When I made my predictions last year, the first one being about new technologies, the second one related to our planetary boundaries, I certainly underestimated the pace of these developments.
The first prediction has now already materialized in many companies across the globe. More and more supply chain managers I have talked to have implemented innovative solutions, such as robotic process automation and process mining. What I can also see are more and more business models that rely on machine learning.
The second prediction came true in an oppressive way: Europe was hit by an unprecedented heat wave, Southern Africa by a terrifying drought. The Amazon – on fire. Siberia – on fire. And now? Australia is on fire; it is estimated that, so far, at least 480,000,000 mammals, birds and reptiles were killed. This is not a Mad Max movie; the world is in climate crisis. Political leadership is lacking from some of those countries with the highest per-capita emissions, including the U.S. and, tragically, Australia. What gives hope is the emergence of a global climate movement.
Instead of just repeating my predictions from last year, I would like to recommend three books related to these topics (see link). Visionary companies and courageous supply chain managers don’t look back, they don’t waste time with 20th-century business models. They look forward and are part of an exciting journey that shapes a digital, post-carbon economy. They will turn challenges into first-mover advantages and create great business opportunities. Isn’t this what SCM is all about?
I wish you a good start into the new year!
The whole world can see it clearly. A wind of change is currently blowing through the air and the past eventful weeks have almost turned it into a storm: The IPCC published its Special Report on the Ocean and Cryosphere in a Changing Climate; world leaders at the Climate Action Summit in New York demonstrated growing recognition that the pace of climate action must be rapidly accelerated; climate activist Greta Thunberg received the Right Livelihood Award “for inspiring and amplifying political demands for urgent climate action reflecting scientific facts”; several million people across the globe joined the Global Climate Strike; Germany followed other countries by introducing a carbon price; and the European Investment Bank decided to divest from fossil fuel projects. It is becoming increasingly clear that the fossil era, which has long shaped the global power structure, is coming to an end. While late movers are now desperately trying to conserve the obsolete fossil solutions of the 20th century with the help of trade barriers, those states relying on green technologies are gaining significant influence. The task of our discipline is now to adapt our theories, methods and practices to this new reality. Exciting times are ahead!
Our guest post today comes from Christoph Flöthmann, an expert in strategic and digital procurement, who has recently co-authored a new report.
Digitalization already has a major impact on procurement, as we write in our new report: 21st Century Procurement Skills. Thanks to artificial intelligence (AI) and robotic process automation (RPA), process-mining tools can be used to reshape and analyze all kinds of processes. Dashboards, governed by analytics bots, help to detect and prevent maverick buying in real-time without any human input. This is ultimately driving procurement effectiveness, efficiency and compliance. However, the digital transformation can only succeed if procurement has bright talents with the right skills in place who steer AI and manage the remaining high-value-adding tasks: First, digital fluency is a new meta-competency that enables managers to reach their targets by being in command of digital tools. Second, the ability for complex and collaborative problem-solving will be key to master the challenges posed by both digitalization and uncertain markets. Because AI and RPA take over tasks that are rather simple and require a low level of human collaboration, the procurement professionals’ scope is about to shift to highly complex and highly collaborative tasks such as developing and approving category strategies. Finally, procurement needs transformational leaders that are able to empower their teams to strive for developing and applying their new skill sets.
Dr. Christoph Flöthmann is a consultant in Roland Berger’s Operations Competence Center. In 2018, he and his project team were finalists at the World Procurement Awards in London for developing and implementing a digital procurement strategy platform. Before becoming a consultant, he completed his Ph.D. at Copenhagen Business School and Kühne Logistics University, specializing in research on competencies and careers in supply chain management.
“Accelerating technology and automation are resulting in wholesale transformation of the supply chain profession.” This is the key message of EY’s new report, titled Supply Chain: Skills for the Digital Era. It is not long, but definitely a good read. The report states that “[p]rocesses with repeatable elements such as planning, monitoring and forecasting can all be automated and enhanced by robotics, artificial intelligence and advanced analytics”. The authors observe that this leads to a transformation of supply chain management: “Where performance improvement in the past may have focused on the optimisation of individual operational areas, it now needs to harness a broader view that understands, for example, how supply chain impacts on profitability.” The report ends by identifying four future personas for the supply chain, based on their mindset (data-driven vs. vision-led) and style (investigative vs. collaborative): There are technologists, orchestrators, analysts and innovators. Does our research and teaching cover all of them?
DHL has recently released the fifth edition of their Global Connectedness Index, which provides an analysis of globalization, measured by international flows of capital, trade, information and people. In spite of growing anti-globalization tensions in many countries, the report indicates that globalization hits a new record high, as the aforementioned flows all intensified significantly for the first time since 2007. It is also found that the Netherlands, Singapore, Switzerland, Belgium and the United Arab Emirates are the most connected countries. Europe tops the regional ranking, while a group of Southeast Asian countries beats the expectations by the widest margin. “Surprisingly, even after globalization’s recent gains, the world is still less connected than most people think it is,” comments one of the report’s co-authors, Steven A. Altman. “This is important because, when people overestimate international flows, they tend to worry more about them. The facts in our report can help calm such fears and focus attention on real solutions to societal concerns about globalization.”
In his new report, titled Balancing Efficiency and Resilience in Multimodal Supply Chains, McKinnon (2018) writes: “Over the past twenty years, supply chain resilience has become a hot topic in industrial, government and academic circles – for good reason. Business surveys and a mass of anecdotal evidence have revealed that supply chains have become more vulnerable to disruptions and the consequences of these disruptions become more severe. […] Despite this attention and research efforts, many companies are still at an early stage in the development and implementation of supply chain risk management strategies.” The author examines “how efficiency and resilience can be balanced in the management of multi-modal supply chains”. The author further “investigates the trade-off between supply chain resilience and efficiency, the approaches to sustainability in supply chain management, innovation and technological development, collaboration and alliances and risk mitigation”. The report summarizes findings from a Roundtable of the International Transport Forum held in April 2018. A call for papers deals with supply chain resilience.
McKinnon, A. (2018). Balancing Efficiency and Resilience in Multimodal Supply Chains. International Transport Forum Discussion Papers, OECD Publishing, Paris.