From the June 2021 print edition
Over the past year technology has crept into how businesses operate across many industries. Among other changes, the COVID-19 pandemic has pushed meetings and conferences online, accelerated e-commerce and given rise to work-from-home technology.
The move towards digitization has not left out supply chain organizations. For example, McKinsey
& Company’s recent McKinsey Global Survey found that companies have accelerated the digitization of their customer and supply chain interactions, as well as internal operations, by three to four years.
The effects of technology adoption on the supply chain have already begun to be felt. The 2021 MHI annual industry report released during the ProMatDX trade show – held online in April – revealed that among over 1,000 manufacturing and supply chain leaders polled, 83 per cent said they believe that digital will become the predominant model within the next five years, while 22 per cent believe it’s already here.
Pandemic aside, it’s easy to see why supply chain organizations would adopt technology. The competitive advantages of doing so can include better and faster planning solutions, an improved response rate and optimal growth, along with the reduction of revenue and margin leakage, says Sanjiv Gupta, CEO of OpsVeda, a software company.
Gupta agrees that the pandemic has only sped up the process of technology adoption. Going forward, supply chain organizations will prioritize technologies including AI-powered self-learning systems, operational intelligence platforms, intelligent data platforms as well as data-led initiatives, he predicts.
Yet a barrier that companies face in adopting digital supply chain technologies is the multi-year commitment many of them require, Gupta adds.
“Platform-centric IT initiatives could easily turn into the IT wild west. Data lakes could quickly become data swamps,” he says. “The right approach would be to focus on the customer. Focus on business imperatives. Create a data-led initiative that produces incremental benefits and funds itself.”
Focus on challenges
Investing in digital technology allows companies to find efficiencies while increasing agility, says Daniel Oh, vice-president, medium business segment at Sage Canada, a cloud technology company. When searching for benefits, Oh recommends looking at common business challenges that distributors face.
For example, according to the company’s recent report, Forward Together, which looks at the pandemic’s impacts on SMEs, 81 per cent of distributors are dealing with global events, 75 per cent are dealing with supply chain disruptions and another 75 per cent face rising costs and margin erosion. Digitization can help organizations deal with cost reductions, improve data security, realize faster delivery, better customer service and experience, all of which improve efficiency and productivity.
And while the report shows that 79 per cent of distributors have a digital transformation strategy, implementing the right technology into a Canadian organization can seem daunting. A perceived lack
of expertise, knowledge or skill, as well as fear that costs will outstrip ROI, can hamper progress. But now is the best time to reassess digital initiatives, Oh notes.
The pandemic has offered a glimpse at a future in which digital is central to most transactions, Oh says. This has forced many organizations further up the adoption curve, almost overnight.
“We’re seeing a number of technologies that are emerging from this pandemic,” he says. “It’s creating some really unique advantages for Canadian companies specifically.”
Robotic process automation and warehouse automation are among the technologies that are especially key to supply chain, Oh says.
The Internet of Things, artificial intelligent machine learning and advanced data analytics are also becoming increasingly important.
Among these technologies, Oh puts the cloud at the top of the list. There are several benefits
to not only having all an organization’s technology remotely accessible, but the cloud is scalable and leverages the power of the internet to increase speed, he says – the cloud makes it possible to view an entire global supply chain in real time.
“All these things are interlinked as well,” he says. “RPA, the Internet of Things, artificial intelligence – none of that technically works without the cloud behind the scenes.”
When looking at any technology, begin with the end goal in mind and what you want to achieve through digitization, advises Vijay Jainaraine, director of eProcurement & analytics, procurement & supply chain at Rogers Communications. Jainaraine says he looks at technology from a data and reporting perspective. While systems help users, organizations must know what those users are working on. “Every time we think of building systems or using systems, the end goal is in the data that’s going to be coming out of it,” he says.
Procurement organizations can choose whether to buy a best-of-suite system, meaning one system that can do everything for you, or best in class, which works better for a specific or niche process. Each has its pros and cons, and Jainaraine leans towards a best-in-suite solution due to the added flexibility.
However, many systems, such as SaaS solutions, don’t give enough flexibility to configure or make changes, leaving organizations stuck with an out-of-the-box solution. This can work for less complex organizations, while more complex ones making purchases for multiple lines of business may need a system that’s flexible enough to adapt to different business needs.
“My view is for complex organizations to go with a best of suite that’s flexible enough for you to build your own processes that are unique to your organization,” Jainaraine says.
Policy is key
When looking to adopt a new technology or system, start with thinking about the organization’s policy, Jainaraine recommends. Are policies clear and do they make sense? Do users know what they need
to do, when they need to engage procurement and what can they do on their own? What’s the system being used for? Is it for complex or simple purchases? Once these types of questions are addressed, then build your system.
It also helps to have the internal capabilities on your team to deal with a cloud-based solution, Jainaraine says. It’s an advantage to have team members who can make changes themselves, rather than relying on outside departments like IT.
“I’ve also got the skill sets on my team to do the dashboard development,” he says. “That’s critical because when you’re building dashboards, you’re not sure exactly what you want.
You have an idea, and then you’re building, you’re constantly changing and making enhancements and adding things. You want those resources on your team to make those changes on the fly.”