The key to digital supply chain transformation

Investment in digital supply chain transformation initiatives is on the rise. According to a Gartner survey, 84% of CEOs are planning to increase investments in digital capabilities across their enterprise. However, many are facing challenges recouping value from these initiatives.

Analysis from the Gartner CSCO Score maturity assessment data shows that most CSCOs struggle to mature end-to-end capabilities that directly relate to digital transformation. That includes managing master data, developing analytics and designing the digital roadmap. They are, however, having more success with increasing the digital maturity of specific functions or domains.

Today, most supply chains lack an effective end-to-end digital supply chain roadmap, as less than half report alignment of all digital projects under a single governance process. In functional-specific roadmaps, each domain makes incremental improvements to its data, processes and decisions, but not to the overall performance of the end-to-end supply chain.

This factor has left many CSCOs disappointed with the business benefits achieved with digitalization. Accordingly, respondents in Gartner’s 2023 Future of Supply Chain survey indicated the most pressing challenge to digitally transform the supply chain is siloed organizational structures hampering an ability to perform end-to-end decision making.

CSCOs looking to drive higher value from supply chain digital transformation should ensure that each digital initiative within the roadmap not only addresses functional benefits, but also contributes to maturing the end-to-end supply chain.

An effective digital roadmap should combine the following three end-to-end capabilities across data, decisions and process execution:

1) Data integration

Supply chains must have access to pools of real-time data from across all domains, functions and the partner ecosystem. The data needs to be integrated across the organization and accessible locally. It should allow for real-time visibility of what’s going on across the end-to-end supply chain.

An effective way to achieve this integration is by extracting data from various systems and putting it into a separate data lake owned by supply chain. This allows for flexibility and speed in supply chain reporting and performance management. It also creates transparency across specific processes, which makes it easier to get consensus for rolling out the strategy across the organization.

2) Orchestrated data analysis

Supply chains must be capable of analyzing data in real time. They should be utilizing advanced analytics, artificial intelligence and machine learning throughout their end-to-end supply chain to drive faster, more accurate and transparent decision-making processes.

Technology alone is not the answer though. Supply chain leaders should rely on the expertise of their workforce to review recommendations from the technology and create guard rails or exception handling for autonomous decision making. Done in concert, this strategy can help supply chains make effective decisions on the fly.

3) Decision execution

Supply chains must be able to connect decisions to automated execution across the end-to-end supply chain. Processes must be designed to make things happen in the right place.

Developing a supply chain control tower environment, which integrates data from internal systems, suppliers’ data along with external risks and disruption information, can help supply chains orchestrate decision execution across the end-to-end supply chain. From there, organizations can build automated responses. For example, if a supplier is delayed providing materials, decisions regarding the need to reroute an order can be taken automatically based on straightforward data, rules and metrics.

CSCOs looking to digitally transform their supply chain need to focus on enabling crucial end-to-end supply chain capabilities. Only by doing so can domain-specific investments complement each other and deliver transformational supply chain performance.

Pierfrancesco Manenti is a research vice president in the CSCO Strategies and Planning Team. He provides insights and advisory support to chief supply chain officers (CSCOs) and head of strategy of global manufacturing and retail corporations into the future trends and key challenges affecting end-to-end supply chain strategy. He focuses on strategic transformation, digitalization, agility and design for profitability. He has over 25 years of experience in supply chain strategy. He can be reached at: [email protected]

SC
MR