Pearson on Excellence: How to dominate through digital

In a recent white paper, Cisco stated that “the Internet of Everything represents $14.4 trillion in ‘value at stake’—the combination of increased revenues and lower costs that is created or will migrate among companies and industries from 2013 to 2022.”

According to the paper, five factors compose this total: asset utilization (reducing costs): $2.5 trillion; employee productivity (greater labor efficiencies): $2.5 trillion; supply chain and logistics (eliminating waste): $2.7 trillion; customer experience (adding more customers): $3.7 trillion; and innovation (reducing time to market): 3.0 trillion.

What should this dramatic pronouncement mean to supply chain decision makers? On the one hand, Cisco states that digital interconnectivity could eliminate $2.7 trillion in waste—the supply chain and logistics portion. But supply chain management’s scope is far broader than “eliminating waste.” Great supply chains can also improve asset management, raise employee productivity, enhance customer experiences, and accelerate innovation cycles. So, supply chain management actually has a stake in all $14.4 trillion of the dollars to which Cisco referred.

Cashing in on “value at stake”
Accenture’s view is that the value at stake refers most directly to digital technology’s ability to create business value for some companies and—as a result of sloth or inaction—to undermine it in others. Consider what’s happened in publishing, music, photography, and telecommunications. In these and other industries, digital technology has created huge value for new and existing companies that recognized and leveraged digital’s game-changing potential, and literally swept away organizations that were less prescient or slower to react.

The winners created new business and operating models designed around digital. The also-rans probably didn’t ignore digital’s potential. But they may have been content with patchwork responses: digitizing a process here or there, or occasionally enhancing functions by substituting digital capabilities for manual ones.

The same distinction applies to supply chain management. To capture a piece of the value at stake, a new perspective may be needed: Re-imagine the supply chain as a digital supply network (DSN), a digital organism that helps companies capture savings and glean competitive advantages by fostering networked processes; optimizing the complete enterprise instead of individual functions; uniting designers, suppliers, manufacturers, distributors, logistics services providers, retailers, and even customers; and inspiring new ways of thinking and working by boosting visibility, collaboration, and innovation.

Every company will obviously choose its own flavor of DSN, and it will be a long time before all of an organization’s operations are totally designed around digital. But in their effort to capture the value at stake, most supply chain leaders will put four goals front and center—leveraging digital technology to do a better job of being connected, intelligent, scalable, and rapid.

Connected.Leveraging various digital capabilities, the most connected companies enjoy extensive visibility, outsized influence, and high levels of control. Connected companies interact more fully with the entire business ecosystem. Often in real time, they react, relate, and communicate more completely with customers—diagnosing customer needs and involving them in product-planning and design initiatives.

Intelligent.Savvy companies extend their connectivity advantage by using digital technology to turn data into valuable information. The key is leveraging analytics, cognitive equipment, and smart apps to provide the right information for decision making. This is what can lead to the creation of an intelligent network.

Scalable.Companies often struggle to scale their supply chains up or down as circumstances require. However, smooth scalability becomes more attainable when a supply chain has been imbued with high levels of digitally enabled connectivity and intelligence. Processes become easier to optimize and duplicate. Errors and anomalies are simpler to spot, and companies are better able to add or reduce partners and suppliers as needed. They also may become more effective at targeting niche markets, segments and customers.

Rapid.The further ahead we look, the more a company’s processes and priorities will need to change as fast, or faster, than their products. Thus they’ll need digital technology to diagnose more quickly, adjust more rapidly and execute more efficiently. They’ll also require accelerated access to resources, as well as the ability to swiftly shift resources within the company and across the extended enterprise. Perhaps most important, they’ll need to rapidly increase or decrease production levels in response to shifting levels of demand.

Every company has scores of unique priorities. However, the more their supply chains excel at being connected, intelligent, scalable, and rapid, the better their market and financial performance is likely to be.