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Nulogy 2023 Predictions: Another Year Surviving the Supply Chain Storm

vmblog-predictions-2023 

Industry executives and experts share their predictions for 2023.  Read them in this 15th annual VMblog.com series exclusive.

Another Year Surviving the Supply Chain Storm

What's in Store for Supply Chain Practitioners in 2023

By Henry Canitz, Vice-President, Industry Strategy, Nulogy

The supply chain is still under immense pressure from many factors, including disruptions from the ongoing COVID pandemic, war, increasingly severe weather events, geopolitical shifts and conflicts, persistent labor shortages, highly variable material availability, and increasing focus by everyone on the supply chain and shifting consumer expectations. 

Some would say that we are in the middle of a supply chain storm. In reality, in every cloud there is a silver lining, so for every opportunity there are corresponding challenges and vice versa.

Here are my picks for the top five opportunities and challenges for the supply chain in 2023.

Improving Visibility and Collaboration in the Supply Ecosystem: 

Supply chains are supply webs or ecosystems. This is not a new concept and during the past 30 years the complexity of connections in the supply chain, and the degree to which companies rely on supply chain partners, has increased dramatically. In effect, companies today don't compete against other companies: their supply chain ecosystems compete against other supply chain ecosystems.

An ecosystem is a community of partners that shares and combines capabilities and develops equitable relationships to generate and exchange value to all participants. The supply ecosystem is all the parties in the upstream supply chain that are involved in bringing a product to market. Gartner, in its Predicts 2022 Supply Chain Strategy research paper, stated that by 2026, more than 50% of large organizations will compete as collaborative digital ecosystems rather than discrete firms, sharing inputs, assets and innovations.

Unfortunately, many companies have mostly ignored building advanced capabilities to facilitate near real-time visibility and dynamic collaboration in the supply ecosystem, and today rely on mostly manual methods (email, phone calls, spreadsheets) and legacy tools (EDI, ERP Portals) to manage this growing and critical part of their business. Improving visibility and collaboration is an enabler to improving efficiency and effectiveness of the supply ecosystem. In fact, research by PwC in February of 2021 showed that investments in supply chain visibility can generate 8% additional revenue and reduce costs by 7%. Most senior level supply chain practitioners would be heralded as heroes if they could achieve those levels of improvements. Improving visibility and collaboration in the supply ecosystem is not a nice-to-do: it is an imperative to stay competitive and maybe even in business in 2023 and beyond. 

Reducing Waste While Increasing Customer Service: 

Many believe that reducing waste while also increasing customer service is not possible because these are opposing goals. For instance, often to improve customer On-Time and In-Full (OTIF) fill rates you must carry more inventory, but carrying more inventory usually leads to more waste through obsolescence. However, that thinking is obsolete in today's highly variable and partner-dependent supply chains. We all want to reduce waste and increase customer service, but to do so will require some "out-of-the-box" solutions.

One of those new classes of solutions is the Multi-Enterprise Supply Chain Business Network (MESCBN) Platform. MESCBN software platforms support a community of trading partners (or ecosystem) that need to work, share data, communicate and collaborate on business processes that extend across multiple enterprises, with an end-to-end/shared focus. In other words, MESCBN platforms are purpose-built to support "end-to-end" supply chain visibility and the improvements in operational efficiency and effectiveness that comes with improved visibility. For Fast Moving Consumer Goods (FMCG) companies that on average outsource 30% or more of their manufacturing and packaging operations, deploying a MESCBN platform enables waste reduction and improved customer service.

Mining and Refining Supply Chain Data, "The New Oil": 

We all know that getting access to data is important. However, knowing and doing are two very different things when it comes to supply chain data which resides predominantly outside of a company's enterprise systems. To complicate the issue, just having access doesn't provide much value. Clive Humby, a British mathematician and entrepreneur in the field of data science and customer-centric business strategies, said "Data is the new oil and like oil, data is valuable, but if unrefined it cannot really be used. It has to be changed into gas, plastic, chemicals, etc. to create a valuable entity that drives profitable activity".

