What are the key challenges facing companies today? How important is technology to companies? We explore these questions and more as we catch up with DELMIA Quintiq World Tour Singapore guest speaker Vivek Sood to get his thoughts on the developments in the industry.

Vivek is the managing director of Global Supply Chain Group and author of three books on global supply chains. His impressive track record includes over 400 business transformation projects with leading companies over 25 years. He is a Chartered Financial Analyst (CFA) and holds an MBA from the Australian Graduate School of Management. In this email interview, Vivek talks about supply chain technology, challenges and how to keep your customers.

Q: Technology is a big driver in the supply chain landscape. What are the risks to companies if they fail to keep up?

VS: Outdated business models, outdated planning and optimization, obsolete technologies are killing companies right in front of our eyes every day.

Just pick up a newspaper and read the sad stories of companies in financial trouble today. Most will blame unforeseen and sudden events when the sad reality is that they failed to update these critical components in time.

I’ve written about this at length in my books and spoke about it in my presentation in Singapore. Briefly, this is how critical problems and risks evolve from one generation to the next:

• Division of labor goes overboard, creating bureaucratic organizations that are divided and inefficient
• Supply Chain Management (SCM) is introduced to cut across the silos (procurement, production, transportation, sales, marketing) – to unify planning and control
• The ERP systems consolidated the functions but are too rigid, creating unworkable plans. I call this phase SCM 1.0
• As a result, SCM 2.0 was created to use flexible and adaptive systems. This was an improvement, but problems emerged with too much cost focus and internal bearing, leading to a lack of collaboration.
• Then came SCM 3.0 which aimed to ease collaboration with suppliers and customers and plan as a single entity.

In summary, your problems is a reflection of the level of sophistication in your supply chain management capabilities.

Q: What are the key supply chain challenges facing companies today?

VS: This is a broad question and something I could probably write a book about. However, here are the top three:

• Adapting to changes – Supply chain planning has come a long way since it started out as a means of integrating key departments in a company. There has been at least one significant generation change each decade – driven by technological, economic and socio-political factors. Most companies do not know about these massive generational advances and so cannot manage the intergenerational conflicts. Neither can they harness the latest generation techniques and technologies well enough because of the confusion that persist within the organization.
• Planning in silos – Each generation of SCM has led to more integration, both within and outside the organization. This has enabled greater profitability, to the extent where SCM 3.0 has, on average, nearly five times the margin of SCM 0.0 or SCM 1.0. In short, to realize higher profits, focus on improving integration within your organization. You can use change management principles (to grow one generation at a time), or business transformation principles to leapfrog a generation. This is an area of focus in my forthcoming book “Unchain Your Corporation.”
• Using technology as a competitive advantage – There are some new age technologies ready to take supply chains to even greater heights beyond SCM 3.0. These include things like – drones, the internet of things, driverless vehicles, advanced robotics, artificial intelligence. Most of these will take time to be integrated into the supply chain. But, before that, we’ll see a hype cycle leading up to SCM 4.0 in the 2020 – 2025 period. On one hand, companies must be prepared for change when the time comes; on the contrary, they need to recognize the perils of jumping in too quick.

Q: In supply chain terms, are all customers equal?

VS: Quite the contrary – every customer is unique. Every time you treat two customers alike you fail to recognize their needs and risk alienating the customer. This is the main reason for customer churn.

It is good that your marketing department is working to segment customers and create targeted messages to appeal to each segment.  However, your supply chain must keep up with targeted product and service bundles, or you’ll be seen as making false promises.

The more you can customize your offering – with price, services, product features, delivery options – the better your chances of converting that customer into a lifelong fan.

Stay tuned! More insights from the Quintiq World Tour Singapore coming up.