Digital supply chains, AI, Blockchain and the future of work – Insights from the Gartner supply chain executive conference

Dr. MadhavDurbha

Gartner 2017The 2017 Gartner supply chain executive conference took place at the O2-Intercontinental Hotel in London on September 20th and 21st. The theme of the conference was ACT (Aspire, Challenge, Transform), same as the Gartner supply chain summit in Phoenix during May of this year. A few of the presentations in London, such as a highly provocative key note by John Philips of PepsiCo are a repeat from this prior event. I covered my observations from the May event in a previous blog. To avoid repetition, I will focus on some net new messages that resonated well with me from this event. Here they are, in no particular order:

1. Tailor your supply chain to cater to diverse businesses: In his keynote, Mourad Tamoud, EVP of Global Supply Chain Operations of Schneider Electric talked about how they are segmenting their supply network based on their customer personas and purchasing behaviors. Based on how Schneider plans, delivers and executes, the following five supply chain models were defined:

a. Collaborative
b. Lean supply chain (for customers who value the economic aspects of their purchases)
c. Agile model (for the customers who value reliability above all else)
d. Project model (for high level of configurability)
e. Fully flexible

Using these different supply chain models, Schneider was able to tailor the service and the overall experience for customers by different personas/groups. The crux of his message was that the overall design and the technological enablers are equally important in enabling “tailored supply chains”.

2. Digital supply chains enable transition to selling services instead of products: Simon Bailey of Gartner made a very compelling presentation on the opportunities that digital supply chains enable. Here is an example he gave: Philips lighting is now providing “Light as a service” to the Amsterdam Schipol airport (which happens to be one of the best lit airports that I had been to!). Through sensors embedded in the lighting that meters the amount of light provided, the airport now pays for the amount of light it consumes. The sensors also provide Philips the means to predict failures of the lights and fixtures and proactively replaces them. Philips, Schipol and the passengers with a great airport experience – all come out as winners – thanks to the digitalization of the supply chain! Philips has the advantage of turning a product into a service offering with a more predictable and results driven revenue stream.

3. The advantage of humans over machines: There was plenty of discussion around the role of automation and AI (artificial intelligence). Amidst wide ranging predictions about what machines will do to human jobs, Dr. Lynda Gratton of London School of Business made an interesting observation in her keynote speech on talent management. She said humans have a distinct advantage that machines can’t mimic in the near future. It is the advantage of a billion years of interactions between each other. The warmth to share, the ability to reach out, and collaborate are skills that humans excel at. It is a simple truth, but easy to forget. Supply chain management is after all a people’s business. Softer skills powered by human intuitions, emotions, and interactions do play a significant role in organizational success.

4. Blockchain in supply chain: Andrew Stevens of Gartner made a presentation on Blockchain covering the basics of what it is and what to expect. Listening to him, as well as reading up quite a bit on the topic by myself and discussing the topic with my industry peers with deep interest in the topic, I do believe the technology has the potential to provide a level of traceability and enable frictionless transactions like we had not seen before. However, several hurdles remain in large scale adaption, such as standards definition, cost factors involved due to high computational power needed to enable a blockchain, and as with any network effect to take off, buy in from multiple stakeholders. My advice to SCM professionals is to take interest in educating themselves in what the technology can offer and if you can afford, experiment in some small scale projects with your supply chain partners, as opposed to contemplating on big bang initiatives around block chain for the timebeing.

5. Technology as core to supporting inorganic growth: In a very compelling presentation during one of the breakouts, Atul Tandon, SVP of Global SCM at Mylan Pharmaceuticals, shared some staggering statistics around how his company has grown from a US $5 billion revenue base 3 years ago, to a US $12 billion base now powered by inorganic growth. During the same period, their SKU complexity has grown from roughly 7,000 SKUs to 23,000 SKUs. Amidst that staggering growth, driving standardization in business processes and IT infrastructure is not easy. Atul talked about how they introduced agility and flexibility into their planning. Given the dynamics of the pharma industry (increased demand volatility due to large tender orders, network complexity, variability in supply due to quality issues and such), being able to quickly run “what if” simulations is absolutely critical. With the investments they made in technology, Mylan can now run “what if” scenarios in a matter of minutes (for what used to take days). Quite impressive especially in light of the massive growth! Atul concluded his presentation noting that 70% of supply chain transformation efforts fail due to change management and data quality issues, and advised the attendees to address these to ensure success.

6. Future of supply chains: In his concluding speech Kevin O’Marah of Gartner, gave a passionate talk on what the future holds. He talked about the changing nature of supply chain roles of today. Here are his predictions around five jobs for the future:

a. Sourcing leader becomes Innovation coordinator
b. Demand planner becomes Commercial troubleshooter
c. Sustainability leader becomes Resource czar
d. Logistics manager becomes Customer satisfaction director
e. Production Planner becomes Customization master

Without going into details on each of these, I will just take one example and elaborate based on what I am seeing in having worked with many organizations. The demand planner role in most organizations of today tends to be to generate a forecast or a consensus demand plan (in the best case) and throw it over the fence to supply planners to make it happen. However, if there are supply choke points, it is usually days or even weeks before demand planners know of any “miss” in the commercial plan. I see some progressive organizations move towards a “concurrent planning” paradigm wherein the demand planner, as and when he makes adjustments to the demand signal, gains immediate visibility into potential bottlenecks and knows whom to collaborate with. In not so foreseeable future, the demand planner could become a “network planner” or a “commercial troubleshooter” as Kevin calls it, who can resolve the problems that stand in the way of realizing the organizational plans and goals.

All in all, I came back feeling quite energized. Beyond catching up on the latest happenings and exchanging ideas, these events are great reunions – providing me with an opportunity to meet with many SCM professionals who I had the pleasure of collaborating with over the last two decades and make new acquaintances, and potentially lifelong friendships!

Dr. MadhavDurbha

As Vice President of Industry Strategy at Kinaxis, Madhav serves as a trusted advisor for our customers through sales and implementation, ensuring success. He also engages with our strategic customers and key industry leaders to drive thought leadership and innovation. Madhav joined Kinaxis in the summer of 2016, bringing many years of experience in Supply Chain Management across various industries. Madhav started his professional career at i2 (which was later acquired by JDA). During his 17+ year tenure at i2/JDA, Madhav played numerous roles in Customer Support, Consulting, Presales, and Product Management. During his illustrious career, he was instrumental in helping enable numerous large scale transformational supply chain opportunities. He is very passionate about Supply Chain Management and the role it plays in making the world a better place. He shares this passion with others through his engagements and writings. Madhav has a Ph.D. in Chemical Engineering from University of Florida and a B.Tech. in Chemical Engineering from Indian Institute of Technology (IIT), Madras. Madhav received the ‘Supply Chain Pro to Know’ recognition in 2017 by Supply & Demand Chain Executive magazine.

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