It’s a very interesting time in the supply chain.
There are a number of exciting technologies coming together to create new possibilities, and dynamic new ways of doing business and meeting customer needs, technologies like blockchain and artificial intelligence.
One dramatic example of what companies are doing is Overstock.com, which started as a discount furniture company, and is now heavily invested heavily in blockchain technology, and has its own cryptocurrency unit called tZERO.
The big disrupters are the companies that leveraging multi-party networks, artificial intelligence, and autonomous technology to change industries and to connect buyers and sellers, and match supply to demand in real time.
Companies like Airbnb, Amazon, and Uber, have boosted service to consumers while taking out costs and delays.
Consumers are becoming accustomed to this new frictionless way of doing business.
Supply chain as a function is becoming much more of a stakeholder within companies.
Read: Building a Digital Supply Chain Ready for the Future
We are seeing roles previously labeled as procurement moving to more of a supply chain role.
Even companies in industries like oil and gas that are creating supply chain organizations.
So we are seeing a major shift away from the internally-focused strategy with Enterprise Resource Planning (ERP) at the center, to a much broader and more collaborative strategy using new technologies.
1. Multi-Party Networks
This first trend is moving towards a multi-enterprise or network-based solutions.
This will be more apparent with processes like procure-to-pay, order-to-cash, and these types of processes are multi-party, these will move to the networks. This is a major shift away from ERP.
ERP is good for HR and finance. But many companies don’t want to take on these drawn out costly projects. A streamlined, network, cloud-based deployment that is lower cost and faster results.
How good would you be at your job if your cubicle had no openings? How much value would you bring to your company and your customers if you couldn’t communicate with anyone outside your cubicle? That’s very much the situation a lot of companies find themselves in with ERP solutions.
Multi-party networks feature collaborative planning and execution across multiple tiers of the supply chain. Because these networks extend visibility and collaboration outside the enterprise “cubicle,” these networks are going to come to prominence.
We saw credence with Gartner’s inaugural magic quadrant for Multi-Enterprise Supply Chain Business Networks. The aspiration is clearly growing, but success with networks requires a multi-party, multi-tier platform.
A key aspect of this is that is often ignored, is what we call a Tunable System of Control. This is a system that manages workflows across multiple systems, network systems, and legacy systems, internal and external systems. The key elements include;
Having this type of approach will allow companies to streamline ERP projects, focus on what ERP is good at while moving these multi-party processes to the network to drive more value, much faster and at a much lower cost.
This will also help leverage other technologies like blockchain. Blockchain is a great tool to move companies toward thinking from a network mindset, but it is early days and there are still problems with the technology, namely: the multi-party MDM, permissions, scalability. Until these problems are addressed, blockchain will remain largely conference room pilots.
This permissibility and scalability issue we solve with an approach that we call a Network Orchestrated Blockchain. We think it will become a dominant technology. The network uses its mature and proven technology to do the heavy lifting in terms of managing permissions and orchestrating parties and processes, but with the ability to write to a blockchain like Ethereum or HyperLedger Fabric if you want to.
I believe multi-party networks with their permissibility and scalability will play the dominant role, but they can be combined with blockchain for transparency and immutability to foster a much wider range of commercial applications and capabilities than blockchain alone.
2. Machine Learning and AI Enhanced Planning
Planning solutions are another area where typical enterprise approaches limit their success. There are several reasons for this poor functioning, but two of the big ones are:
This combination of this lack of considering constraints and critical inputs, and stale and fake data, leads to inaccuracy in these enterprise planning approaches over time that limits the value a company can gain and kills adoption.
Download the Paper: 8 Keys to Achieving Success with Artificial Intelligence in Supply Chain
Planning is an area where more and more customers will look to leverage AI. The key capability requirements for next-generation planning that can use AI effectively include:
The need for decisions to be made at the transaction layer
Continuous and Incremental Planning based on what we call subnets
This is another example of how pure technology like Machine Learning, AI, RPA, etc. isn’t delivering full value yet because it’s based off enterprise approaches which limit their effectiveness. A shift to multi-enterprise networks will enable companies to get much more value from these technologies as they can leverage the network.
