One of the topics this blog likes to explore is how to make the whole supply chain process more efficient, less risky and ultimately more profitable for everyone involved. We look at this from a real-world perspective, using our deep knowledge of this area, especially around automation and security. So it is really good when external sources back up your own knowledge and experience and this has been the case looking at the report by PWC on “Next Supply Chains: Efficient, Fast and Tailored”. In today’s post I’ll take a look at some of the findings of this survey by PWC and discuss their implications on supply automation, chain management and risk.
Supply Chain Trends
The PWC report had a particular pertinent and insightful finding. This was that the supply chain is regarded as an actual strategic asset by 45% of organizations. Strategic assets are vital for competitive edge and keeping them well managed is therefore an important business consideration.
In their report, PWC has identified a number of supply chain trends, all of which show an expectation of increasing in importance and which have a material impact on the effective management of the supply chain. The following graphic, taken from the report, shows the 12 most important trends; noticeably all are expected to increase in importance.
In this post I’ll concentrate on two of these top trends, which we come across time and again, “Implementing techniques to automate and increase transparency” and “Managing supply chains security and risk”.
Automation to Increase Transparency
In the PWC report, they noticed that the most successful companies had a program in place to reduce supply chain complexity and to use automation methods to make supply chain processes more efficient. This has been instrumental in the leaders identified in the survey, having delivery performance figures of over 96%. Part of this comes down to transparency across the supply chain. Transparency greatly helps to improve the smooth running of a supply chain. A report by electronics manufacturers, Jabil, found that 96% of the surveyed respondents said that an opaque supply chain put efficient operation at risk.
Gartner analysts concur with PWC and identify automation of supply chain processes as a supply chain trend. In a recent supply chain conference, Gartner linked automation and the Internet of Things (IoT) arguing that this has the potential to impact transparency across the chain. Gartner stated that, “functions such as procurement, logistics and inventory management often operated in silos with not enough coordination or focus on the end result”. Gartner reiterate this sentiment in their latest supply chain predictions of 2016, saying that automation will double in the next 5 years due to increased digitization of companies.
The PWC report shows clearly that automation leads to better performance, and Gartner is backing these findings up. This comes at a time when the digital landscape is moving underneath us all, as digitization of services and the IoT grow in importance – this makes the move to automation of supply chain processes inevitable as the complexity needs to be countered by transparency. In fact, the idea of having greater control over the processes and bringing all of the steps together in a seamlessly connected manner should be the goal of any eco-system. The PWC report stresses that digitization and automation of supply chains will create greater transparency, if managed correctly, which will ultimately result in reduced costs and efficiency. They also point out that automation is seen by two thirds of respondents as a “vital” part of the supply chain process. In fact, PWC show that automation is seen as one of the best ways to differentiate a business across a number of industry sectors including automotive and retail, giving them a method to “optimize their logistics and distribution operations”.
The supply chain has not been immune to the global challenges we are currently facing. These challenges extend to financial market turbulence and the increasing cyber security pressures felt by all enterprises.
Growing risk from the supply chain is something that the vast majority of organizations seem to suffer from. Zurich Insurance found that in 2014, 81% of companies suffered a supply chain disruption, an increase of around 4% since 2010 and almost a quarter of survey respondents saw losses of around $1million due to such disruptions – cyber security being one of the most concerning.
The PWC survey identifies the management of chain security and risk as a top trend. They point out that to have a successful supply chain operation, an organization has to take personal responsibility for tracking the risks across the chain. The complexity of risk management rears its head most noticeably when the supply chain is a global one. Risk come in many shapes and sizes and a global chain can involve environmental, financial and certainly cyber-security risks. Ensuring stability of the extended supply eco-system is a management challenge and one, which requires a holistic approach.
PWC found that risk mitigation, through close management of supply chain partners was one of the top differentiating practices of effective and high performing supply chains.
A Transparent Approach to Risk Management
The two top trends we have looked at here are not mutually exclusive. Both of these trends impact each other. By using automation to improve transparency, you can in turn enhance the management of risk across the chain. A move towards automation is a leap forward to take your supply chain to the next level, but it will afford greater rewards in the guise of more optimized, efficient and risk minimized processes.