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Digital Supply Chain JDA Software Special Edition by Fred Baumann, Glen Ceniza, Serge Massicotte, Anand

Digital Supply Chain

JDA Software Special Edition

by Fred Baumann, Glen Ceniza, Serge Massicotte, Anand Medepalli, and Kelly Thomas

Ceniza, Serge Massicotte, Anand Medepalli, and Kelly Thomas These materials are © 2017 John Wiley &

These materials are © 2017 John Wiley & Sons, Inc. Any dissemination, distribution, or unauthorized use is strictly prohibited.

Digital Supply Chain For Dummies ® , JDA Software Special Edition

Published by John Wiley & Sons, Inc. 111 River St. Hoboken, NJ 07030-5774

Copyright © 2017 by John Wiley & Sons, Inc., Hoboken,

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Manufactured in the United States of America

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Contents at a Glance

Contents at a Glance

Introduction

1

CHAPTER 1:

Supply Chain Digitalization

3

CHAPTER 2:

Your Digital Supply Chain Playbook

17

CHAPTER 3:

Creating Your Digital Strategies and Technologies

27

CHAPTER 4:

Linking the IT Department into Your Digital Supply Chain

45

CHAPTER 5:

Eight Critical Success Factors

53

Appendix: Glossary

59

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Publisher’s Acknowledgments

Some of the people who helped bring this book to market include the following:

Development Editor: Ryan Williams

Project Editor: Jennifer Bingham

Acquisitions Editor: Steve Hayes

Editorial Manager: Rev Mengle

Business Development Representative:

Kimberley Schumacker

Production Editor: Siddique Shaik

Special Help from JDA:

Fabrizio Brasca, Kevin Iaquinto, Doug Kimball, John Sarvari, Laura Sanders, Anna Sherman-Hall, Scott Zickert

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Table of Contents

Table of Contents

INTRODUCTION

1

 

About This Book

1

Foolish Assumptions

1

Icons Used in This Book

2

Beyond the Book

2

CHAPTER 1:

Supply Chain Digitalization

3

What Is Digital?

3

Forging Your Digital Supply Chains

5

The Value of a Digital Supply Chain

7

What Is Everybody Else Thinking?

10

Advanced analytics

11

Augmented reality

11

Big data

11

Cloud-based applications

11

Digitalizing manual processes

11

Internet of Things (IoT)

11

Mobile applications

12

Radio Frequency Identification (RFID)

12

Supply chain systems integration with trading partners

12

Internal supply chain integration

12

Supply chain visibility

12

What Is the Future of the Digital Supply Chain?

15

CHAPTER 2:

Your Digital Supply Chain Playbook

17

Defining Your Playbook for Digital Supply Chain Success

18

The offer

19

The supply chain

22

The asset

24

CHAPTER 3:

Creating Your Digital Strategies

Segmenting Your Supply Chain

and Technologies

27

27

Invest in your data

28

Segment your customers

28

Align supply chain strategy

29

Table of Contents

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Create a visible supply chain

29

Reap the benefits!

29

Digitally Enable Always-On Manufacturing Planning

30

Leverage IoT Technology to Reduce Costs

31

Digitally Enable Real-Time Collaboration

32

Use Digital Data to Accelerate Transportation Insights into Action

32

Digitally Enabling Warehouse Automation and Optimization

35

Workforce technology

35

Automation and robots

36

Satisfying customer demand

36

Smart optimization

37

Deliver a Seamless Store Experience

38

The seamless store experience

38

Staffing the store

39

Bringing Your Digital Strategies Together

40

Enterprise-wide visibility

41

Supply chain modeling

42

Response management

42

CHAPTER 4:

Linking the IT Department into

More Information, More Data

Your Digital Supply Chain

45

45

Keeping Pace with Technology

46

Automated Decisions, Decisions, Decisions

46

Tear Down the Silos!

