In a SCM World report offered by Kinaxis here, Gartner’s SCM World’s cross-industry learning community, with the help of author Pierfrancesco Manenti and his co-contributors, offers some insights for those supply chain executives and managers trying to make decisions about SCM technologies.

 

Important and disruptive technologies

Interestingly, the top 5 important and disruptive technologies (according to a poll of more than 1,400 respondents) were, in descending order:

  1. Big data analytics (81%)Graph of poll results on SCM disruptive technologies
  2. The digital supply chain (68%)
  3. The Internet of Things (IoT) (64%)
  4. Cloud computing (58%)
  5. Advanced robotics (53%)


The report also suggests that there is a hunger in the marketplace for technologies. More than half of the respondents (57 percent of 277) thought that—as of today—“the technology is ready and it is the right time to invest” or the technology “has been there for years….”

 

What kinds of technologies?

The report categorizes SCM technologies in five (5) groups, with subcategories as follows:

  1. Control tower
    1. Supply chain visibility (SCV) and risk
  2. Forecast to delivery
    1. Demand planning and forecasting (DPF)
    2. Supply chain planning (SCP)
    3. Sales and operations planning (SOP)
  3. Order to cash
    1. Logistics and management (LOM)
  4. Procure to pay
    1. Supplier relationship management (SRM)
    2. Spend analysis (SAN)
  5. Design for profitability
    1. Product lifecycle management (PLM)
    2. Smart manufacturing management (SMM)

 

This seems to cover the full gamut of SCM. And, as reported above, the majority of marketplace respondents say that “the technology is ready.”

 

So, why the long faces?

If “the technology is ready” for deployment, why the relatively lackluster reception by those who have purchased and implemented these cutting-edge technologies?

Graph of Voice of the Customer poll results

 

More than 200 respondents were asked about things like:

  • The scale of the impact of deployed technologies on the performance of their supply chains
  • The reliability of the technologies and the vendors behind them
  • Their view of the innovation expressed in the technologies supplied
  • The speed to deployment and benefit
  • The value they received for their investment

 

The author of the report said, “The results of the VOC [Voice of the Customer] survey were disappointing, as the customers who participated gave vendors’ digital capabilities an average score of only 3.2 on a scale of 1 to 5.” That’s barely above midrange! Where’s the excitement about these new technologies?

 

What this says to me

Maybe I’m reading something into this report that isn’t there. Maybe I’m missing the point entirely. (You should read the report and decide for yourself.) But, here’s what these results say to me:

 

Despite the SCM leaders’, managers’ and executives’ sense that “the technology is ready,” their expectations for real and measurable benefit from these technologies are low. They don’t really seem to expect much ROI (return on investment) from their expenditures on the new technologies, and—if “scale of impact” and “value for money” measures mean anything—they are getting what they expected. In other words, they had low expectations going in, and their expectations were met! The got mediocre results.

 

This says something more to me, too.

 

It tells me that, while technologies like big data analytics, supply chain digitization, the IoT, cloud computing, and advanced robotic all have importance and will all have their own dramatic effects on supply chains, there is something more fundamental that is not being effectively addressed by any of these highly-promoted technological solutions.

 

I don’t believe the “average Voice of Customer score” on this report would be a mediocre 3.2 out of 5, if the following had been typical of the results being achieved by the implementation of the new technologies:

  • Sustainable achievement of planned service levels, irrespective of demand patterns, accompanied by
  • Reductions in average inventory of between 30 and 50 percent, along with
  • Cost reductions in the neighborhood of 20 percent, with
  • Planning lead-time reductions of up to 85 percent, all the while
  • Greatly reducing or eliminating the costly and continuous “firefighting,” expediting, and frustration found in most operations and SCM organizations

 

These (listed above) are typical results for demand-driven supply chains as reported in Demand-Driven Supply Chain Management by Simon Eagle.

 

Maybe… just maybe, the really important and disruptive technology that is being overlooked by so many supply chain managers isn’t a technology at all, but an entirely new approach to supply chain management. Without the demand-driven approach, the results of other SCM technologies are just mediocre.

 

How about you? Are you ready to become a demand-driven supply chain leader?

 

We can help. Leave your comments below, or feel free to contact us directly, if you prefer.

 

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CITATION: Manenti, Pierfrancesco, Patrick Van Hull, and Geraint John. In Pursuit of the Right Supply Chain Technology Solution - Mapping the Path to Supply Chain Digitization. Report. Boston: SCM World (Gartner), 2017.

 

CITATION: Eagle, Simon. Demand-Driven Supply Chain Management: Transformational Performance Improvement. New York: Kogan Page, 2017.

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