Become a Digital Champion with the Right Supply Chain Software
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Good-bye Excel chaos! Become a digital champion with the right supply chain software SCM Software investments that pay off: Towards predictive and autonomously-adapting supply chains Barkawi Management Consultants Munich • Atlanta • Vienna 1 I Authors Dr. Andreas Baader, Managing Partner & Head of Europe Dr. Andreas Baader heads our After Sales Service division. Before joining Barkawi Management Consultants in 2000, Andreas Baader held various executive positions at SAP AG, most recently managing the Application Design Sales Support division there. Andreas Baader studied engineering and wrote his doctorate in the field of aerospace technology. Luis Dominguez, Senior Consultant Luis Dominguez is an expert in analytics, algorithmic augmentation of planning decisions and supply chain planning. With Barkawi Management Consultants since 2017, Luis Dominguez gathered industry experience at different major firms before joining. Luis Dominguez holds a master of science in mechatronics and an MBA. Stefan Gaubatz, Senior Consultant Stefan Gaubatz has extensive knowledge in digital supply chain solutions and supply chain transformations. Stefan Gaubatz has been with Barkawi Management Consultants since 2015. Stefan Gaubatz is an industrial engineer with specializa- tions in supply chain and operations management and mechanical engineering. More publications by Barkawi Management Consultants Consulting Special: From dashboard to supply chain cockpit to a fully networked digital control tower The demands on modern supply chains have been increasing rapidly for years now. The challenge is to move goods, products, spare parts, etc. around the globe in perfect efficiency and orchestrate suppliers and service providers worldwide brilliantly. The right amounts of the right things at the right place at the right time – that is the objective. I 2 SCM Software investments that pay off: Towards predictive and autonomously-adapting supply chains INDEX Introduction 5 1. Typical supply chain challenges that belong to the past 7 2. From ERP to Supply Chain Maestro – Digital sets new boundaries 12 3. Supply Chain in the Cloud – Deploy all five trends 17 4. How AGCO and ClearOps show the path 20 About Barkawi Management Consultants and Genpact 25 3 I I 4 or years supply chain experts were working only Fin one direction: less cost, less capital deployed, higher speed and lower redundancy. Supply chains became leaner, faster and more standardized to minimize assets and administrative effort. Risks of poor reaction to sudden changes were tolerated – occasional shortages in supply and product availa- bility were considered acceptable given the over- all efficiency gains were according to expectations. And even events like the Tsunami in Japan or strikes in Hong Kong and Shenzhen were never felt in the consumer temples of New York, London or Paris. Product availability at the point of sales was conside- Introduction red a given. 5 I Legally compliant supply chain management in a complex international environment was important, but not crucial. But then changes happened. In 2018 the first victim of a new area was ZTE. The U.S. ban on high-tech components brought ZTE to the edge of bankruptcy. Second came Huawei expecting the revenue loss in mobile telephone sales due to new regulations to be around 700 m USD in 2019. And a further potential wave related to raw materials, from oil to gas to finally rare earth minerals, is at the horizon. Sudden changes of access to markets and sources in today’s Trump/Brexit era definitely bring new challenges to supply chain executives and supply chain solution design. But there is good news in the pipeline as well. The IoT world now holds over eight billion connected de- vices. Exchanging data between business partners is easier than ever. Despite the flow of physical goods becoming more complex, the ease of exchanging data to control and steer supply chains is better than ever. Assuming the real-time data lake for the supply chain is available, what solution does it take to fully leverage it? The ability to do so is based on real-time calculations, scenario simulation technology, accurate mathe- matical models, big data analytics, collaboration and connectivity with partners, and much, much more on top – all interconnected, accessible and assessable at all times! Only then can a company be proactive instead of merely trying to cope with the situation when events have already caused the problem. Act, don‘t react – that is the motto of digital champions! I 6 Typical supply 1. chain challenges belong to the past 7 I I 7 or years supply chain executives and their teams were struggling in daily life with cumbersome challenges all Fdriven by data and all ready for resolution: What will enable supply chain teams to overcome these hurdles? The experts from Gartner highlight five relevant concepts and technologies: artificial intelligence, advanced analytics, internet of things, robotic process automation and the digital supply chain twin. We want to guide the reader through these topics and make transparent how the transformation into the new supply chain world can be successful. Everyday Excel chaos: In most enterprises, planning is still Excel-based. It is time to accept it: no company worth more than 100 million Euros can be run with Excel. Data volume limited to one million rows? Forget analytics! Manual inputs in unstructu- red spreadsheets? No automation! Different versions running in parallel? Slow and error prone collaboration! The daily struggle costs time, money and competitive position. Professional planning requires professional solutions. Distance to the customer: For many manufacturers, dealers are the only direct point of interaction with the customer. That is why the company itself generally has little to no opportunity to directly influence the aftersales quality. In this situation of ’every dealer to their own’, the OEM and their partners are set to lose operational efficiency. The solution? Achieve network effects between the OEM and among dealers via a dealer platform so that all parties benefit. Unclear responsibility and lack of coordination: Has the sales team shared their demand forecast? Does manufacturing know what the numbers are? Are the promotions planned by marketing in there? And does it all match with finance’s expectations? Siloed decisions can soon result in excess stocks and loss of profit margin which can suddenly become an existential threat. All despite the fact that the information necessary to avoid it was there the whole time. Collaborative planning plat- forms help organizations fully use the wealth of information they have. Inability to handle change: Inevitably, the unexpected will occur – the main supplier defaults on an important delivery and the business’ customers cannot be served. Planners scramble to find alternatives. The damage sustained grows with every minute that passes and calculating worthwhile alternatives for the customers (let alone one that retains value for the business) in ERP systems is a near impossibility. Waiting for the next overnight batch run is not an option. Scenario simulation technology provides the agility to handle these situations. I 8 In the next chapter, we show the future of the supply chain IT landscape, which we call “Supply Chain Maestro”, a realization of the digital supply chain twin. Thereafter we present the cloud as the best IT concept to make all the technology for artificial intelligence, advanced analytics, internet of things and robotic process automation available. To provide hands on experience we present the case were AGCO, one of the largest manufacturers of agricultural machinery in the world, realized such digitally enabled supply chain with the technology partner ClearOps. Gap to best practices: Many firms face the paradoxical situation of simultaneously rising inventories and falling customer satisfaction – in essence, the wrong amounts arrive at the wrong place on the wrong date. This is more often than not due to suboptimal planning practices. The wheel does not need to be reinvented – classic supply chain problems have already been solved and implemented in specialized supply chain management software solutions… No options for the problems that matter: ... however, best practices are sometimes just not enough. While non-core activities can be relayed to best practices, key problems require more advanced solutions to enable true operational competitive advantage. Given a mature digitalized supply chain is in place, companies can augment their systems with advanced analytics where experts implement custom state-of-the-art algorithms to tackle the company’s toughest operational problems. Great need for coordination with logistics companies: The work required to coordinate the logistics between transport providers, CEP (courier, express and package services) forwarders and 3PL is enormous, especially when amounts and deadlines fluctuate. For this reason, full data connections have found widespread adoption. However, in these days of extremely high customer expectations, a daily synchronization is not enough. To enable optimal rerouting, advanced scheduling and selective prioritization, the information flow has to become real-time. System thought for the wrong addressee: Nearly all data evaluations done by large ERP systems primarily address finance and controlling, and only consi- der the operational logistics and supply chain managers as an afterthought. In order to truly create a digital twin of the supply chain that can be