47

Combine your solutions for greater value

47

Create a platform for consuming innovation

48

Take it to the cloud

48

Creating a Digital Mind for Moving in the New World

49

Connecting the informational dots matters

50

Finding the same insights in an ocean of data

50

Computers find new patterns

50

Turning insights into action

51

CHAPTER 5:

Eight Critical Success Factors

53

Define Your Digital Strategy

54

It All Starts at the Top

54

Digital Supply Chains Require New Competencies

55

vi Digital Supply Chain For Dummies, JDA Software Special Edition

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Visibility Alone Is Not the End Goal

56

Invest in Digital Talent

56

Keep an Eye on the Competition

57

Accept This New Reality

57

Start Small and Fail Fast

58

APPENDIX: GLOSSARY

59

Table of Contents

vii

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About the Authors

About the Authors

Fred Baumann, Group Vice President, Global Industry Strategy, is responsible for JDA’s manufacturing verticals. During his 18-year tenure at JDA, Fred launched JDA’s Flowcasting business initiative and has been instrumental in driving JDA’s collaborative trad- ing community strategies, thought leadership, and launching the company’s CPFR, S&OP and analytics offerings. Prior to JDA, he worked at IBM and The Pillsbury Company. Fred is a former advisory board member of the CPFR VICS and GS1 industry sub- committee and is a named contributor to several published indus- try guidelines. He is a frequent speaker at industry conferences and has been recognized as a Rock Stars of the Supply Chain by Food Logistics. Fred holds a bachelor’s degree from Georgia State University and an MBA with distinction from the University of Arkansas, Sam M. Walton School of Business, where he had a core focus in supply chain management.

Glen Ceniza, Group Vice President, Product Management, is respon- sible for JDA’s Store Operations solution, with oversight responsi- bility for R&D investments in JDA execution product lines. During his 16-year tenure at JDA, he has overseen JDA’s retail strategy, managed technical teams for hosting SaaS and cloud strategy, and spearheaded Global Solution Sales. Glen joined JDA when RedPrairie purchased BlueCube, a product that he helped design, in 2001. Prior to RedPrairie, Glen worked at NetLumious, Xerox Global Services, and Lotus Development Corporation. He holds a bachelor’s degree in mechanical engineering from Georgia Institute of Technology.

Anand Medepalli, Vice President, Retail Planning Product Strat- egy, is responsible for defining and executing strategies for JDA’s Retail Planning and Pricing solutions. He has over 20 years of experience designing and deploying decision-support enterprise solutions. Recently, Anand led the launch of JDA’s first-ever true SaaS solution Retail.me, a next-generation, customer-centric retail planning application that leverages the latest advances in big data science and user experience research, and has been instru- mental in driving JDA’s thought leadership in this space. Prior to JDA, Anand worked at Earnix, Talus Solutions and Sabre. Anand is a trusted advisor for executives at leading companies in pricing

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and product, commercial account and asset planning strategies. He holds a doctorate in mathematics from Iowa State University.

Serge Massicotte, Executive Vice President and Chief Technol- ogy Officer, is responsible for establishing, communicating, and delivering JDA’s core technology, including product architecture, innovation, analytics, cloud enablement, and mobility. Prior to JDA, Serge served as the Senior Vice President of Product Engi- neering at Cloud9, a Silicon Valley startup providing cloud appli- cations for sales forecasting and pipeline management. There he was responsible for developing a best-in-class platform for Cloud9’s SaaS applications. Prior to Cloud9, Serge worked for Taleo Corporation as Vice President and General Manager of Enterprise Products and Platform and was responsible for devel- oping the architectural underpinnings of the company’s SaaS talent management solutions. Prior to Taleo, he served as Vice President of Product and Operations in charge of GEOCOMtms, a company acquired by RedPrairie in 2007. Serge holds a bachelor’s degree in mathematics, a bachelor’s degree and a master’s degree in computer science from Université Laval, and a master’s degree in computer science from York University in York, UK.