The supply chain organization needs to own supply chain data because supply chain professionals are the only ones that truly understand supply chain data. Companies must invest in mature data management capabilities which are a critical enabler of automation and digital transformation. It's complicated and difficult to ensure what is called the "7 Cs of good data"; Clean, Consistent, Comprehensive, Consolidated, Convenient, Current, and Computable. Supply chain data also includes both structured and unstructured forms of data adding complexity. No one ever said supply chain management would be easy, but data remains both a challenge and an opportunity in the supply chain.

Increasing the Clock Speed of Multi-Enterprise Business Processes: 

Every supply chain practitioner should relate to the famous line spoken by Maverick in the movie Top Gun, "I feel the need, the need, for speed". Market dynamics are quickly changing today and supply chain practitioners are challenged to sense, analyze, collaborate and respond fast enough to meet the breakneck clock speed of the markets they serve. "The Need for Speed" is a major supply chain challenge today and quite possibly one of the biggest opportunities as well.

A few years ago the average time for a brand manufacturer to bring a product to market was 123 days. That's roughly 4 months. Much can change in the market in 4 months. Failure to compress "time to market" likely means that a product will be displaced or replaced by a competitor that has increased through "clock speed" to bring new products to market.

A great way of increasing the clock speed of the supply chain is through real-time visibility and dynamic collaboration which helps to remove wait times between when a change or disruption occurs and when you sense the change to be able to analyze, collaborate and respond. Most industry 4.0 investment has been focused on inside-the-four-wall investments. Focusing on improving visibility in the upstream supply ecosystem will provide the greatest band for the buck. To be competitive, I believe that within the next five years, supply ecosystems will need to increase their clock speed by 10X.

Automation of Manually Intensive Manufacturing and Distribution Tasks:

One of the biggest challenges is the lack of labor to work in manufacturing and distribution operations. Even though most operators have increased salary and benefits significantly over the last couple of years, they are still finding it difficult to find the employees needed to operate their businesses. Many companies are investing in automation in the form of robotics and intelligent systems. This trend will continue and even increase in 2023 and beyond as these systems become more agile, faster, smarter and less expensive compared to labor costs.

Robots and intelligent systems can be a force multiplier. Autonomous mobile robots (AMRs) and automated guided vehicles (AGVs) are being deployed to move materials around facilities. Faster and more agile robotic arms can be reprogrammed for a new task within minutes making them much more relevant to job shop manufacturing and packaging operations. Robots can operate 24 hours a day, 7 days a week at speeds that support most operations today. Artificial intelligence infused purpose-built software fed with real-time information can quickly identify, analyze, and act when that action is within predetermined limits or inform a human counterpart when human interaction is required. In effect, these intelligent systems can handle the majority of decisions at lightning speed 24 hours a day, 7 days a week. 

Most supply chain practitioners live for the challenge of surviving and thriving in the highly chaotic and constantly changing world of supply chain management. The key is to constantly evolve through incremental and sometimes radical improvement efforts. 2023 should bring the opportunity to make improvements to your company's supply chain - no matter how radical they might seem.

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ABOUT THE AUTHOR

Henry Canitz (Hank): Vice President, Industry & Marketing Strategy

Henry-Canitz 

Henry Canitz is the Vice President, Industry and Market Strategy for Nulogy, the leading provider of multi-enterprise supply chain solutions for the supply ecosystem. Henry has 25+ years of experience building high performance operations including evaluating, implementing, and using enabling technology as a practitioner at leading companies and developing and marketing business solutions with leading enterprise software providers.

Henry has an undergraduate in Mechanical Engineering from the University of Wisconsin, a graduate degree in Supply Chain Management from Michigan State University, ASCM CPIM and CSCP certifications, and a lean/6-sigma black belt certification.

Published Friday, November 18, 2022 7:32 AM by David Marshall
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