Accelerated Clock Speeds of Business Change

Since the founding of the Supply Chain Matters blog, and certainly during the past three years, readers have likely noted from our research, our annual predictions and in our blogs related to industry and specific business developments, that the clock speed for either industry, business and supply chain changes has accelerated to unprecedented dimensions.  Cloud based systems

Our highlights of 2020 Predictions for Industry and Global Supply Chains shared on this blog umbrella an overall global business climate reflecting a lot of economic and business uncertainties to be very evident over the coming weeks and months.

Fundamental business disruption is occurring across industry landscapes and that is affecting existing supply chain management business, physical, and decision-making processes. The mood is one of watchfulness and response to events with little tolerance for inaction.

Within today’s global multi-industry landscapes are similarly growing evidence of the leveraging of advanced technologies upending multiple industries in ways not previously imagined. Whether it be retail, personal and business focused transportation, logistics, product maintenance or services, business models are being transformed while existing industry participants must either adapt or incur the consequences.

Essentially, continuous change, added agility and transformation is no longer an option but a reality. With many business process dimensions involving customer fulfillment and supply networks, supply chain management is indeed the epicenter for ongoing transformation.

 

Industry Wide Impacts

Conversations and statements among multi-industry supply chain management professionals reflect how such changes are impacting existing supply and customer fulfillment networks.

More discerning, and advanced technology enabled consumers demand personalized products tailored to specific needs, expectations and product tenets. The consequent result are new product development processes that previously took months to complete, now required to be supported in weeks. Previous norms and expectations are no longer tolerated, or at least are being tested.

The continuing explosion in the online focused, digitally based economy has significantly raised customer expectations in areas of order fulfillment.

With Amazon.com touting one-day, same day or hourly delivery expectations, the cascading effects are production and logistics networks having little time to tolerate inefficiencies or delays.  We heard one contract manufacturing executive describe how retailer Walmart contacted this provider the very week before the crucial Black Friday shopping holiday seeking a significant quantity of revised product packaging material in a matter of days. The retailer already determined that this contract manufacturer might have had excess capacity available. Thus, the need for connecting physical and digital processes has become ever more essential.

As noted in our writings and insights reflecting on today’s heightened global-wide geo-political landscapes, unparalleled levels of global supply network management challenges continue to drive the need for difficult decisions related to existing global sourcing of direct materials. One obvious epicenter of business change for U.S. based manufacturers and retailers has been the effects of the ongoing tensions among the U.S. and China, and what that implies for line-of-business financial outcomes. Business across the United Kingdom and Europe will in a matter of weeks, be expected to buffer any physical or just-in-time process impacts related to Brexit.

Businesses large and small are now faced with complex decisions, often scenario-based that seek to determine whether altering the sourcing of products from China to other regions is required to meet product margin and overall business profitability goals. When such decisions are made, it is often the task of supply chain management teams to execute such changes in the timeliest manner.

 

Application Systems and Data Management Impacts Overlooked and Under Weighted

When speaking to supply chain leaders, the notions of pace and challenges associated with physical process changes is often described in people, process and decision-making dimensions. When the context turns to systems and applications impact, the conversation often turns to either one of frustration, or not understanding the magnitude of changes needed. Quite often, supply chain functional and business planning teams need to rely on supporting IT teams to support such changes.

One of the reasons for systems impacted being under weighted is the reality that many existing systems have a technology legacy that averages over 15-20 years. In other words, resident systems and applications were designed during the Y2k era.  They do not provide the flexibilities and depth of support that today’s Cloud and SaaS based ERP and best of breed applications provide for businesses. C-Suite executives and line-of-business groups rightfully have little tolerance for a lengthy business disruption caused by a major systems upgrade. At the same time, increased cyber and data security threats require highly secure systems and data with global class security measures.

 

Customer Fulfillment and Logistics

Consider the need to enhance customer fulfillment capabilities in areas of customer experience, more timely delivery expectations on the part of customers, and in needs for near real-time visibility to individual shipment disruptions. Most of the information sits in system or application siloes or in EDI electronic transmissions. Making needed systems modifications with legacy WMS and logistics systems originally designed without an Omnichannel fulfillment business model in-mind are often challenging, requiring added IT customizations in application, data and information flows, all requiring additional time, expense and testing.

Contrast such levels of frustrations with today’s SaaS based applications of connected business process applications that were designed with the flexibility to both support end-to-end business processes with the ability to leverage multiple legacy or other Cloud-based data sources and data lakes. Likewise, is the built-in flexibility to create mini-applications, bots or apps, that can tailored to a changed logistics or customer fulfillment process requirements. The ability to leverage either Internet of Things (IoT) process enablement or artificial intelligence and machine-learning capabilities is part of the package, or automatically updated on a quarterly basis by the technology provider. Consider that enhance logistics visibility requires added leveraging and use of mobile based devices linked to GPS locators.

Direct Materials Sourcing

Also consider the need to be able to alter direct materials sourcing to other regions beyond China. There are issues related to supplier discovery, qualification and certification. Similarly, there are challenges related to different currency conversion and customs declarations processes, EDI or XML based electronic notifications, not to mention different transportation and customs declaration requirements. Once again, C-Suite executives have little tolerance for understanding why such needed sourcing changes have to take so long to execute. Such direct-sourcing needs extend beyond strategic sourcing and transactional procurement to other areas of enterprise-wide information integration related to material costing, invoicing and trade compliance.

Here again, a pre-integrated Cloud based applications platform with a B2B information integration provides added flexibility and agility. Accommodation for more-timely creation of customized supplier portals, online based supply and inventory planning, or automation of Certificates of Origin become important considerations.

 

Consider Importance of Upgrading to Cloud Based Infrastructure

A further consideration is the increasing importance in the needs for upgrading to Cloud based applications and IT infrastructure in order to manage global-wide business and process changes in a far more-timely manner. There is indeed importance to where IT infrastructure and systems redundancy s located.

The importance of global based computing and data management resources is in the ability to support virtual expansion or needed contractions in required IT computing resources on a global-wide basis, essentially not having to pay for unneeded compute capacity. That benefit is important for overall managing of IT infrastructure budgets and reducing operational costs.

Further, a shift resulting in added regionally based applications, data and computing resource support can accommodate localized data security standards such as GDPR,  all with global-wide data-security conformance included. The benefit is that the need for lift and shifting of IT workloads can be performed on a far timelier basis, which makes the CIO and her or his respective support teams more responsive to be able to easily support such business changes.

As an example, Enterprise Cloud infrastructure technology provider Oracle has deployed 16 hyper-scale regions globally with plans to expand to 36 regions this year. Each center is virtually and redundantly networked, with individual and global-wide failover, autonomous systems management and cyber security enabled by machine-learning algorithms.

 

Reader Takeaways

Today’s economic and business uncertainty climate manifested across multi-industry landscapes requires far more agility and resiliency among customer fulfillment and supply networks. Process, decision-making and people impacts must further include application systems and data management impacts. Ensure that your business, IT and supply chain management teams include such a context in managing needed transformation.

Also consider that today’s Cloud based SaaS applications are designed to support end-to-end business process, data and information flows. Cloud provides the flexibility to support broad transformation, added cyber security measures and the ability to change applications incrementally, avoiding major business disruption and added business costs. The ability to leverage today’s more advanced technologies can be garnered from defined quarterly release cycles.

Finally, do not overlook the important need for locational support for global-wide Cloud based infrastructure to support needed virtual expansions or contractions in compute capacity or lift and shifting of applications and data management workloads. While that may be the purview of IT, such consideration is becoming ever more important for supply chain management teams.

 

Bob Ferrari

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