Kelly Thomas, Senior Vice President and Chief Product Officer, is responsible for leading JDA’s product strategy and management and aligning JDA’s R&D investment to its go-to-market strate- gies. He has 30 years of experience in leading teams in design, development, sales, and delivery of supply chain management and manufacturing execution solutions. Kelly is the author of more than 20 papers in the areas of supply chain management and related technology and is a frequent speaker at industry con- ferences. He is a former board member of the Supply Chain Coun- cil, and has been recognized as a Supply Chain Pro to Know by Demand and Supply Chain Executive. Kelly holds a bachelor’s degree in chemical engineering from Rutgers University, where he was a Slade Scholar.

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Authors’ Acknowledgments

Authors’ Acknowledgments

This book was made possible thanks to input by JDA contributors:

» Fabrizio Brasca, Vice President of Solution Strategy, is responsible for defining and executing global go-to-market strategies for JDA’s Intelligent Fulfillment solution.

» Doug Kimball, Senior Product Marketing Director, is responsible for developing sales enablement messaging and content for JDA’s Manufacturing Planning and Flowcasting solutions.

The authors would also like to acknowledge JDA colleagues Kevin Iaquinto, John Sarvari, Laura Sanders, Anna Sherman-Hall, and Scott Zickert for their assistance in the preparation of this work.

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Introduction

Introduction

A nd you thought the invention of the internet was a big deal? The new digital technologies and capabilities devel- oped these days will have as great or even greater impact

on society than when folks first started sending email messages over ancient networks. This wave of technological innovation will impact all aspects of business, including your supply chain.

About This Book

of business, including your supply chain. About This Book In this book, you get a closer

In this book, you get a closer look at what the new digital supply chain means to your business and how supply chain practitioners are responding to these rapid technology advancements. We show you how these changes require a new playbook for digital supply chain success, as well as the digital strategies and technologies you’ll want to consider as you embark on your digital supply chain journey.

Because this is a JDA Software Special Edition, we also dive into IT considerations for enabling the new digital supply chain. So sit back, grab a cup of coffee, and dig in. Enjoy the wild ride to digital supply chain transformation!

Foolish Assumptions

to digital supply chain transformation! Foolish Assumptions In preparing this book, we’ve assumed a few things

In preparing this book, we’ve assumed a few things about you:

» You’re a supply chain executive interested in learning about how the latest digital technologies can improve your company’s supply chain.

» You work in supply chain management and want an update on the latest digital strategies, tools, and techniques.

» You’re a newcomer to the role of supply chains and want to educate yourself quickly on the basic concepts around the practice and how digital technologies are changing the game.

Introduction

1

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Icons Used in This Book

Icons Used in This Book

You’ll find a couple of icons in the margins of this book. Here’s what they mean.

This icon indicates a helpful tip on how to get things done or a handy piece of extra information. Couldn’t hurt to read it, could it? a handy piece of extra information. Couldn’t hurt to read it, could it?

of extra information. Couldn’t hurt to read it, could it? Anything with this icon is something

Anything with this icon is something that you want to keep in mind. Always good to refresh your memory!of extra information. Couldn’t hurt to read it, could it? Wanting just the basics is fine.

want to keep in mind. Always good to refresh your memory! Wanting just the basics is

Wanting just the basics is fine. But if you like to dig into the more technical details, this information is right up your alley. technical details, this information is right up your alley.

technical details, this information is right up your alley. Beyond the Book You can find additional

Beyond the Book

this information is right up your alley. Beyond the Book You can find additional information about

You can find additional information about supply chain manage- ment by visiting the following websites:

» For more information about how JDA Software can help you on your digital supply chain journey, visit www.jda.com.

» For an online magazine dedicated to the latest supply chain management news, visit www.scw-mag.com.

» For a weekly online newsletter that focuses on supply chain management and logistics, visit www.scdigest.com.

» For an analysis of logistics trends, technologies, and services,

» For access to thought leadership in supply chain manage-

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IN THIS CHAPTER

» Discovering how digital technology affects every step of your supply chain

» Learning the value of digitalizing your supply chain

» Examining how other companies implement a digital supply chain

Chapter 1

other companies implement a digital supply chain Chapter 1 Supply Chain Digitalization T echnology is nothing

Supply Chain Digitalization

T echnology is nothing new in today’s world — everyone knows computers that used to fill university basements pale in comparison to that cheap tablet your 5-year-old

can toss around her bedroom with impunity. But nowadays digital technology can advance almost any aspect of any business — in this case, the supply chain. In this chapter, we show you what the term digital supply chain means and how your business will benefit greatly.

