Business transformation is defined as deployment of fundamental changes in how business is conducted to address a shift in the market (Wikipedia). Nowhere is transformation more evident than in the world of global supply chain and logistics. UPS just recently appointed a new CEO tasked with shoring up its international business growth strategy. Apple appointed Tim Cook – widely touted as a premier supply chain guy – to succeed Steve Jobs. Business is becoming increasingly global. With that, new risks, challenges and costs arise at every turn in the supply chain. Of course, major opportunity also exists at every turn – to reduce costs, improve customer experience and operate more efficiently. The leaders of tomorrow across every industry are those who generate operational excellence in the global supply chain.
Reading between the lines of the major headlines, the focus is on more than just supply chain talent and expertise. There’s a major push underway toward supply chain innovation. Companies are reshaping the entire underpinnings and infrastructure upon which they communicate and collaborate with trading partners. Here’s an example showcasing the difference in approach:
Company A: Company-Centric Approach
Company A has been a leader in deploying best practices in ERP for years. They’ve taken pride is establishing a “single version of truth” internally. In fact, they have several ERP systems globally to manage data. They use portals and EDI to connect and manage trading partners. Data, amendments and updates are all captured in ERP – with point connections from the ERP “hub” out to the network to facilitate communication and collaboration.
Company B: A Network Approach
Company B has placed an emphasis on connecting trading partners and establishing a system of record beyond the four walls of the enterprise. They view traditional alignment tools as essential for operating within the enterprise, but they recognize the limitations. Global growth and streamlining operations, they believe, need to follow a broader vision for facilitating this alignment. Company B recognizes that businesses are not good at orchestrating beyond their four walls. Their vision is a hyperconnected enterprise. All teams sharing information in real time in an automated environment. Partners and service providers are plugged into a nervous system – just as internal folks are – to capture visibility into data, goods and capital in the global supply chain. The company operates and moves as a single network. A cloud based network enables this hyperconnectivity, similar to the way LinkedIn connects individuals.
Type A Versus Type B
What defines the companies of yesterday and tomorrow? Yesterday’s company is internal centric. Issues that commonly arise with those similar to Company A is that data is quickly outdated and trading partners lack visibility into the latest information. Essential data is sometimes held in spreadsheets, emails and other documents. Phone calls and reconciliation between partners and systems are still necessary.
Tomorrow’s company is outward focused – valuing connectivity across the supply chain. Instead of trying to maintain essential data inside the four walls, the company of tomorrow embraces the fact that 80% of supply chain data resides on the outside, with external trading partners – and then it opens that data up to everyone who needs to access it.
Line of business executives and supply chain and logistics folks on the front lines are beginning to understand and grasp this new path forward. These executives understand the importance of partnering with trading partners and investing in the greater health of the network. But the challenge many are finding is that this needs to be embraced by the CEO. While a few get it, most still do not.
Selling to the C-Level
Working capital, cash cycles, operational efficiency and gaining market share are some of the high profile initiatives and concerns for CEOs. Any company operating globally today is limited in its ability to achieve any of these goals without a radical shift in how it operates. Continuing as an internal focused organization limits the ability to scale. This will continue to be the case until hyperconnectivity and hypercoordination occur across the value chain.
As pointed out in the May 29th episode of Talking Logistics, this shift in approach is a radical transformation. It’s not a bolt-on or one-time project. Rather, it’s a long term strategy for operating in a hyperconnected world.
Bryan Nella is Director of Corporate Communications at GT Nexus, the world’s largest cloud-based supply chain network. He has more than 15 years of experience distilling complex solutions into simplified concepts within the enterprise software and extra-enterprise software space. Prior to joining GT Nexus, Nella held numerous positions in the technology practice at global public relations agency Burson-Marsteller, where he delivered media relations and communications services to clients such as SAP. In previous roles he has worked with clients such as IBM, MasterCard and U.S. Trust. Nella holds a BA in Mass Communications from Iona College and a MS in Management Communications from Manhattanville College.