How to design a supply chain transformation road map that supports a seamless transition to a DOS
The COVID-19 pandemic has put many manufacturing organizations under enormous stress. However, the unexpected pressures of the last 18 months have also given manufacturers a much-needed push to review and evolve their traditional production systems for enhanced agility and control. As a result, many organizations have fast-tracked their digital transformation journeys to harness the benefits of smart, integrated supply chains. However, the transition to a digital operating system (DOS) has some challenges. A supply chain transformation road map that focuses on integrative improvement is key to orchestrating a successful DOS implementation that achieves supply chain integration without disruption.
A successfully digitized supply chain becomes one with the organization; traditional operational silos are dismantled to form a collaborative demand-driven value network (DDVN) that synchronizes internal processes and practices with external partners for full visibility. A DOS-enabled smart supply chain is empowered by actionable data that enables manufacturers to respond to events with real-time intelligence and make faster, better and more efficient decisions for the future. The benefits of being able to understand and respond to customers with speed, relevance and insightful actions improve an organization’s reputation, boost its revenue stream, sustain demand for its products and services, and, ultimately, strengthen its market position for long-term growth.
An organization’s supply chain transformation is thus essential to its digital transformation, which is crucial to maintaining a strong competitive position. Therefore, supply chain integration needs to be done well; supported by a supply chain transformation road map that is strategically defined by an organization’s specific needs.
Three stages of an effective supply chain transformation road map
In the rush to digitize and integrate their supply chains, too few organizations prepare their people and processes for the challenges of transformation. Unless it is guided carefully with collaborative implementation and integrative improvement initiatives, organizational change can undermine employee wellbeing, interrupt productivity and cause expensive delays in realizing the benefits of a DOS. An effective supply chain transformation road map can mitigate the disruptive challenges of digitization by following a staged integrative improvement approach: Assess – Plan – Execute and Sustain.
1. Assess current strengths and weaknesses
Each manufacturer will embark on digitization and supply chain integration from a different starting point and thus, every supply chain transformation road map needs to propose a plan based on the organization in question’s assessment of its unique needs. The assessment stage looks at an organization’s existing levels of capabilities in the following four areas:
- Digital competence
- Integrative improvement
- Operations alignment
- Value chain alignment
Here are some highlights from each of the four areas of assessment.
|1. Digital competence||Assessing an organization’s digital capability helps business decision-makers make relevant technology choices for a seamless transformation.|
|2. Integrative improvement||A continuous improvement (CI) workplace culture is a crucial foundation to support an organization’s digital and supply chain transformation. An integrative improvement approach to CI initiatives supercharges the process by implementing improvement holistically, ensuring a sustainable company-wide transformation.|
|3. Operations alignment||A digitized supply chain is part and parcel of the organization as a whole, seamlessly connected to production processes with external and internal stakeholders fully aligned. The operations alignment assessment helps business leaders design and implement the most relevant transformation process possible.|
|4. Value chain alignment||An outside-in supply chain transformation strategy optimizes an organization’s transition to a DOS to create a DDVN. A DDVN links the manufacturer with its suppliers, distributors and customers with real-time visibility and information from point of origin to delivery. A value chain alignment assessment helps transform the organization’s supply chain into a DDVN.|
2. Plan the implementation
Once an organization’s assessment stage is completed, the results can be used to draft its unique supply chain transformation road map with an emphasis on integrative improvement. The planning stage focuses on creating a step-by-step implementation based on a clear understanding of the organization’s existing digital competencies, CI initiatives, operational integration and alignment. No two manufacturers will have the same requirements, which means no two plans will be exactly alike.
A well-planned road map implements initiatives in a sensible order, aligns digital transformation milestones with strategic objectives, addresses gaps in resources and digital skills, improves cross-functional alignment, synchronizes integrative improvement initiatives for company-wide impact, and regularly reviews progress against defined metrics.
3. Execute and sustain
A supply chain transformation is put to the test in the execution stage. A successful and seamless transition to a digitally enabled DDVN requires behavioral change from the organization’s executive and management teams. Without leadership buy-in, all efforts at change and improvement will be short-lived and result in costly disruptions such as employee disengagement. To sustain an organization’s progression from a traditional, siloed and centrally controlled entity to an integrated and DDVN powered by a DOS requires human-led processes augmented by digital technologies that enable:
- A united and collaborative leadership committed to positive behavioral change
- Clear communication across the company
- Tools like leader standard work (LSW) to support ongoing continuous and integrative improvement through advanced data analysis
- Integrated, digitally fluent teams linked through standardized work routines and shared objectives
- Data driven visibility to inform critical tasks with accountability
In a traditional manufacturing organization, the supply chain is an external function that operates as a separate silo. In pursuit of digital transformation – and all the benefits it confers – manufacturers need to integrate their supply chains with their production processes. An organization’s successful transition to a DOS hinges on its supply chain’s transformation to a DDVN – and vice versa. Thus, a carefully and uniquely designed supply chain transformation road map is crucial to guiding an organization’s digitization process, ensuring that all its people, processes and practices are aligned for integrative improvement to sustain success.