What Is Digital?

and how your business will benefit greatly. What Is Digital? Throughout this book, we’re going to

Throughout this book, we’re going to be talking about all things digital. Digital refers to three key technological trends:

» Physical “things” incorporating computer technology (sometimes referred to as the Internet of Things)

» Readily available external big data, including social, news, events, and weather

» Computer systems and software becoming increasingly real-time and intelligent

CHAPTER 1 Supply Chain Digitalization

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A digital supply chain capitalizes on these three trends to profit- ably plan and deliver customized, individualized products and services. Digital technology drives business process and time convergence across demand and supply processes from high- level planning to execution, resulting in real-time systems and processes. Basically, it rules everything around the supply chain process at this point.

Digital technology is rapidly becoming the basis for competition. Products, services, and the supply chains that deliver them are increasingly dependent on digital technologies to create competi- tive differentiation and profit. When smart technology and busi- ness planning come together, they can dramatically change the way organizations plan and react.

Physical objects that maybe just used to sit there (we’re looking at you, bathroom scale) now include embedded computer technol- ogy to provide information and the capability to share this infor- mation with other things and with people. In the past, the use of computer chip technology mainly occurred in computers and in communication among computers. Now, these chips are embed- ded in all sorts of everyday items, from refrigerators to toasters to clothing. This tech provides these items with intelligence and allows them to communicate insights to computers and to each other. (And yes, they are gossiping about you.)

And, of course, new gadgets come along every day with this amazing technology built in. Embedded computer technology in a product means the manufacturer can start throwing around terms like smart or intelligent. For example, when cell phones started including computer chips, software, and operating systems for mobile needs, they became known as smartphones. Information sent from one smart thing to another is called a digital signal.

Likewise, external big data from many sources is now available to corporations. Social information sources such as Twitter and Facebook have open application programming interfaces (API) from which data can be derived.

interfaces (API) from which data can be derived. Use these data for your competitive insights! For

Use these data for your competitive insights! For example, a sin- gle tweet or a spike in Google searches (“I LOVE YOUR BRAND OF CHEESE!!!”) can be early indicators of demand changes for a product. Be ready to analyze and leverage this information to improve supply chain operations.

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At the same time, computer systems run by companies are becoming increasingly intelligent and able to make big decisions in real-time. Here’s a closer look at what that means:

» Intelligent computer systems and software can learn and adapt versus relying on preprogrammed rules to only handle a prescribed set of inputs. These intelligent systems can also predict events, provide insights, and prescribe actions.

» Real-time means computer systems can continuously process digital signals and stay synchronized with what’s happening in the physical world.

Devices with embedded computer technology coupled with exter- nal big data can now combine with smart enterprise computer

systems to offer a host of new approaches for managing supply chains and in delivering products and services to customers. This

is the essence of a digital supply chain.

Forging Your Digital Supply Chains

a digital supply chain. Forging Your Digital Supply Chains A digital supply chain increasingly leverages intelligence

A digital supply chain increasingly leverages intelligence embed-

ded in devices, external big data sources, and intelligent supply

chain software to accomplish several goals:

» Improve customer experiences

» Deliver higher profit

» Increase the value of products in the market

» Create new business models and revenue streams

» Rule the world (okay, maybe not this one)

Ultimately, a digital supply chain draws on embedded intelligence in all physical equipment associated with physical assets:streams » Rule the world (okay, maybe not this one) » Stores » Transportation » Warehouses

in all physical equipment associated with physical assets: » Stores » Transportation » Warehouses »

» Stores

» Transportation

» Warehouses

» Factories

» Inventories

» People (and maybe cyborgs)

CHAPTER 1 Supply Chain Digitalization

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All these assets will connect electronically to all other equipment, inventory, and people in real-time.

