“It’s key to virtualize the supply chain”

“To make full use of the strategic opportunities created by digitization, it’s important to virtualize the supply chain, build a network with all partners and automate all processes,” stated Prof Dr Carl B. Welker, Director of the IIW Institute of Information Management & Technology at the Supply Chain Management Strategies Summit in Berlin. The key conclusion from the event was that, while digitization and collaboration offer strategic opportunities, it ultimately comes down to people.

By Ramona Held

At the 1st Annual Supply Chain Management Strategies Summit, held in Berlin in November 2017, over 250 senior supply chain leaders and innovators from across Europe shared their experiences and future strategies during an inspiring three-day event.

Among the impressive line-up of speakers was Edwin de Boer, Director of Supply Chain Operations at Cisco, an organization that has evolved from a hardware company to a software company. He talked about the company’s digital journey and showed developed technologies in the categories of data & analytics, collaboration, Internet of Things and mobility. In illustration of Cisco’s focus on understanding customer requirements, he presented details of 3D printing for prototypes resulting in 66% cost reduction and 50% less production time. He also explained that Cisco ensures real-time order visibility across the supply chain with its universal order visibility application which provides real-time tracking on a single-source-of-truth dashboard for all users and devices.

Another interesting contribution came from Daniele Fregnan, Global Senior Logistics and Information Technologies VP at Benetton Group, who showed how automation enhances efficiency. Benetton uses a control tower to achieve seamless flow integration and complete online visibility of the end-2-end (E2E) supply chain. The information hub interacts directly with the connected ERP system and connects all supply chain partners.

Digitization as enabler for customer-centric supply chain

In the presentation by Liberty Global, it became apparent that the company has mastered customer-focused supply chains. This is especially key for the development of new services, explained Anita Arts, Managing Director of Supply Chain. She sees digitization as an “enabler for a customer-centric supply chain,” and she highlighted game-changers like Apple iTunes which has completely changed the music industry with its new business model. To understand customer needs, Liberty Global worked very closely with its clients during this transformation journey. With the help of a customized Plan Do Check Act (PDCA) cycle (in this case: listen to customers, co-create, analyse impact, re-develop), Liberty Global has developed a mobile reverse logistics solution for and with its customers. The resulting app allows online self-service diagnostics for faulty smartphones.

Proven tips for close collaboration

Throughout the event, various speakers from industries such as electronics, textiles and foodservice agreed on the importance of collaborative relationships with suppliers and customers in order to dramatically improve product availability, service levels and realizable costs. Several of the presentations included practical examples of how digitization is helping companies to collaborate with their supply chain partners. Iveta Kozkickova, an independent management consultant, introduced a concept of virtual teams along the entire supply chain which was implemented at Covestro, thus improving the communication between the divisions and setting a clear direction with shared KPIs. Further examples came from the Benetton Group, where vendor and customer portals are used to share contracts, forecasts, order status details and packing lists throughout the supply chain.

Another model was demonstrated by Alexander Bahr, Director of Supply Chain Information and Integration at McDonald’s. The company’s business model is founded on the three-legged stool model which describes the cooperation between the owner/operators, the suppliers and the company employees. Although the McDonald’s restaurants worldwide are independent SMEs owned and operated by entrepreneurs, they work together towards a common goal. The strength of the alignment between the company, its franchisees, suppliers and employees is one success factor of McDonald’s. The business model enables the development of innovative strategies based on local experience and customer insights. All supply chain partners are highly motivated to provide support.

Empower your employees first

Digitization and collaboration offer strategic opportunities, but ultimately it comes down to people. Employees with the right training are essential in order to achieve the full benefits, according to Tim Hourihane, Vice President Supply Chain Transformation EMEA at Estée Lauder. He dedicated a large part of his presentation to the important question of how to develop expert skills and how to ensure the success of change management initiatives. He presented a value cloud featuring key values such as ‘passion’ and ‘groundbreaking’. He pointed out that “building a world-class talent base and optimizing performance will be a clear competitive advantage in the future”. He encouraged the delegates to “empower, enable and engage people!” adding that another essential motivational element is “having fun”. As an example, he mentioned an internal supply chain competition in which everyone was invited to record a video of how a supply chain should work. All the videos were published, and the best video won a prize. The importance of having fun was also echoed in the summary at the end of the panel discussion.

Ramona Held is a supply chain excellence expert at Peri Group