The Digital Supply Chain Transformation Path to Business Value

Eighty-two percent of CEOs₁ are planning to increase investments in digital capabilities across their enterprise. Most CSCOs have been responding to this expectation by launching digital supply chain transformation initiatives, however many are struggling to deliver target value.

Analysis from the Gartner CSCO Score maturity assessment data shows that most CSCOs struggle to mature E2E capabilities that directly relate to digital transformation, including 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.

Most supply chains lack an E2E 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 E2E supply chain.

This is a key reason so many CSCOs are disappointed with the business benefits achieved with digitalization. With functional-specific roadmaps, CSCOs are not able to address the expectation from the business for a supply chain able to make faster, more accurate and consistent decisions in real time. Gartner’s latest Future of Supply Chain survey shows what are the key challenges (see following figure).

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 E2E supply chain. The digital roadmap should drive value from the effective combination of three key E2E capabilities across data, decisions and process execution (see next figure).

Integrated Data End-to-End

Supply chains must have access to pools of real-time data from across all domains, functions and the partner ecosystem. Data need to be integrated E2E and accessible locally. It should allow for real-time visibility of what’s going on across the E2E supply chain.

Novo Nordisk, a Danish multinational pharmaceutical company, has been on a transformation journey to connect data across its end-to-end supply chain. They extract data from various systems and put it into a separate data lake, owned by supply chain. This allowed for flexibility and speed in supply chain reporting and performance management. Very quickly, once people started to see transparency across specific processes, they started to agree on this picture across the organization for the first time.

Analyze Data on the Fly

Supply chains must be capable of analyzing data on the fly. They should be utilizing advanced analytics, AI and machine learning throughout their end-to-end supply chain to drive faster, more accurate and transparent decision-making processes.

“When you say the word ‘digital,’ people always jump to the conclusion that it’s all about technology,” says Wendy Herrick, vice president, digital supply chain, at Unilever, “but we’ve actually defined the role quite differently. Technology is just a piece of it.”

Unilever’s data intelligence strategy is broken down into three categories of decisions, depending on the partnership between humans and technology. “Humans in the Loop” enables visibility and expects humans to take decisions based on domain knowledge. “Humans on the Loop,” is when humans review the recommendations from the technology and approve or reject conclusions. “Humans out of the Loop” is when autonomous decision making is arrived at using technology, with humans playing guard rails or exception handling.

Make Things Happen in the Right Place

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.

Schneider Electric has developed a supply chain control tower environment, which integrates data from all their internal systems, their suppliers’ data, as well as external risks and disruption information. It gets full visibility of the end-to end supply chain, allowing to run a risk-balanced and agile supply chain. Through the control tower, Schneider Electric is building automated responses. For example, if a supplier can’t provide material on time, decisions regarding the need to reroute an order can be taken automatically based on straightforward data, rules and metrics.

Many CSCOs are unsure what their digital supply chain should look like five years from now and what critical supply chain capabilities they should enable with their digital initiatives. There needs to be clarity and a laser focus on enabling crucial E2E supply chain capabilities if domain-specific investments are to tie together and deliver transformational supply chain performance.

The Digital Supply Chain Transformation Path to Business Value