Like an orchestra needs a conductor, the interconnectedness of assets and external big data sources relies on new supply chain management software. This software provides predictive and pre- scriptive analytics and learning capabilities. That’s right — they learn by watching you! This technology transforms the traditional left-to-right, linear, asset-driven view of the supply chain into a dynamic grid, as shown in Figure 1-1.

supply chain into a dynamic grid, as shown in Figure 1-1. Source: JDA FIGURE 1-1: Linear
supply chain into a dynamic grid, as shown in Figure 1-1. Source: JDA FIGURE 1-1: Linear
supply chain into a dynamic grid, as shown in Figure 1-1. Source: JDA FIGURE 1-1: Linear
supply chain into a dynamic grid, as shown in Figure 1-1. Source: JDA FIGURE 1-1: Linear

Source: JDA

FIGURE 1-1: Linear supply chain versus digital supply chain.

In the dynamic grid, relationships among nodes in a supply chain become digitalized. This means that supply chain management software creates multiple virtual supply chains across a single set

of physical assets. Ultimately, you’ll see many-to-many relation-

ships among supply chain nodes. That means a given order from

a given customer can follow its own unique, customized path

through the supply chain, creating personalized fulfillment for the customer. It’s like being able to catch a flight to your ultimate destination, no matter how small the airport. This system places the customer at the center of the supply chain — and we hear that’s where they like to be.

In the digital supply chain view, all physical assets surround the customer and then dynamically form interrelationships to process and fulfill orders in the way the customer wants them fulfilled. Incidentally, this process also optimizes profit for the enter- prise (that’s you). Your physical assets in the supply chain and the management of the supply chain become flexible and adapt- able enough that a tailored and personalized customer experience can be provided. The customers begin to believe the enterprise provides them with their own personal supply chain. We call it a supply chain of one, and it’s foundational to a customer-centric supply chain.

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In the digital supply chain, supply chain management software consumes digital signals in real-time, allowing the software to convey an accurate, precise understanding of everything happen- ing in the supply chain. The physical world of supply chain assets and the digital world of supply chain software converge into one profitable, customer-focused system. Everybody happy?

In the past, some time elapsed between what happened in the physical world and what the digital world of supply chain soft- ware registered. But the current, real-time view of the supply chain, augmented with external data like social media, news, events, and weather, can help you to better understand consumer intent, understand risk, and predict demand and supply.

Embedded computer technology, external big data availability, and intelligent supply chain software are finding their way into all business processes associated with retailers, distributors, third-intent, understand risk, and predict demand and supply. party logistics providers, and manufacturers. That means

party logistics providers, and manufacturers. That means every- body else has to jump on board as well. These business processes will all need to incorporate these new capabilities:processes associated with retailers, distributors, third- » Merchandise financial management » Assortment

will all need to incorporate these new capabilities: » Merchandise financial management » Assortment

» Merchandise financial management

» Assortment planning

» Category management

» Store operations

» Warehouse management

» Transportation management

» Demand management

» Replenishment

» Manufacturing planning and scheduling

The Value of a Digital Supply Chain

planning and scheduling The Value of a Digital Supply Chain The digital supply chain is the

The digital supply chain is the next step in the evolution of modern supply chain management. Computers and software assist in the management of assets, or even replace assets entirely. For exam- ple, one of the reasons companies employ supply chain manage- ment software is to reduce inventory. You don’t want hundreds

CHAPTER 1 Supply Chain Digitalization

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of skids full of dolls taking up valuable warehouse space, do you? In this case, supply chain management software optimizes the quantity and positioning of the inventory resulting in less inven- tory required across the supply chain. In other words, you have a good idea of how many dolls are wanted and where, so you don’t have to store them in various places hoping for an order.

Likewise, supply chain management software can increase pro- duction throughput. In this case, software eliminates the need for additional investment in production capacity. Thus, supply chains are evolving to employ a mix of digital and physical assets, with digital assets representing an increasing percentage of overall assets.

representing an increasing percentage of overall assets. You’ll invest less in overall assets as a percentage

You’ll invest less in overall assets as a percentage of company revenue, but you’ll invest more in digital. It is unlikely that supply chain digital assets will surpass physical assets anytime soon, but their percentage of the overall pie is likely to continue to increase.

