The Future of Supply Chain: As Much About People and Organizational Culture as Technology

It has become broadly understood that the onrush of new digital technologies and solutions often outpaces companies’ ability to easily absorb and harness them. Although this has become conventional wisdom, many companies fail to take the organizational steps necessary to address this challenge.

At a high level, these steps include cultivating corporate culture and building organizational structures that are designed to be as flexible, adaptable, and speedy as the emerging technologies themselves. Many IT managers have learned this truth the hard way. They’ve found that simply deploying a new digital solution can be relatively easy, compared to ensuring that the solution addresses actual business needs and objectives—to say nothing of getting employees to use it.

All of these dynamics are clearly in play when it comes to corporate supply chain operations. As in other functional areas, cutting-edge supply chain technologies promise tantalizing benefits but often come with significant implementation challenges. Everything from Internet of Things (IoT) devices and sensors to big data analytics and artificial intelligence is giving supply chain managers powerful new tools to exploit. But these tools also add complexity, require new skill sets, and can prove costly in terms of time and money if they’re not properly vetted and well matched with specific company objectives.

On the bright side, the digitization of the supply chain has become a catalyst pushing many companies to pay increased attention to this critical business area. As part of these examinations, companies should look beyond simply automating and optimizing existing processes. An in-depth evaluation of company needs, paired with an understanding of what today’s technologies can provide, is likely to reveal ways organizations can implement supply chain innovations that add significant value across the entire enterprise.

Supply chain innovation and optimization hold such strong potential because of their inherent scope and variety. After all, supply chain functions encompass finance, procurement, inventory/warehouse, transport logistics, and distribution, among other activities.

Traditionally, these essential supply chain elements have often operated somewhat independently from one another, if not in completely isolated functional silos. Nowadays it’s possible to run all these functions on a unified and well-integrated IT infrastructure. Here, again, though, the toughest challenge will often be integrating the various departmental groups, which each have their own culture, supply chain stakes, and reporting hierarchy.

As with so much else in our digitally transformed business environment, supply chain optimization must be addressed by cross-functional and cross-departmental teams. In many companies, these multifaceted teams will report to a chief supply chain officer (CSCO) or some equivalent.

In turn—because the team should include IT as well as business unit members—the CSCO may report directly to the chief operations officer or even to the CEO. Oversight will often fall to the chief information officer, however. Because a core CIO function is to bridge the IT and business realms, that person can also provide the high-level oversight and coordination required.

It’s important for the strategic team to focus not only—or even primarily—on the sourcing, transit, and inventory side of supply chain operations. The team should also include sales and marketing department representatives, since they can provide relevant insight into market trends and customer preferences. Meanwhile, product design and development experts with knowledge of current and future material requirements should also be key team contributors.

Companies that leverage today’s technologies to build innovative and optimized supply chain operations can gain great business advantage over those slower to act. But the organizations leading in these efforts will understand that the most impactful innovation must originate in their own company’s culture, managers, and employees. Only with a well-managed, comprehensive, and cross-departmental approach will companies be able to best exploit the many new technologies and solutions now available to them.

Learn how GEP can help you digitally transform your procurement and supply chain operations at www.gep.com.