Creating A Digital Supply Chain For The New Normal Hemanth Kumar June 22, 2020

Creating A Digital Supply Chain For The New Normal

Creating A Digital Supply Chain For The New Normal

Supply Chain leaders across enterprises were already dealing with various issues in trying to do their best to achieve their service levels such as 

  1. End to End Supply Chain Visibility.
  2. Lack of Data in some cases to analyses why a particular SKU went out of stock.
  3. Data Quality issues where the same SKU had multiple descriptions leading to an obsolete stock.
  4. Last-mile personnel and information workers supporting them dependent on manual processes and reports.

Depending on the organization’s digital transformation journey in the quest for building the Digital Supply Chain and the state that they have achieved some of these issues might or might not exist or exist in specific areas. Based on the discussions I have been having I had seen a flavor of these issues in various areas or regions.

The Pandemic added to these woes by adding more complexities and disrupting the Supply Chain ecosystem making all know data points, notions, and ideas irrelevant. The Supply Chain which is supposed to act as a unified ecosystem/organism and is a challenge to get it to behave that way in the best of times spun out of control creating a reactive supply chain than a responsive one. 

Some of the challenges brought on by the Pandemic are:

  1. Pantry Loading due to Panic Buying.
  2. Logistics unreliability during the pandemic transforming to a bottleneck in the new normal.
  3. Sacrificing Efficiency for Resilience.
  4. Margin pressures due to higher cost outlay.

According to a Gartner survey, 76% of supply chain executives indicated that compared to three years ago, their company today is facing more frequent disruptions in their supply chain. Meanwhile, another 72% reported that the impact of disruptive events has increased. 

These will continue to stay on in the new normal which might take 12 – 18 months based on the Event 201 simulation.

Supply Chain and IT Leaders have been having various discussions to deal with such situations and the roadmap they had agreed on for digital transformation and were building has come to a grinding halt. Those who had not started it are breathing a sigh of relief because they would not know what to do with projects which were half done should they continue or stop it. Those who are in the midst of it are undecided. Those few who have completed are happy that they did it.

We have looked at these challenges and given a tactical short and medium-term approach to overcome these challenges based on where you as an organization are in your journey and a more strategic long term approach to be prepared for such a pandemic going forward. We have come up with this approach keeping two key aspects as the pillars of the strategy.

  • Cost to Value
  • Time to Market

As part of the immediate steps, we need to map out which are the SKU’s we should be focusing by applying to the 80/20 rule which would give you a perspective of which SKU’s currently give you 80% of the revenue and we need to works towards ensuring the service levels of these SKU’s are maintained at the appropriate levels and reconfiguring the entire supply chain towards that.

This is already being done by companies such as Coca Cola, Mondelez and P&G. To know more click here.

Now that we have identified the SKU’s how are we going to ensure the service levels considering the demand is still erratic. Now, this would entail a series of activities that you will need to do both on the upstream as well as the downstream part of the supply chain.

Short Term – 1 Month

  • Create an Exec dashboard that shows the key metrics of the COVID specific SKU’s. Ensure the information shows key KPI’s with the visualization of the dashboard giving visibility of all key metrics such as
    • Pacing
    • Service levels
    • % of out of stock

Ensure these dashboards have the right information based on the role and also take care not to overload it with information.

According to a Gartner Survey More than 80% of supply chain professionals report that decisions made in response to disruptive change could be improved — either more accurate, faster, or more cost-effective.

  • Build AI-enabled dashboards which give you a perspective of parameters affecting these metrics which could be reasons for out of stock or the mobility in a specific region. Utilize some of the Citizen Data Scientist capabilities built into Visualization platforms such as Power BI.
  • Give line managers and front-line executives an actionable report focusing on their specific territory. Region country ensuring the entire supply chain falls into a specific rhythm.

These reports could have aspects such as 

    • Top 3 SKU’s for MSL Non-Compliance
    • Top 3 SKU’s for Out of Stock
    • Bottom 3 Customers for Service Level Issues
    • Top 3 reasons for Out Of Stock Reasons.

Depending on the role of the person the metric would be aggregated to their specific area of influence a territory/ region or a country as the hierarchy may be and ensuring the same view is cascaded through the entire downstream supply chain.

Look at creating the same kind of operational dashboards for the Upstream supply chain.

Read more: Creating supply chain symphony with SCOR 

  • Arm information workers and front line teams with conversational interfaces for easy access to information, it might not be a humanoid they might have been dreaming of to assist them but a chatbot answering natural languages questions such as ” Show me the customers for which this SKU is Out of Stock or Show % of OOS for SKU A at Customer A or making an entry for the reason out of stock for an SKU and achieving all of this without having to log in to multiple systems. 
  • Integrate other external data elements like Stringency data, Google’s mobility, or John Hopkins with Shopper Panel, POS, and Syndicated data and COVID specific benchmark reports such as the one from IRI. This is going to give you a true sense of demand and also help you collaborate with your peers in sales, marketing, etc., and break the supply chain silo which is a key element in creating a digital supply chain.
  • As regions go through the Hammer and Dance routine we will need to capture data and corrections during these phases for that region or the one with the closest demographic or for the category if specifics are not available and iterate rapidly as and when data becomes available to improve the accuracy of demand forecast.

Medium Term 2-3 Months

  • Reconfigure your forecasting and demand planning algorithms and make it short terms. If your S & OP tool is not geared towards flexibility and shorter horizons come up with a tactical custom-built solution that you can prototype rapidly. Avoid the urge to wing it with a manual spreadsheet-based or gut-based processes. Once you have some stability you could look at incorporating that into your LOB systems.
  • Start Mapping your supply chain for the COVID specific items and understand the ecosystem. Choose speed over perfection and improve the map as you go along ensuring that it is living and breathing map which is evolved constantly in the future as well. 
  • Replace your excel macros with RPA templates and self-service BI dashboards

Long Term

  • Map you entire Supply Chain for the other non COVID products and enhance the existing supply chain maps which will ensure that you are less at risk based on such pandemics going forward.
  • Start preparing your road map to create a digital supply chain if you have not yet started and started working towards creating a digital supply chain by looking at next-gen features like
    • Autonomous Supply Chain
    • Dashboards enabled with Natural Language generation
If you’d like to learn more about this topic, please feel free to get in touch with one of our experts for a personalized consultation.