Digital Trendsetters: Secrets of the Most Successful Supply Chains

Oct. 31, 2016
Having a super-flexible supply chain is as critical as having a super-efficient one.

Digital disruption is changing markets everywhere, and a highly efficient supply chain is only half of the story. Today's digital customers, in both B2C and B2B environments, want experiences as unique as they are, delivered "on demand"—and at hyperspeed. That makes a super-flexible supply chain as critical as a super-efficient one and digital capabilities have a critical role to play.

Although 85% of organizations have introduced the digital technologies that help enable supply chain flexibility, or plan to do so within a year, most still haven't realized the full, value-driving potential of these technologies.

One group, however, is different. We call them "digital trendsetters," and they are the top performers in terms of both profitability and revenue growth in our survey of 400 senior supply chain executives across 14 countries. These trendsetters are breaking away from the pack of "digital followers" because they are responding to digital disruption differently. Here's how.

Think Enterprise, Not Just Supply Chain

Digital trendsetters look at things differently. They use digital to own the customer experience, end-to-end, across the ecosystem. Unlike digital followers, whose approach is transactional and focused on providing an improved shopping and buying process, and faster and more flexible fulfilment, trendsetters take a more strategic view. They look to strengthen their ongoing customer relationships with regular updates about products and services, online self-service, support and feedback. In short, they use digital to enhance existing business models and develop new ones. By taking this strategic approach, trendsetters also drive value for the enterprise as a whole versus only for the supply chain organization.

Although 63% of trendsetters expect digital technologies to drive revenues, they haven't abandoned traditional processes and operational efficiencies—to the contrary. Cost reduction and on-time delivery remain important key performance indicators (KPIs) for them. But trendsetters have transcended these measures. They systematically use such additional KPIs as cost-to-serve, customer satisfaction and market share—and significantly outperform digital followers on these measures.
Raise Your Technology Game

By embracing controlled volatility, digital trendsetters aim to treat customers, products and suppliers differently—on purpose and on their own terms. They design their supply chain operations around the intersection of suppliers, products and customers, all the way to the end consumer.

However, unlike digital followers, who say that giving their customers a unified experience remains their primary supply chain objective, trendsetters strive to deliver a hyper-tailored customer experience: highly individualized, focused products and completely customized services providing buy-anywhere, collect-anywhere, return-anywhere capabilities via flexible channels.

For example, global energy management company Schneider Electric has leveraged digital to identify 10 different customer segments based on need, and it operates four different supply chain models for a hyper-tailored customer experience.

Hyper-tailored products and services require hyper-flexible capabilities, and trendsetters know that leveraging the full spectrum of digital technologies is key to enabling them. They continue to invest in analytics, mobility and the cloud—the digital technologies most highly favored by digital followers. But trendsetters also take digital further, investing significantly more than followers in the higher-order digital technologies that facilitate hyper-flexibility.

In fact, almost three times as many trendsetters as followers invest in artificial intelligence. Nearly twice as many trendsetters invest in the Industrial Internet of Things (IIoT) and intelligent products. Bottom line: Trendsetters outspend followers on digital 8:1 overall.

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Material Handling & Logistics is an IndustryWeek companion site within Penton's Manufacturing & Supply Chain Group.

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