Introduction

Industry supply chain management teams continue efforts in achieving 2019 final quarter strategic, tactical, and operational line-of-business performance objectives and expected business outcomes, especially in this all too important final quarter. This affords Supply Chain Matters the opportunity to look back and review our prior 2019 Predictions for Industry and Global Supply Chains, which were published at the beginning of this year. The Ferrari Consulting and Research Group

The Ferrari Consulting and Research Group, the parent of the Supply Chain Matters blog has published our annual predictions for industry and global supply chains since our inception in 2008. Our approach is to view predictions as an important resource for our clients and blog readers, thus, we do not view them as a light, one-time exercise. Unlike other industry analyst firms, our predictions for the most part, do not take a sole perspective of a three to five-year window with nebulous degrees of probability. Our belief is that industry business and supply chain management process needs are changing rather quickly and that leaders need a focused view of what could likely occur from business, functional and advanced technology perspectives in a one to three-year timeframe. An important part of annualized predictions is assessing what really occurred and why. Thus, every year in November, we look-back and score our predictions for the year.

As has been our custom, our scoring process is based on a four-point scale.  Four will be the highest score, an indicator that the prediction indeed occurred.  One is the lowest score, an indicator of, what-on-earth were we thinking? Ratings in the 2-3 range reflect that we probably identified the right trending, but events turned out differently. Admittedly, our self-rating is subjective, and readers are welcomed to add their own assessment of our individual predictions in feedback comments.

After looking-back at current year predictions, we will then transition into the unveiling of our 2020 Predictions expected to occur starting in mid-December.

 

In the Part One posting of this series, we revisited 2019 Prediction One, which related to what supply chain management teams would have anticipated in global economic outlook, and Prediction Two, the notions of supply chain talent recruitment and retention reaching alarming levels.

In our Part Two posting, we revisited 2019 Prediction Three, which related to unprecedented levels of global supply network challenges, along with 2019 Prediction Four, the notion that supply chain cybersecurity and information safeguarding was mandatory.

 

2019 Prediction Five: Supply Chain Management Digital Transformation Strategies Will Require Strategic Roadmaps and Specific Tactical Business Case Support.

Self-Rating: 3.0 out of a maximum 4.0 score.

For 2019, we predicted that many broad-based supply chain management teams would require and seek more definite transformation roadmaps related to overall digital business transformation. Advanced process and technology investment efforts would need to be guided by short- and longer-term line-of-business alignment needs.

We observed that the digital transformation roadmap had to address both short and longer-term business outcome and process transformation needs while addressing action planning to augment organizational talent, data and process alignment requirements. The realities of budget were another factor.

Our sense from feedback and observations of activities in 2018 was that up to that point, individual teams had for the most part, a bottoms-up or functional-specific focus to digital transformative efforts. Many organizations were focused on foundation aspects of people, process and technology assessments and foundations. Our belief was that in 2019, the emphasis would turn turns toward tops-down, with senior management steering mechanism orchestrating more direct cross-business as well as cross-functional leadership.

Once again, observations, client discussions and external survey data indicated to us that in 2019, many multi-industry teams indeed stepped-up efforts in road mapping overall supply chain digital transformation or actually initiating initial phases. That stated, the percentage of mainstream efforts is likely a continued work-in-progress. Some external survey data point to perhaps 10 to 15 percent adoption rates and mostly concentrated toward larger, globally based firms. In such firms, the efforts are focused on specific-lines of business process areas as opposed to organization-wide.

Prioritization Areas

In our prediction we indicated that areas of prioritization would indeed be business specific. As an example, businesses with predominant direct-to-consumer business models will likely prioritize omni-channel customer fulfillment transformation in areas of customer data mining, increased automation of pick and pack processes and overall logistics and transportation transformative processes. Similarly, manufacturing-intensive business would likely focus on edge operational systems transformation leveraging Industrial Internet, Internet-of-Things and Additive Manufacturing based technologies and processes.