Additionally, digital composition of the supply chain will naturally grow through time. Digital technology will first assist and then subsume or replace assets. Digital devices and software will make existing physical assets, people, and inventory more productive, which then will reduce the need for additional investment in each. Digital technology will also, in some cases, reduce or eliminate the need for physical assets, people, and inventory assets.

Of course, digital technology also becomes a bigger part of prod- ucts, increasing their appeal to consumers and opening new rev- enue streams. For example, cars now employ between 50 and 100 microprocessors for various functions, including entertainment, communication, and safety. They often also connect to the man- ufacturer, which can then offer new services, review needs for upgrades, and learn from usage. As companies gain more digi- tal insights (such as shopper demographics, buying patterns, and usage), they can more effectively position the right offer to grow revenue. Find the right positioning, promotion, and price, then make the sale!

The digital supply chain goes far beyond robotics and automation, which have been evolving for decades. Two of the simplest use cases in the digital supply chain involve location and status. With mobile devices, onboard computers, and similar devices, compa- nies can now track, in real-time, the exact location of assets as

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they move across the supply chain and across the globe. You know exactly what is needed and where!

For example, you can use technology to track the precise loca- tion of a truck heading from a factory to a distribution center (DC) so that you have everybody and everything ready to act at the right time. Now, apply this same kind of knowledge to an ocean- bound ship. This information lets you process allocation to stores earlier and make on-the-fly adjustments as needed. At a smaller level, you can track the location of merchandise and labor within a store. Immediately understand the status of out-of-stock or out-of-place inventory and then task labor to resolve the issue in the most optimal manner. “Jimmy, move the box of onions to Aisle 3!”

Table 1-1 shows examples of how digital assists, augments, or replaces more traditional business processes, supply chain assets, products, and people.

TABLE 1-1

How Digital Supply Chain Technology Replaces Traditional Supply Chain Processes

Digital Area

Description / Example

Enabling interactions

Discovery, research, buying, rating, and returns through e-commerce and mobile.

with consumers

Driving business-to-business (B2B) interactions

These interactions become increasingly digital through machine-to-machine interactions.

Driving personalized

The digital supply chain finds a path to deliver what the consumer wants, when and where the consumer wants it.

fulfillment

Enabling real-time systems and physical-digital convergence

The digital supply chain processes digital signals and big data to create an accurate picture of the supply chain and consumers.

Enabling learning systems

Supply chain software employs artificial intelligence to learn and adapt, rather than just handle a prescribed set of inputs with a prescribed set of actions.

Assisting physical assets – machinery, property, plant, equipment

Computer technology is embedded in production capacity and transportation equipment, providing status and location information.

(continued)

CHAPTER 1 Supply Chain Digitalization

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TABLE 1-1 (continued)

Digital Area

Description / Example

Replacing physical assets – machinery, property, plant, equipment

3D printing digitalizes manufacturing and transportation by essentially eliminating the need for transport via manufacturing on demand.

Assisting labor capital

The digital supply chain enables augmented reality through wearables. Schedule and manage work through mobile apps.

Replacing labor capital

Robots automate production processes, and labor management software increases productivity.

Assisting inventory

Embedded chips provide real-time location information.

Replacing inventory

Supply chain software reduces inventory.

Enhancing products

Almost all value-add content of cars in the past 10 years is digital, including entertainment, safety, and driver-assist capabilities.

Creating new products and services

Mobile apps create the sharing economy. Services offer monitoring and management of consumer products with embedded chips.

Assisting in the use of products

Examples include cars equipped with driver-assist capabilities or supply chain software that prescribes decisions for demand and supply actions.

Replacing humans in the use of products

Self-driving cars and trucks remain an intriguing (if slightly terrifying) prospect.

Creating its own digital

Humanlike systems that think, act, and understand scenarios.

