Digitization Era

Digitization, together with today’s increasing proliferation of data, on everything from material flows to customer preferences, is rapidly changing the way companies do business, highlighting a powerful need for enhanced data management, analytics and talent.

In fact, the way organizations capture and use data is changing the manner in which those organizations work, creating a substantial difference in efficiency, costs and customer satisfaction.

Businesses are facing a revolutionary paradigm around big data, with a deluge of transactional information coming from social media, mobile devices, corporate purchasing, point of sale, GPS mapping and product sensors. Supply chain leadership that understands and can harness these inputs can create a powerful competitive advantage along the entirety of the supply chain, leading to reduced lost sales, increased efficiency and improved speed to market.

Data and digital tools allow organizations to develop an end-to-end perspective on the way the supply chain is structured, serving the customer more effectively – a move toward a true demand-driven supply chain. What is needed is the right talent, along with the appropriate technologies and tools.

It is essential that supply chain leaders have the skills and experience to take full advantage of tools and technologies and to bring a new way of thinking and operating to the organization. “There is huge demand for analytics skills and insights into what is happening in the supply chain through network visualization, modeling and optimization,” one 3PL leader points out.

Exploring the Issue

Through primary research and confidential interviews with CEOs and business leaders, we have explored the essential human capital component of this digital transformation in the supply chain to shed new light on the capabilities required to manage digitization in the supply chain – and the skills that will be most critical in the future. We also analyzed the profiles of more than 50 senior supply chain executives across a range of industries to see how well-positioned they are for digitization.

Research indicates that most supply chain leaders feel their organization is not yet well-positioned from a human capital standpoint to embrace digital supply chain transformation. As one consumer packaged goods executive shares, “Supply chain leaders need to have an improved understanding of digital. The whole process flow, from forecasting to delivery, needs to be integrated from end to end – this is where supply chain leaders can drive change.”

Our analysis of senior supply chain executives from the healthcare, consumer goods, retail, automotive and technology industries found that, on average, only 13 percent are “well-positioned” for digitization of the supply chain. A majority of supply chain executives we surveyed have no prior experience working in an e-commerce, manufacturing technology, IT  and/or industrial engineering role. When it comes to pure digital or e-commerce experience, only 7 percent of surveyed supply chain executives have experience in a significant operating role with a primary business function related to web-based, social, mobile device, cloud, SaaS, big data or e-commerce responsibilities.

Key Characteristics

Four key characteristics that supply chain leaders should possess:

1. Knowledge of data and digital tools

While chief supply chain officers are not required to be information technology experts, they should have enough knowledge about data gathering, technology and analytics to lead the conversation and provide a digital vision for supply chain teams. Supply chain leaders should recognize how pertinent platforms and processes are implemented and utilized. Leaders also should demonstrate a solid understanding of the scope and scale of data from diverse channels. Importantly, they must be prepared to act intelligently on data.

2. Able to collaborate and build bridges

The chief supply chain officer touches every part of the business, no longer in a silo. This executive will need to be able to build bridges with both internal stakeholders and external suppliers. Internally, supply chain leadership must be able to communicate and collaborate with the chief technology officer to help determine the appropriate technologies and policies for the organization, and the chief data officer to understand how data are best captured and used. Also interaction with the chief marketing officer to understand how the supply chain can be more customer focused and demand driven is important.

3. Experience and sensitivity

Companies are moving away from hiring specialized talent for the supply chain role and, instead, are looking at candidates with broader experience who can understand and communicate with people from multiple business functions. Further, familiarity with multiple countries and cultures is extremely beneficial and tends to bring an appreciation for different backgrounds, ideas and approaches that can be invaluable in today’s fast changing business world.

4. A drive to develop and train

One mistake that companies make is to implement a data management solution without properly preparing the organization. Tools alone do not drive results – people must be developed and trained to use those tools. Establishing internal programs to ensure an adoption of skills across the supply chain is critical. The chief supply chain officer is not excluded from this requirement, as digitization of the supply chain should be driven from the top down. As one leader puts it, “If you are not learning and training, then your organization is on a fast journey to becoming obsolete.”

Finding versatile and uniquely experienced supply chain leadership is no easy task. It will be essential to look within industries that already are on the cutting edge of digitization such as retail, consumer goods and e-commerce. Talent from technology companies also are considered well-positioned. It is important that companies prepare themselves for digitization of the supply chain.