From our perspective, the two most prevalent forms of digital transformation that are emerging among multi-industry supply chain landscapes are either planning and materials management, or logistics and customer fulfillment focused digital transformation. Each represents a fundamental leg of business process and decision-making, digital process characteristics, as well as important change management considerations. They further represent two fundamental aspects of business performance, one related to overall business, manufacturing and supply chain operations, the other being service and responsiveness to particular customer needs. That especially relates toward needs for supporting required omni-channel online fulfillment. Both have strong dependencies and implications to one another and must be interrelated. Hence the need for tops-down transformation and change management leadership.

We fully anticipate that supply chain digital transformation initiatives will continue to evolve over the coming months, with transformative efforts directed at multi-year objectives, interim benefits and process capability milestones.

 

2019 Prediction Six: The Multi-Year Transition Toward Digitally Enabled Response Networks Continues.

Self-Rating: 3.5 out of a maximum 4.0 score

In 2018, after describing the capability of Digitally Enabled Response Networks as a multi-year transformational effort in process, talent and advanced technology capabilities, we predicted that such efforts will continue into 2019 with far broader scope from both technology providers and supply chain operations teams.

We defined a Digitally Enabled Response Network as requiring the build out of end-to-end network visibility and synchronized decision-making capabilities. It can be viewed as a foundation for supply chain management digital transformation for enterprises with direct to consumer customer fulfillment business models or services businesses that cater to multiple customer service channel needs. They imply perspective and capability that moves beyond “chain” to that of dynamic network ecosystems linking available supply to dynamic and changing customer demand needs. Such capability includes extensions of planning and fulfillment processes externally, involving key customers, suppliers and services providers in a federation of highly connected and integrated supply and product demand response networks. In many cases it requires Cloud based B2B connectivity linking various networks.

With increased technology investment among both specialized B2B Business and/or Supply Chain Network technology providers, we felt that response networks would embrace new forms of advanced analytics and decision-making, augmented intelligence and response to customer and supplier needs. We positioned such capabilities as an extension of a digital maturity path that involves supply and demand networks, process automation, peer-to-peer collaboration and synchronized joint decision-making.

In collaboration with Supply Chain Matters sponsors OpenText and Nulogy, we featured a series of market education blogs during the year, each defining the various aspects of Digitally Enabled Response Networks from different dimensions.  

We observed that legacy-based business backbone systems are being increasingly augmented by Cloud-based networks that connect various supply and demand-based processes and decision-making.  Gating this area has been the existence of a disconnect between digital and non-digital network partners with the majority of information exchanged between business partners being Fax, email or spreadsheets rather than structured automated or electronic based.

A further reality for many of today’s multi-industry global supply networks are siloed B2B connections and functional processes. Business processes spanning supply planning, procurement, production, customer fulfillment, transportation or logistics provide an existing footprint of multiple EDI messaging translators, VAN or B2B gateways.

We explored what Nulogy describes as Agile Customization, namely that he advent of shifting and more personalized consumer buying preferences brought about by the online buying revolution and changing customer preferences, requires greater levels of product innovation that often includes late-stage customization and postponement-based supply network fulfillment needs. Such needs require consumer brands to work with contract packagers, contract manufacturers, third-party logistics or other late stage packaging services firms in the overall customer fulfillment process, all of which must be synchronized in information flows and decision-making.

Both specialty and ERP focused B2B Business Network platform providers are now moving in the direction supporting Cloud to Cloud and Cloud to On-Premise information process integration, leveraging pre-built connections to leading Cloud and on-premise backbone ERP or supply chain management systems and utilizing a more simplified portal development environment available to either internal IT or external business network support teams. This is leading to capabilities to be able to more rapidly develop micro-applications or “Apps” that can integrate information and decision-making needs among B2B networks. OpenText describes such capabilities as Hybrid Integration.

Indeed, supply chain management and line-of-business teams are beginning to better understand the process foundations, required technology and transition paths toward Digitally Enabled Response Networks.

 

This concludes Part Three of our revisit and self-rating of 2019 Predictions for Industry and Global Supply Chains.

In the upcoming Part Four update, we will revisit and assess Prediction Seven– technology investment priorities during the year, Prediction Eight– global logistics and transportation meeting the realities of industry disruption, and Prediction Nine– the ongoing positioning for global online retail presence.

In the meantime, clients and readers are encouraged to continue to share their own specific assessments of what occurred this year, as well as their anticipations for the coming year.

 

Bob Ferrari

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