The following guest blog commentary is contributed by Bob Ferrari, Founder and Executive Editor of the Supply Chain Matters blog and Managing Director of the Ferrari Consulting and Research Group LLC.
Kinexions 2015, the annual Kinaxis training and user conference, featured some fascinating speakers that delivered timely messages and themes for the supply chain management community regarding important competencies. Kirsten Watson of Kinaxis touched upon some of these themes in a previous blog posting. As we enter 2016, such messages will take on a special meaning, and in this guest contribution, I wanted to touch upon some of the key takeaways that stood out for this author and how they relate to the year ahead.
Jeff DeGraff, the ‘Dean of Innovation’ from the University of Michigan addressed the topic of connecting the dots of innovation as it relates to business and value chain strategy. A clear message that he delivers to C-suite audiences is that if companies seek growth, it has to originate from the speed and magnitude of innovation – “Innovation is your only friend.” A clear message delivered to the supply chain management community was that innovation occurs all across the value chain, and that supply chain teams are one of the few groups that can connect the dots vertically and horizontally.
Another important message was that innovation happens in cycles, not lines, and has a limited shelf life. In other words, the results of innovation occurring in 2015 more than likely originated from ideas brought to light several years ago, but will only sustain themselves for a limited period before competitors or industry disruptors leap to the next iteration. He described how failure can lead to success, how diversity of thinking breeds ideas, and why apathy is the death of innovation.
As I was listening, I thought about how in 2015 some industry supply chains are, by mandate of senior management, slipping back into a cost-reduction or avoidance focus that could jeopardize efforts directed at supplier and value-chain innovation. The year 2015 brought non-stop challenges for industry supply chains and 2016 will bring even more challenges in growing top-line revenues, delivering expected profitability and in effectively responding to rapidly changing markets.
Andy Walker, Head of Supply Chain Strategy, EMEA for global pharmaceutical firm Merck, addressed functional silos, how they breed distrust, and why it is important to shift paradigms to broader business objectives such as integrated business planning. That allows teams to collapse silo thinking and focus more on expected business outcomes. A clear end-state vision helps cross-functional teams to focus on what needs to be accomplished.
Again, while listening, I dwelled on why so many S&OP teams express frustration in moving toward broader, more prescriptive capabilities in decision-making that allow the ability to analyze product demand and supply in the context of supporting a firm’s financial, business and product plans. Too much energy is indeed spent on legacy functional silo data and corresponding key performance indicators and hence the frustration in moving the needle toward more integrated business planning.
Gary Hanifin, Managing Director of Accenture’s Business Strategy practice, delivered the message: disrupt or be disrupted, namely that supply chains will need to change to remain fit for purpose: “The linear supply chain is dead.”
Understanding the network effect and speed of information flow and decision-making is often key. He described the convergence of four supply chain competencies: physical; informational; financial; talent. A cited example of this convergence is that occurring at GE Aviation, where aircraft engine sensors monitor performance, schedule predictive or required maintenance, trigger spare parts demand while feeding operational performance data to quality monitoring and product engineering groups. While addressing new emerging capabilities in analytics-driven decision making and supply chain control towers, he translated these new emerging capabilities as driving evolving skill and talent needs.
In my last guest posting on this blog, Preparing Skills for the Future of Supply Chain Management, I also observed that while we have reached a point where technology can support continuous synchronized planning and execution across the extended supply chain, having the trained and experienced resources to effectively leverage all of these new technological capabilities is an increasing challenge that needs more concerted leadership and attention.
So where are all of these messages leading to?
On Supply Chain Matters, I just completed the compilation of our 2016 Predictions of Industry and Global Supply Chains. Readers should find little surprise that what to expect in 2016 blends with the themes mentioned above:
- Another year of industry uncertainties, added supply chain risk, and continuous change requiring lots of contingency and what-if planning.
- Continued turbulence in global logistics and transportation requiring more attention to sense and respond.
- Widening of supply chain talent and skill gaps requiring more skills-based recruitment, training and career planning while addressing laggard compensation gaps.
- Unique challenges in B2C Online Retail, Commercial Aerospace, Consumer Product Goods and Automotive industry sectors.
- Certain S&OP processes morphing to the broader context of integrated business planning.
- Internet of Things (IoT) initiatives diving into the realities of line-of-business strategy and deployment needs.
- A high visibility supply chain snafu or event with significant business implications.
There should be little question that the supply chain provides and influences competitive advantage. Supply chain teams connect the dots in value chain innovation, drive sales and operations planning to broader objectives, and strive to network the extended value-chain business network. The need for upgraded skills and added talent is compelling, and supply chain management professionals should stand tall for the contributions they have made to business success.
In 2016 and beyond, the supply chain and its global ecosystem of services providers will be the catalysts for business change, resiliency, and agility to support required business outcomes in a far more dynamic global environment. Stay focused on the skills, competencies and organizational traits required to carry out this mission.
I would like to express my personal wishes to readers for a very Happy Holiday and a rewarding New Year.