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!
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?
The 20th century was dominated by an analog, linear and fossil economy, but we are about to shift to an economy that is digital, circular and post-fossil. It seems obvious that our discipline, to remain relevant, needs to drive this transition rather than clutching at obsolete managerial practices and theoretical perspectives. Those who participate in developing new business models will gain a first-mover advantage, while those trying to keep the 20th-century economy alive will soon be forced out of business.
My personal predictions for 2019 relate to these transitions. First, robotic process automation and process mining are increasingly shaping the way of modern business. This will have a tremendous influence on end-to-end business processes. Great chances are within our reach, as learning machines are taking over increasingly complex tasks from white-collar workers. But we should not overlook the danger of a small number of IT giants using their scripts to centrally control the majority of our global supply chain processes.
Second, we sometimes seem to assume that we can change the laws of nature, just like other laws. This becomes clearer when moving into the anthropocene epoch. But planetary boundaries, including the Earth’s carbon budget, cannot be negotiated or abolished like budgets in business. We simply have to accept that exponential growth and a capped number of planets – and this number is 1 – do not fit well together. One does not need to be good in math to understand that if we cannot change the number of planets, it will have to be our supply chains that will need a radical and ambitious transformation. But how can we achieve degrowth and decarbonization in our supply chains? We could shift from linear supply chains to circular ones, from selling products to selling services (e.g. the right to use instead of owning a phone), from consumer orientation to user orientation. Thus, SCM theory needs to shift away from the “consumer” of things they don’t need towards the “user” of limited resources. This would incentivize producers to keep resources in the loop instead of building products for the scrap yard.
Millennials are not primarily driven by income, but by doing something meaningful. They are scared by the climate crisis. My wish for 2019 is that we all start teaching them that they can be part of an exciting journey that could simultaneously save our planet and create income and wealth. Let us hope the best for 2019 and beyond!