibility to single sourced or strategic suppliers residing in such lower tiers have been the burning lessons of past disruptions, such as the 2011 severe earthquake and tsunami that impacted Japan. Data lakes are a means for sharing streaming data that flows across not only procurement Cloud, but multiple supply chain management focused applications.
Supply Chain Matters Added Perspectives
In previous supply chain technology focused commentaries, Supply Chain Matters continues to advocate for considerations for leveraging multi-enterprise Cloud based platforms that can transparently share information related to product demand and supporting supply networks. It is a combination of physical data points of production and inventory with digital aspects of granularity of overall demand for specific products.
It is a combination global and domestic based supply network designed with balanced risk, redundant and flexible supply sourcing. Contingency supply is based on identified manufacturers that have demonstrated abilities for flexible, additive manufacturing techniques grounded in digital based technologies who can rapidly scale-up when required. The same capabilities are required among global logistics and transport networks.
We advocate that the key for bringing information together among various existing Cloud based applications are data lake strategies that allow respective applications, whether procurement, product management, integrated business or supply chain planning to extract certain information and apply advanced analytics and intelligence to such data.
This is not about rip and replace but rather augmenting existing supply chain management applications with architecture that leverage data lakes to move and subscribe to key information that is required for more informed and time-aware decision making. It includes bringing digital and physical information sources together and extends across global networks.
Technology vendors need to step-up and facilitate seamless integration of data and information across various networks including consistent data standards, terminology and master data consistency. The concept is that of “network of networks” providing global-wide visibility to trouble spots or opportunities related to demand, supply, supplier, product management, logistics or other bottlenecks. That is why JAEGGER’s data lake strategy is so significant.
Bob Ferrari
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