As I wrote in my last column, 2018 was a banner year for supply chains. Companies across the globe found ways to grow revenue (not just cut costs!) through the digital transformation of their supply chains. Customers demanded more, and expected more, in terms of delivery accuracy, personalization and timing. Automation of routine tasks became commonplace and new technologies, like Artificial Intelligence/Machine Learning (AI/ML) and Blockchain, were deployed.
What can we expect to see in 2019? Will we see more of the same? Are companies picking up speed or losing momentum?
At the Digital Supply Chain Institute, we have worked with nearly 100 companies on Digital Supply Chain issues. In 2018, we collaborated with companies that lead their industry–Lockheed Martin, Dell, Corning, and SAP. We met with smaller companies like Anastasia (a leading Santiago-based AI firm), MVP Workshops (a Belgrade-based Blockchain company), and Chain IQ (a Zurich-based procurement company). And we spent time with innovative companies like Under Armour, Aricent, Colgate-Palmolive and Li & Fung.
This doesn’t mean that we are a foolproof source of truth about the future in general or 2019 in particular, but our work does provide a unique vantage point to assess the currents that are carrying companies forward—and the headwinds that are causing others to falter and lose momentum. One thing is certain: Every company will navigate some, if not all, of these currents in the coming year.
Here is our view of the top five supply chain actions that the best-performing companies will undertake in 2019 to extend their leadership position in the marketplace. Put one or all of them on your list of resolutions for the New Year:
- A massive retooling of the people dimension. Our research shows that deploying a Digital Supply Chain strategy can increase revenue by 10 percent. But getting this done will require a different skill set in the workforce. Companies will need more data scientists and data stewards. We need more people who understand the customer experience and customer choices. And we need a workforce and executive team that makes decisions based on data, not just intuition. In 2019, companies will hire data scientists, acquire data science companies and undertake massive training of the workforce on data-based decision making.
- Unprecedented collaboration with a purpose. Consultants have yapped about collaboration for decades, but now we have a real incentive to change our behavior. Without collaboration within a company (e.g., Marketing and Operations) and without collaboration with suppliers and customers, building a Digital Supply Chain is simply not possible. In 2019, successful companies will work on things that require serious collaboration between companies and departments like “data-trading,” where companies swap proprietary data for data owned by another company. For example, an apparel maker may trade its sales trend data for a retailer’s data about who is actually making the purchase in the store. Companies will also form cross-functional teams—Demand Councils–that use real data to make forecast and planning decisions.
- Widespread use of algorithms. There is nothing more important to a company’s success than building the right algorithms and supporting them with AI/ML technology. Algorithms will make the company smarter every day—and dramatically improve customer satisfaction and thus help them gain market share. The algorithm race is already on and companies will have to address the first two bullet points above to effectively deploy algorithms.
- Step back and dive deep on Blockchain. The pendulum is swinging on Blockchain, once touted as bigger than the Internet, now seen as a disappointment by some. Despite what you’ve heard, Blockchain is not bigger than the Internet. It is not better than all databases and cyber security tools. Except sometimes it is. Companies have wasted money and time conducting supply chain pilot projects without first accessing if Blockchain is appropriate for the task or what return they can expect. None have scaled up. The big focus this year will be for companies to forget the hype, apply common sense and strengthen measurement, accountability and apply Blockchain where it can and will have a big impact on the supply chain.
- Make it personal. Supply chain leaders always want every car to be black and every model to be the same. But in 2019, companies will finally realize the power of personalization. That means supply chain and product development will have to take a segmented approach. For example, a supply chain in some of cases would source, manufacture and deliver products for an individual buyer. In other cases, these “personal” products may actually be aimed at a broader, yet specific segment of consumers.
The five actions above will dominate supply chain playbooks in 2019. Sure, lots of other things will happen too. But you will find companies in your industry (B2B or B2C) making a play on one or more of these five resolutions. Won’t they be surprised when they discover that their customers are flocking to you because you resolved at the start of 2019 to move on all five!