By nature, supply chain success is largely dependent on the chain’s ability to adapt and evolve within its environment, much like a living organism. However, unlike a living organism, this process does not happen instinctively. It’s the responsibility of supply chain professionals to foresee trends and risks, and in turn, recognize how to respond to them.
We are facing an era of great political, social and environmental uncertainty, and the world’s 4th industrial revolution is reshaping supply chain management. All these technological advances and changes bring about a whole new set of risks for supply chains. I’m no psychic and nobody is able to predict the future of the industry exactly, but based upon current trends and forces of change, I have put together a few success criteria, or rather, a survival list for the supply chains of the future.
Cyber vigilance
Digitalization and the IoT have revolutionized supply chain management, boosting efficiency across all processes. But digitalization can be both a blessing and a curse; digitalizing processes may make companies more efficient, but it also makes companies more vulnerable to cybercrime and data theft. As innovations such as the IoT and RFID tracking become more common among supply chains so does hacking, spoofing and digital theft.
Due to the complexity and diversity of supply chains, particularly those operating internationally, supply chains have become a key target for hackers, given that there are multiple access points of varying strengths. Around 80% of cyber breaches occur in the supply chain. However, many companies still haven’t realized the severity of the situation and cyber security consequently gets put at the bottom of the priority list. The Maersk NotPetya attack in 2017 is a classic example of a company underestimating security risks and overestimating its supply chain capabilities. The Dutch shipping giant’s system was attacked at ports in 4 different countries, causing delays and disruptions that lasted several weeks. Though it is believed that no business or consumer information was leaked, the company had to reinstall its entire infrastructure. According to cyber security expert John Boles, the attack could have been simply avoided by applying Microsoft updates and patching software.
Cybercrime is only expected to increase; it’s estimated that by 2021 the global cost of cybercrime will exceed $6 trillion. Nobody can avoid these risks entirely but it is time for a change of attitude. Companies should adopt a more stringent and continuous assessment system of their supply chains and regulate supplier capabilities more closely. As shown by Maersk, it is possible to come out of a cyber-attack without any fatal damages, but a little bit of cyber vigilance can go a long way and save supply chains a lot of money and hassle. Although new and more secure technology is constantly being developed (e.g. blockchain), it is inevitable that as technologies become smarter, cybercriminals will too.
Active engagement
Supply chain leaders must be able to engage their workforce to attract and retain employees, and take a more active role in education. Today’s workforce isn’t getting any younger; people are retiring earlier and quicker than they can be replaced, the requirements for supply chain jobs are expanding, and the industry is having to contend with the perception that supply chain jobs lack excitement. If companies are to prepare for the future, this supply chain talent gap must be addressed, as demand related pressures are ever increasing.
Attracting the next generation of supply chain professionals is often a challenge. Millennials and Generation Z have different expectations to their Baby Boomer predecessors as to what a job should provide. It’s not just about good wages and suitable hours and working conditions – these are fundamental; millennials seek opportunities for career progression, professional development and recognition in a profession. Organizations therefore need to be visibly committed to employee development and offer clear career paths for their employees. Furthermore, to attract new talent the industry must make an effort to change its image. According to DHL, to be more attractive, the industry should take advantage of the industrial revolution by emphasizing the need for skills robotic management, AI and AV control- these are job aspects that would appeal to the younger demographics. One approach to engaging young professionals could be to implement gamification in the workplace. Adopting a system that incorporates game mechanics, like setting objectives, leaderboards, progression bars and rewards would provide real-time feedback and the instant gratification that these youngsters are accustomed to, while encouraging productivity.
Artificial Intelligence may solve many of the industry’s shortage and optimization issues, but human workers will still be necessary in the foreseeable future, and there will be a need for greater expertise and understanding of machine learning. AI will require jobs to be redesigned and as a result, workers will have to learn new skills. Furthermore, traditional education can no longer keep up with the rate of innovation, it is therefore important for employers to have an active role in educating workers and prospective talent by investing in continuous, real-time training and education.
Embrace innovation
To put it plainly; you either innovate or get left behind. There are several drivers behind innovation, such as the need for differentiation, cost minimization and increasing demand, but it arguably all boils down to satisfying the customer and meeting expectations. The companies with the most innovative and efficient supply chains are naturally able to deliver the best and quickest results for customers. It’s a survival of the fittest, if you will. It is important to note that supply chain innovation comes in many forms; it’s not all about drones, robots and blockchain technology. Innovation can simply mean refining and improving processes and current technologies.
With the increasing complexity of customer requirements and the mass influx of data that supply chains now have to process, old methods are becoming outdated and obsolete at a quickening speed, making innovation a necessity rather than an option. Many companies focus heavily on product or service innovation but seem to neglect innovation within their supply chain operations and processes, therefore missing out on an entire competitive advantage. A 2018 DHL report on digitalization found that out of 350 supply chain and operations professionals that were surveyed, only 5% were fully capitalizing on the potential of physical innovation and data analytics.
What do you think is essential for ensuring a brighter, successful future in supply chain management?
