Digital Supply Chains, the winners and losers

by | Iter Insights

Digital Supply Chains

Digital Supply Chains Post Image

Digital supply chains can provide great competitive advantage to those that can master the technology.

For those that get left behind the inevitable consequences are reduced market share and having to work harder to achieve less. For those yet to master the technology, a step-change in how they organise and operate is essential.

This is the first of four articles that aim to provide insight into how businesses can identify their current status, prepare for digital supply chain transformation and introduce some of the key technologies and their expected impact.

Some history…

Over the last 30 years we have seen the introduction of many technologies. If we begin in the 1990s with ERP, it required a major commitment to deliver its true potential. Most organisations gave up along the way and settled with having data and driving activities both in and out of the system. 75% of ERP projects failed, with 60% taking longer to implement than expected.

It was during this time that `systems’ for many became a constraint rather than an enabler. IT departments often became gatekeepers. Business cases for further development became difficult to develop due to uncertainty and many were burnt by the original process.

LEAN was adopted by process industries and volume manufacturers and additional systems including Manufacturing Execution Systems (MES), Warehouse Management Systems (WMS) and Computerised Maintenance and Management Systems (CMMS) arrived in the 2000s. The drive for system integration had begun and the demand for operational data increased.

However, for many, systems and automation existed as `Islands’ and provided limited benefit. Islands were bridged externally through the use of Access and Excel. The problem was that as the volume of data increased and automation transformed into autonomy, the need for data availability and accuracy increased as planning cycles and response times reduced.

Where we are today…

Organisations today are having to upgrade poorly implemented systems at great expense (SAP Hana, for example) yet these upgrades often leave organisations treading water and making no real advance towards the perceived finish line.

New digital technologies such as Industry 4.0, Industrial Internet of Things (IIoT), additive manufacturing, Blockchain, Big Data and AI and ML all promise much, but are complex and expensive to successfully implement and need building on firm data foundations.

That said, the `finish line’ does not exist in a digital world where there is a need to:

  • Develop long-term capabilities
  • Put digital at the heart of everything
  • Use digital to develop capacity to meet/exceed customer needs whilst maintaining profitability

There is an interesting perspective from Jeff Bezos regarding what he identifies as Day 1 or Day 2 organisations:

  • Day 1 organisations should always maintain the first-day mindset of a start-up
  • Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1

Which one describes your organisation?

If you are yet to make the step change to becoming digital in everything you do, I’ll outline the key considerations in my next article.

How Iter can help

Iter’s knowledge, experience and that of its digital partners can help you assess your current digital capabilities, where you should be and how to bridge the gaps. Our methodology can be executed across your whole supply chain or within a specific component.

Colin Prout
Delivery Director
Iter Consulting