Supply Chain 4.0 – what is it & where is this going? – LogiSYM August 2019

There is a lot of hype and excitement about ‘transformation’. And indeed even more about “digital transformation”, a term banded around quite a lot. But for many this topic is not well understood. For others, with some subject knowledge, it is about technology. And for the rest of us it is a big challenge to get to grips with the impact of this evolution.

For those who followed a few years ago the start of the Industry Revolution 4.0, can appreciate the challenges this presents us with.

It all started with the advent of a disruptive technology culture that has created a lot of turbulence for the traditional way of doing things. But it all still remains a massive work in progress.

Industry 4.0, proposed a very clear message for the need to change the business models that have strongly challenged the traditional ways of doing things.

The digital transformation journey, was the phrase coined to capture and drive change. And this started with buzz words like Uberisation, Bitcoin, machine driven logic and forcing us to re-think and re-invent the way we approach our business models.

Is it clearer or still confused?

Several years later we are still at the starting blocks of this change. Maybe because we still do not fully understand how to master the complexities of such an integrated technology program.

But why is it taking so long to move us forward?

I suppose that the fundamental reason for this, is that many do not understand how transformation is affecting their business and industry. They can see change but cannot see how to manage this and what are the causes driving the change.

This is not surprising nor can you blame the many who are challenged by the transformation phenomenon. Very few really understand this right now!

To begin to understand change you need to identify the impact of change and accept that what we are doing and how we are doing it, is no longer the way of the future.

This is a very bitter pill to digest and a very tough realisation of the decades of unchallenged business rules and methods. In any change scenario, accepting to change and doing something about it is about having the right business culture.

It is not about the CEO waking up one day, outlining a simple plan for change and then delegating his team to implement it. Yes, the CEO must lead such a major change initiative, but must also enable the organisation to be part of an engaged solution and a collective journey of change.

It is about the Organisation’s Business Culture.

Business culture is created and sustained by the behaviour of the key actors in the business. If the key players say they want change, talk about 21st century technologies and bang tables demanding for performance and results. This does not create the culture of change and the inspiration of the new future. So what does achieve this change and acceptance of a transformation journey?

The simple reality of an inspired starting point has to be an understanding of what needs to change to adapt to the future. Let us remember that technology is an enabler and can only effectively achieve what it is designed to deliver. From our past experiences, applying technology is not a “quick fix” nor a “plug and play” tool that can transform your business overnight. If it were so easy, then such a deployment would be shallow and be short lived. Lets then turn to these technologies and address the shopping wish list!

What does Digital Transformation actually mean?

By definition the word “Transformation”, implies a dramatic change from one way to another – and this is what we still grapple with in real and tangible terms. Because it is not easy if there is not a clear understanding of why and what we want to achieve. It would be logical to think that the first step in a digital transformation, is to adopt advance IT tools and applications.

By these applications we mean, the deployment of artificial intelligence (AI), machine learning (ML), the internet of things (IOT) and blockchain. But for what purpose?

Understanding what is the right approach of a technology driven transformation, is itself is a major journey. A journey that cannot be undertaken by the CEO or CTO or any single department on their own. Trying to just install some part of these tools would not deliver any benefit to anyone except pay some consultant lots of money, which in the and may not achieve any Digital Transformation. None of these technologies can stand alone in a business and no single user or initiator can manage such a critical project on their own – it has t be a collective effort of all stakeholders.

If we are planning to embrace this massive journey of Transformation, we need to be clear of what it is we need in our business and how this transformation challenge will the business improve performance.

There are several areas where a transformation program can deliver desirable benefits. In my view there could be 5 big areas crucial to future sustainability and growth of the business. These are being: faster, flexible, detailed, accurate and efficient.

These cannot we achieved by the deployment of systems and tools alone. They require a structured plan of implementation with a likely complex transitional process moving from the current to the new. In the end, the real test of a successful transformation, will be measured on how effective the deployments have been in improving business performance and its sustainability.

How would a transformation program get started?

Often it is the CEO that wakes up and starts the process, known as the Top Down approach. But there are some case where we have seen a Bottom Up approach, where small ideas have developed in to something big. Whilst these cases are less common they could be the more robust long term success stories as they engage the broad base stakeholders earlier in the change process.

However whether is a Top Down start or a Bottom Up start, they all have a common denominator – Organisational Business Culture.

This is what its all about – having the Vision, Strategy, People, Resources and Processes that together form the Enablers is a foundation necessary to work from. But not forgetting that the end game is also about achieving the Results around the crucial focus areas of– Customer Satisfaction , Financial Performance, People Engagement & Social Responsibility.

This a typical program based around Total Quality Management (TQM) principles, that has been deployed successful across many industries since late 80’ and 1990’s. And I believe still very relevant in the context Industry 4.0 and Supply Chain 4.0. Such a program is fundamental to forming and developing an organisational business culture that can digest change, implement transformational programs and strongly mitigate the disruptive factors. This is how a sustainable business program could be achieved.

Supply Chain 4.0 is the a proposed approach in which critical functions supports the organisation impacted by Industry 4.0 – coping with rapid changes and disruptions. It may not be the only one, but it is starting point.

Put in very simple terms, the objective of the supply chain function is to match supply to demand. But we all know that this a great challenge.

The constraints that we are faced with are many. But 3 stand out as the crucial ones which if mastered could be a game changer in our transformational plan. Dealing with – the uncertainty and accuracy to forecast demand, the production flexibilities to support changes in demand, and improving the synchronisation links between supply chain players. These are the big clusters of attention where digital solutions would deliver significant improvements if effectively deployed.

There are a lot of papers written on digital transformation benefits, challenges, applications and case studies. They are all very enlightening and informative. And just like my short paper, every piece helps us to form a clearer picture of what digital transformations is about – by wearing a state-of-the-art digital watch that that tracks all our critical health parameters, does not mean that we are digitally transformed per se. If we do not use the digital information output to improve our health, then we have not benefited from the digital technology that we have invested in.

The need to embrace a digital transformation program must be for many a mandatory path to secure a sustainable future. Such a transformation program, whilst technology driven, can only be enabled by a visionary CEO, supported a business culture that accepts change and empowered by the whole organisation to develop and execute the transformation.

The TQM journey has been successfully achieved by many and I assure you that it is a most exhilarating experience. But many more need to challenge themselves to drive change from Bottom Up and seek the necessary collaboration from your colleagues to support and share the journey. That is how a digital transformation can gain traction and be successfully deployed.

Joe Lombardo
Founder of ESP Consult

Joe Lombardo has advised CEOs on change management through a supply chain focus.
The need for change is a very likely and necessary step for their business development and sustainability. However, starting a journey of transformation within their organisation can be hugely daunting. This introduction to a transformational journey illustrates that it is not as complicated or as expensive as it may seem. But the rewards and benefits will be significant. ESP Consult advises on structuring the model to facilitate and successfully implement Adaptive Supply Chain driven organisation. For those involved, it has been an enlightening and motivating experience.