3. Actionable and Autonomous Control Towers
There is a growing realization of the need for a full supply chain control tower.
We’ve seen companies take a data warehouse and data lake approaches, but these are showing limited ability to drive significant value and can be costly and time-consuming.
Big data projects tend to be both backward-looking and enterprise/internally focused paradigms. As discussed with planning, decision making, AI, etc. processes need to sit on the transaction layer. These can also be digital twins.
These data projects are run by IT teams rather than business teams. The move to Actionable/Autonomous control towers will drive more value than pure analytics.
Nucleus Research has highlighted this in their recent Control Tower Value Matrix with their control tower maturity model:
But these control towers really need to be driven and crafted by business resources, and the technical aspects need to be automated within the platform. So expect to see a shift from IT to business projects.
So, for a successful control tower implementation that is consistent with existing ERP and leverages new planning approaches, companies need real-time actions driven across multiple tiers of their supply chains and driven by AI.
Download Nucleus Research’s Inventory Optimization Value Matrix 2019
4. Finding and Keeping Talent for New Technologies
A VP of Supply Chain of an oil and gas company, recently mentioned that they are automating purchase orders and taking the buyers out of the equation. So now they need more sophisticated people who are capable of performing higher level tasks, who can translate business requirements into these new technologies. She said we’d be lucky to find two or three people who can do this in an entire organization.
In a similar vein, an expert at the Supply Chain Center at University of North Texas Dallas drove this point home saying that what we really need in future are not data scientists but knowledge scientists.
These new technologies require new skills, of which there’s a distinct shortage right now. This will only worsen as these technologies expand. Companies that can train employees or attract the right talent with these skills, will have a distinct advantage as we move towards these machine learning and artificial intelligence-driven paradigms.
And then there’s the issue of Millennials…
A study I saw recently among millennials and their preferences, showed that taking the dog to work was a top 5 requirement in many of the responses. Younger employees today want different things.
Many millennials support social causes and they want jobs that have meaning for them, that they feel are improving the world
Finding and attracting this kind of talent will require a shift on the part of companies.
These trends are steadily picking up steam and will continue to accelerate as new companies come on to the scene and older companies upgrade their existing systems. Companies should anticipate these changes and plan to align their technology, processes, and skills with these trends.
Multi-party networks are relatively mature and they are a proven technology that can be adopted and leveraged for benefits immediately. They enable companies to work much more closely and easily with their trading partners.
The most disruptive forces, such as Uber, are the ones that use a single version of the truth, with real-time supply-demand matching, with full end-to-end orchestration through to financial settlement. This model is likely to continue to disrupt other industries, so it is imperative that companies are prepared and pre-empt such a disruption with their own transformation.
The technologies that are embedded in these new models, technologies like blockchain and AI, are dependent on these new network models to extract the maximum value from data that would traditionally be siloed and inaccessible.
Finding and managing talent to support this shift is going to be critical. Companies should not only begin laying the groundwork for the technology but also identifying talent in these fields and implementing training for existing employees whose roles are likely to be impacted by it. This will make the transition much smoother and more sustainable.
Related Article: 8 Signs Your Business-2-Business Cloud Network is Broken
Related White Papers
8 Keys to Achieving Success with Artificial Intelligence in Supply Chain
This white paper looks at the fundamentals that supply chains need in place in order to achieve real results from Artificial Intelligence implementations. Download Now!
Bridge to Blockchain: A Platform for Orchestrating Multi-Enterprise Networks
In this white paper, you will learn why blockchain platforms vary widely in terms capability, disclosure, confidentiality, anonymity, the cost to use, and speed, and why companies need to leverage more than one blockchain network to realize game-changing business models. Download Now!
Nucleus Research’s Inventory Optimization Value Matrix 2019
How do inventory optimization solutions stack up? A complimentary report from Nucleus Research tells you what you need to know.. Download Now!
One Network: IDC MarketScape Multi-Enterprise Supply Chain Commerce Network Assessment
In this research paper, “IDC MarketScape: how Multi-Enterprise Supply Chain Commerce Network 2018 Vendor Assessment,” describes the companies that will be “driving productivity gains of 2 Percent” and how the supply chain technology landscape is rapidly changing. Download Now!