Gary Iles is the senior vice president of marketing and business development at TraceGains.
Modern technology is needed to achieve modern outcomes, and this rings especially true for supply chains. Globally, many supply chains still rely on outdated technology and processes that have hindered their ability to deliver products to end customers on time.
Supply Chains Are Overwhelmingly Relying On Outdated Technologies And Processes
Research published in 2022 by McKinsey reveals the severity of the situation. The consulting firm found that nearly three-quarters of supply-chain functions rely on spreadsheets and that “more than half use SAP Advanced Planning and Optimization (APO), a popular but antiquated supply-chain-planning application that SAP introduced in 1998.”
Of course, it’s not easy for supply chains to move over from these traditional technologies. After all, as McKinsey noted, companies “hang onto older systems because of the time and money needed to replace them, even if upgrades would bring substantial benefits.” But the longer supply chain stakeholders rely on outdated systems, the more risks they expose themselves to. To future-proof themselves, supply chain leaders must shift their mindsets and move to implement new technologies and processes that can streamline their operations as soon as possible.
What Supply Chains Need Moving Forward
The supply chains that will succeed in the future are the ones that get started on several foundational elements now.
First, supply chain leaders must ensure that, at all times, they are using highly credible, verifiable information. Credible, verifiable data is the backbone of creating products with the right specifications, in line with all safety standards and regulations. Outdated, inaccurate data leads to a domino effect, a cascading breakdown resulting in an array of consequences, such as the use of materials and ingredients that don’t meet specifications—and that could create safety hazards for employees and consumers.
One of the keys to getting credible information is via composable data. Real-time data provides critical insights that just aren’t possible through static means. Consider this: A PDF outlining information doesn’t have a mechanism for alerting supply chain stakeholders in the event of recalls, global alerts, ESG violations and more. On the other hand, systems that weave together various data points from all relevant parties in a given supply chain ecosystem will provide leaders with a clear window into developments at any moment.
Of course, the spread of data in large part relies on supply chain stakeholders being willing to make a good-faith effort to provide that data. In the fragmented supply chain world, the more “networked” the different players are, the more they’re willing to participate in the exchange of information, the stronger they’ll be.
New technology can help supply chains with the gathering, exchange and alerting of verifiable data. But it is also essential for other critical supply chain functions. Artificial intelligence, for example, can provide supply chains with precise information and, in turn, data analysis that helps them make more strategic decisions. Especially considering the effects of the Covid-19 pandemic, analytics are more vital than ever. As Gartner noted in 2021, through 2024, 50% of supply chain organizations “will invest in applications that support artificial intelligence and advanced analytics capabilities,” given that the pandemic “amplified” their need to “seek tools that help them make better and more informed decisions faster.”
Supply chain leaders should carefully evaluate technology solutions on the market to determine which options best align with their budgets and goals, and work with employees to gather their input. As the research from McKinsey mentioned earlier explained, effective planning involves three key elements: a “well-articulated planning-process design,” a “well-defined vendor-selection process” and a “multiphase implementation road map.”
As new technology enters supply chains, many employees have understandable concerns about how these tools might impact their work, sometimes viewing them as barriers. Supply chain leaders should take the time to thoroughly train employees on how to use these tools and show them how these tools will make life easier.
Community: Another Crucial Factor
While technology is playing and will continue to play an essential role in the evolution of supply chains, it is not the sole factor stakeholders in this space should focus on. They must also prioritize community-building—the path forward is communal for supply chains.
At its core, the supply chain industry is a living, learning, growing community. As different players shift their approaches and new players enter the scene, it’s beneficial for everyone in the community to know. While there is some understandable hesitancy that some in this industry have about knowledge-sharing, the future paradigm is one where a free flow of information will be increasingly paramount. As the adage goes, knowledge is power. It will help buyers and suppliers weed out nefarious actors, get ahead of issues and create a cooperative, mutually beneficial environment where employees and consumers can thrive. Supply chain stakeholders can facilitate the free flow of information through forming strong business relationships. To do so, they should explore business ecosystems, particularly ones that offer networked capabilities. Examples include online platforms such as LinkedIn that facilitate community-building and industry-specific systems with built-in networking.
Additionally, supply chain leaders should direct their efforts to internal community-building. Unfortunately, there are some communities in this industry that are at times overlooked, such as food safety and quality teams. When they do their jobs well, operations keep humming along, so leaders may not take the time to check in with them. But leaders should still intentionally try to regularly interact with people in such roles to understand what makes them enjoy their jobs and what helps them remain productive and not burn out.
What’s more, as part of internal community-building, supply chain leaders should democratize how tasks are completed, dismantling old-school hierarchies and processes so that frontline workers can obtain immediate answers and tackle their tasks more efficiently—without the need to get a stamp of approval from management each time, or hunt down information in various files. When supply chain teams are motivated and fulfilled in their rules, able to do their jobs without having to navigate frustrating limitations, they’ll produce even better outcomes for consumers.
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