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The modern supply chain could be a valuable source of data that helps an organization improve operations and even products. However, many supply chains remained bogged down by outdated technology and processes. In this Q&A, Brittain Ladd, vice president of supply chain analytics at Genpact, explains how digital supply chain transformation can make the supply chain a strategic part of an organization. Genpact is a global consulting firm that focuses on digital transformations with a focus on supply chain strategy and technology.
Why is it important for companies to think about undergoing a digital supply chain transformation?
Brittain Ladd: The primary issue that companies face with their supply chains is that even with solutions from Oracle, SAP, JDA and so forth, much of the supply chain is still manual, and much of the supply chain is still a black hole. Companies today -- larger companies especially but even midsize companies -- almost always have a global supply chain. They may have visibility for what they do domestically, but they lose that visibility internationally. Being able to apply digital solutions that can track the movements of products, that's really the biggest thing that a digital supply chain transformation helps companies correct.
What are some characteristics of a digital supply chain transformation?
Ladd: Supply chains are incredibly manually intensive and digital transformation is really about automation. It's finding opportunities for taking manual processes -- especially those that are repeatable -- and automating them. You can automate in any number of ways, but really machine learning and AI are the two big digitally focused technologies that help companies [with transformation]. First, by identifying where they are currently operating manually, and then by showing them how they can actually automate through the use of bots, machine learning or AI. Then once you teach them how to automate, you can work on how to leverage the data that you're collecting. For example, you can run analysis and identify who your customers are, what they want, what their buying behavior is, what their consumer behavior is. You can harness all of that information to transform how the company operates. So the supply chain is strategic, and the digital supply chain transformation is mandatory because if you do that you can actually help the corporation transform itself overall.
Are companies understanding the strategic nature of the digital supply chain or is it still a work in progress?
Ladd: It's an incredible work in progress. I still read about companies that put out press releases that say we've implemented a TMS or we've implemented a WMS, but when you scratch the surface what you find is they are still running on a traditional ERP platform like Oracle or SAP. They have technology -- and much of it can be best of breed technology -- but they don't have an integrated supply chain that leverages machine learning and AI. The supply chain isn't living in their system, and the big thing the system can do is to tell you what has already happened. You should look at digital as a way to tell you what's going on in your supply chain in almost real time, versus the traditional supply chain that tells you what already happened.
Why is this important?
Ladd: If all you're able to do is read reports about what's already happened, then you have no ability to affect change. If you have the ability to evaluate a supply chain and understand what your supply chain is doing in real time, now you have the ability to run analytics and business intelligence that can actually help you affect change today. You're able to provide a better customer experience tomorrow, you can mitigate disruptions in the supply chain, and you can help shape the supply chain so that it's a much more effectively operating organism. That's really what the supply chain is -- an ecosystem that's alive.
How can analytics help identify and mitigate potential supply chain disruptions?
Ladd: It's more than analytics. You need to have visibility, transparency and analytics, but you also need the ability to perform optimization and what-if scenario analysis. When you have those four things, regardless of where your supply chain is located, regardless of how global a company's supply chain is, you have the ability to collect data and run analytics. When something comes up like the implementation of a new tariff, the company through the digital supply chain can run analysis and say 'Where am I impacted in my supply chain because of the tariffs? What's the financial impact?' and then you can do what-if analysis to say 'What if I source this product from another country and what is that impact?'
So understanding what may happen in your supply chain can have a big business impact?
Brittain Laddvice president of supply chain analytics, Genpact
Ladd: Here's what's important. If you aren't able to leverage your current state supply chain, you may say 'We'll just source it from another country,' but you have to really understand the impact of doing that. If you source product from somewhere where you don't have a supply chain relationship, you might have to fly product by air or do expedited shipping, or the company you want to source from may not have the capacity to meet your needs. So even though there's an alternate source of material, the math from your analytics may tell you that you're better off paying the tariff. However, the analytics may show that it's better to only source a percentage of your product from Company A, B or C, and then work with your customers and explain that you're going to change the delivery model of the order. So that's the beauty of having a supply chain with visibility, transparency, analytics and the ability to do what-if scenario planning because it just helps companies say 'We don't guess what we're going to do if there are tariffs or other disruptions, because our supply chain runs analytics that tell us where potential disruptions are and we can mitigate the disruption or avoid it completely.'
What may happen to companies that don't undergo a digital supply chain transformation?
Ladd: The digital supply chain is a must-have to be competitive, it's just that simple. Companies have always competed on their supply chain. Walmart became Walmart because of their mastery of supply chain and logistics. The game has now changed and a digital supply chain is an absolute must-have for companies to be competitive because so much of what we do on a daily basis is becoming digital -- the IoT, the smart home, the fact that customers want things in hours and not days. The digital supply chain, especially machine learning, AI and the science of supply chain optimization are all must-haves. If you don't have them, I can assure you there will be companies that go out of business simply because their supply chain isn't digital, that's just going to be a fact.