Semantics of Supply Chain. Now Change It?

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“Lost time is never found again.”
– Benjamin Franklin, Poor Richard’s Almanack

As SCM World’s fabled thought leader Kevin O’Marah wrote in early 2018, “The name ‘supply chain’ is only as boring or as exciting as the work you do.” He was right.

Take primary accountability for cost, quality and speed, and you’ll forever own the best job in the world: Making dreams come true at scale.

The challenge is that the traditional supply chain model of sequential handoffs no longer aligns with the reality of today’s fourth industrial revolution, with its open digitally connected systems. “Chains” constrain; digital platforms free companies to plug into and shape business ecosystems to build new products and services that unlock fundamentally new sources of margin and growth.

And that isn’t just consulting jargon. A spring 2019 Gartner survey of 3,100 global corporations indicates tangible digitally-led value capture has increased by 4x just in the last 12 months. The times and terms really are changing.

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Until circa 2017, the term “digital” for many simply meant automating existing business processes. Imagine S&OP, supply planning or warehouse execution, only faster and with fewer handoffs. Large payback, but confined to legacy product and information flows.

Today, observe by contrast old-world farming equipment company Caterpillar, which over the last three years leveraged new digital asset management platforms to pivot its entire business model — from sales of tractors to sales of equipment uptime — the productivity measure that really matters to farmers.

Per Aaron Kline, COO of Caterpillar’s Silicon Valley-based digital subsidiary, Yard Club, “It’s very likely that as connected assets become more prolific, you’ll get enough coverage on these machines where you can effectively predict failure and preemptively optimize performance.” In other words, the entire business — and its supply chain — have been summarily replaced.

Cost, quality and reliability still matter. But the way Caterpillar and other digital leaders achieve those metrics is continuously changing as they each experiment with new combinations of industry components in the name of untapped customer value. Consider:

  • Amazon (from books to web services, marketplaces, and logistics)
  • Netflix (from CD delivery to video streaming to original content production)
  • Dell and Unilever (from linear single-delivery to circular, subscription-based commerce)

Someone had to throw all the balls in the air, imagine new service sequences and combinations, forge new commercial relationships, and — in parallel — decide how to measure and execute on the speed and efficiencies that supply chain must still deliver. This is not your grandmother’s plan-do-check-act.

And this is where our choice of terminology matters. Suddenly there’s more than one party looking at the whole business system and thinking about how business functions and partners fit together end-to-end to maximize shareholder value. Think chief digital officer. Think chief commercial officer. Think product manager — which in the digital world redefined by Amazon is really a tech-savvy general manager with responsibility for all commercial, operational and technical aspects of the customer journey.

If in that context we limit the brand of this Profession to its legacy of “Supply” and “Chain,” is our own internal marketing doing justice to our extraordinary capacity to ride and steer the next wave of digitally-led industry change?

Notably understated U.S. founding father Benjamin Franklin once quipped, “Well done is better than well said.” He could have been speaking of supply chain and its hard-earned reputation for actions that speak louder than words. But he also said, “What’s a sundial in the shade? Hide not your talents.”

We have the best job in the world. In the frothy world of connected digital ecosystems, do the right people still know it? Is our terminology terminal? Or does it still have legs? Interested in your view.

 

Author Steve Hochman

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