As organizations move forward with determining how to transform their supply chains, it’s critical to understand that successful supply chains aren’t driven just by more investment into static resources but about agility in the way that we use our assets, investments and partners. The one constant we know is that business changes will happen and these changes will have a direct impact on our supply chains increasing the need to adjust and adapt quickly to drive cost efficient and customer focused practices.
This is what supply chain orchestration is about, optimizing how we best use our resources to drive perfect order execution. While many organizations are still focusing on maturing across their siloed supply chain functions, there are a number of trends that are increasing the need for multi-party end-to-end supply chain orchestration.
Here are 3 supply chain stats that support the need for supply chain orchestration in today's quickly evolving environment.
Only 6% of 623 supply chain professionals across 17 countries think they have achieved supply chain visibility, according to a survey by GEODIS. Importantly, 70% of respondents described their supply chain as either very or extremely complex.
Supply chain complexity is one of the biggest drivers in the need for transformation we see with organizations. We live in a customer driven world and the rising requirements of our B2C and B2B customers have made it incredibly difficult to balance the successful delivery of OTIF orders with affordable costs to provide them. The bar for supply chain service excellence is continually rising and the engines and processes we’ve built to fulfill on them is often beyond it’s limits.
This is most evident with supply chain visibility. Visibility has been a hot topic in supply chain for years but it’s definition changes based on the audience and presenter. When we look at the stat above, supply chain visibility is around the granular events and milestones in the end-to-end supply chain. That only 6% of supply chain professionals feel confident in their ability to have a view into the critical milestones needed to deliver more OTIF orders is a huge problem and it’s all due to increased complexity of the supply chain function and the systems that support it.
Where supply chain orchestration and control tower platforms can help is in extending your current systems to get that end-to-end visibility across the critical milestones and events that affect your performance in driving OTIF orders.
When PwC surveyed 209 global companies, 74% agreed that the number of entities in the supply chain has increased in the past three years. And it’s a growing problem, with 94% stating that changes in the extended supply chain network configuration occur more frequently, and 95% agreeing that discrepancies between supply chain entities have increased.
A large component of the complexity mentioned above is due to the multiple parties that we are adding to our supply chains. It is no secret that as our businesses grow, the geographic footprint and order volumes our supply chain is expected to handle grows as well. That means that enlisting the right suppliers and partners to create a supply chain network that can expand your supply chain capabilities while ensuring customer excellence for every order is critical.
With more parties in the supply chain that are external, a growing management and visibility challenge forms for most companies. As you can see in the stat above, discrepancies between entities have grown and the challenge lies in lack of supply chain visibility and collaboration with these parties. This limits the ability to address key order exceptions that lead to less OTIF orders with these parties and just as important, affects the evaluation of suppliers and partners to continue to improve your supply chain network and ecosystem for better performance.
We also see that it’s not just a visibility issue but also a control and collaboration issue. Supply chain orchestration is about ensuring that your external parties can be viewed and leveraged just the same as your internal parties. We often see organizations start with supply chain visibility and then mature to deeper collaboration and orchestration as they transform their supply chain strategy.
While 80% of respondents to MHI’s 2017 annual survey said they believe that the digital supply chain will be the dominant model within the next five years, only 16% think it’s happening today.
We live in an age of great disruption and transformation in supply chain. And it’s leaving organizations with difficult questions on how to move forward with their existing IT systems. Most organizations have already made strategic decisions with their supply chain IT stack with their ERP, WMS, TMS and potentially other systems but what we are seeing is that organizations are increasingly noticing the cracks that are forming due to the limitations of these legacy systems. However, the question is what to do about it and we can see with the stat above that many organizations are still in a holding pattern in choosing the way forward.
The fork in the road is a decision to:
1) Replace what you currently have
2) Look for ways to add value and extend your current systems
What we’ve seen in the past is that replacement doesn’t solve all your flexibility issues especially with regards to the end-to-end supply chain and customer order. Core supply chain systems actually do their jobs really well for their siloed functions and are and were the right decision at the time. They were not however built with the multi-party, customer order focused supply chain in mind and there is an obvious need for systems that can extend their functionality such as control tower platforms.
When evaluating new technologies to do this the focus needs to be on their ability to be configurable and agile to the ever-changing business environment enabling your team to prove value and make changes quickly and grow with the system as needed. Digitization is changing our business processes and it’s crucial to focus on systems that not only help you get visibility into core processes and partners but also enables you to take action on this data for real-time and future optimization.
Supply chain orchestration is all about best balancing the need for cost efficiency in a world where customer excellence especially OTIF are paramount to business success. In this world, organizations with the best networks win as they can best embrace the complexity inherent in customer order fulfillment to provide a better tailored experience for each and every customer, leading to increased customer retention and attraction.