As technology has spun forward, so has how supply chains work and the best practices to manage them. Below are five keys to supply chain management success in the age of the internet of things (IoT), cloud computing and hackers looking to get at the same customer data that is driving your business.
1. Create a glass pipeline
Doug Farren, managing director of the National Center for the Middle Market, calls this the holy grail of supply chain management, “having visibility all the way through the supply chain, from the raw materials that go into the product all the way to the end customer user,” he said. That’s the case no matter what the product, be it a car, medical device or trendy gadget.
This isn’t a new concept, Farren says (adding he studied it in undergraduate and graduate school), but no less important — or challenging — to achieve because of all the partners and parts involved in supply chain management. But “as technology evolves, it’s much easier to get this type of information and share it,” he said.
Another old concept that is just as important today as it was 15 years ago, and keeps that pipeline transparent: talking to each other.
“Everything comes down to communication,” says Rick Schreiber, board member of the National Association of Manufacturers and head of BDO’s Manufacturing and Distribution Practice. “Supply chain is complex, and everyone’s a part of it. If someone’s not communicating, it breaks down,” he says.
2. Have a strong supplier council
One way to keep those communication channels open is to have a strong and communicative supplier council, because what good is having a glass pipeline if no one looks at it or uses it? Or no one’s learning from it? Not much.
“It’s really a forum that allows a lot of two-way dialogue about efficiency process, changes and upcoming plans,” says Farren. “Conversely, if they were struggling with something, or felt like there was a gap in communication breakdown somewhere within the process, this forum is a gathering to allow for a lot of those exchange of ideas.”
3. Create an outside-in, not inside-out supply chain
Creating an outside-in supply chain means using data to look at what consumers want and need and predict that demand instead of creating a product and hoping that it lands in the right spot and finds its market, says Roddy Martin, vice president of SC transformation thought leadership and SC cloud marketing at Oracle.
“With the advent of digital media, people are saying things about our products and services on social media,” he says. “We have very sophisticated analytics that can do predictive analytics on consumer preferences.” By using those analytics and data from customers, companies can know what to create for them, and where they already are instead of the other way around.
“Think about what Amazon and Apple do,” he says, citing his own experience with Amazon, which lets him know about new supply chain business books before they’re published, and when they are, has copies ready to ship in places where customers who want that book can get them the next day.
“Insights in consumer behavior drives the rest of the business,” he said.
But a company can’t just suck up all the data out there and expect sales wisdom to pop out. Companies need to use the right data, and use it correctly, to draw the right conclusions, or else it’s “garbage in and garbage out,” says Schreiber.
“There’s so much data being collected now because of the internet of things, because of sensors, because of wifi and the clouds,” he adds. “Now we have big data that our suppliers can share with our manufacturers and distributors and retailers, but what do we do with all this big data?”
4. Pay attention to security
In a recent study, BDO found that despite an increase in attacks launched at manufacturers and their supply chains, 27 percent of companies do not have a security policy in place for their supply chain partners and other vendors.
“We’re trying to be collaborative and enter these alliances to share our networks with each other,” says Schreiber. “That opens up a whole bunch of access points for some bad guys.”
You need to communicate with all partners and having a policy in place to make sure that everyone in your supply chain is as secure as your own company because a weak link in the chain could expose everyone, including your customers.
And it doesn’t matter where that weak link is because your company will be the one taking the hit if your customers are exposed. Remember, Target was hacked through an HVAC company.
5. Make sure the CIO has a seat at the table
It used to be that the IT team would implement a business solution and then go away. “You won’t be successful today unless the CIO is on the leadership team, and part of the transformation project,” he said.
Also, supply chain can no longer be about cutting costs, says Martin. When modern supply chain is working right, he says, “the supply chain is recognized by business leaders today as a growth function.”
Who’s involved in supply chain is also changing, says Martin, who calls it a cultural shift.
“Supply chain is not the trusty old fellow who’s been there for 15 years,” he says. “I’m finding more women leaders in supply chain. A lot of marketing and business people in supply chain. They are now sitting at the table figuring out growth with the leadership team,” he says.
“It’s a breath of fresh air.”