What Is Everybody Else Thinking?

and understand scenarios. What Is Everybody Else Thinking? Given the multitude of new digital enablement options

Given the multitude of new digital enablement options now avail- able, many companies look to leading market indicators and proof of value to chart a potential path forward for themselves. JDA funded research by SCDigest to look at the current approach com- panies are taking to prioritize digital initiatives for the future. The following sections go over the different digitalization initiatives being considered and how they can be used:

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Advanced analytics

This information provides insights on customer and supply chain activities. This area is advancing rapidly to produce predictive insights on how and where the customer is going to buy and the likely future state of supply chain risks and opportunities.

Augmented reality

Augmented reality offers enhanced visual and audio capabilities that are tethered to the human body to virtualize an operational environment in real-time. Common applications include the streamlining of warehouse operations in the put-away, pack, and ship processes.

Big data

Big data includes the voluminous data captured in real-time for the identification of trends and insights. The digitally networked landscape enables the capture of social, news, events, weather, and other signals in massive quantities never seen or aggregated before.

Cloud-based applications

These applications were natively built to operate in a digitally connected way outside of a company’s behind-the-firewall IT deployment. Use of cloud-based applications accelerated due to faster time to value and the reduction of ongoing maintenance to stay current with ongoing enhancements.

Digitalizing manual processes

Manual human activities will transition to digitalized self-service with enhanced visibility and speed. For example, digital portals that allow for immediate order updates and proactive digital alerting. They might still leave the mayo off your burger, though.

Internet of Things (IoT)

IoT refers to the network of physical objects connected through the Internet, as well as the intelligent communication that occurs between them.

CHAPTER 1 Supply Chain Digitalization

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Mobile applications

These applications operate on a mobile device. The millennial generation grew up on mobile platforms and drives new expecta- tions for a seamless experience between phones, tablets, and their enterprise workstations.

Radio Frequency Identification (RFID)

These chips assist in the tracking and identification of assets.

Supply chain systems integration with trading partners

This process enables two independent companies to interoper- ate and act as one. This union improves the overall performance of the supply chain and improves the customer experience. Inte- grated information can include forecasts, transit status, orders and projected orders, and parameters that drive the flow of prod- uct through the supply chain to the end consumer.

Internal supply chain integration

This process links key planning and execution solutions to enable them to interoperate to drive improved business performance and agility. The most common systems include forecasting, replen- ishment, warehouse management, fulfillment, transportation planning, master planning, and scheduling. Most companies want to integrate these systems to drive an overarching integrated busi- ness planning (IBP) initiative. That initiative brings together sales, marketing, product development, supply operations, finance, and the executive leadership team to build and execute to a common plan. And maybe to catch a drink after work, if you’re lucky.

Supply chain visibility

Supply chain visibility lets you understand the location of com- ponents or products as they flow from the factory to the end cus- tomer. Recent innovations in digital technologies also provide the environmental conditions of the products or components as they flow through the supply chain, such as temperature, humidity, friction, or vibration. Nothing like finding out your inventory was shaken, not stirred.

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Figure 1-2 highlights where companies invest their resources and bandwidth, according to the 2016 SCDigest Supply Chain Digitiza- tion Benchmark survey.

2016 SCDigest Supply Chain Digitiza- tion Benchmark survey. Source: JDA FIGURE 1-2: Importance of digital initiatives

Source: JDA

FIGURE 1-2: Importance of digital initiatives as part of current – and future – business strategies.

As you can see, supply chain visibility is the top priority. Under- standing where the product is in the supply chain and the corre- sponding dwell times that occur as the product makes its way from the factory to the consumer is critical to meeting and exceeding customer expectations over time. Closely linked to this high pri- ority item are advanced analytics. Predictive analytics enable the next generation of supply chain visibility solutions.

the next generation of supply chain visibility solutions. Moving from knowing where the product is located

Moving from knowing where the product is located in real-time to accurately predicting where the product will be is becoming a reality, thanks to external data signals. Imagine a global supply chain with off-shore, over-the-ocean, and inland legs as part of its transportation plan. Anything from a storm to a hurricane can impact the timing when the product will arrive. Predictive analyt- ics can enable innovative companies to understand and mitigate risk much faster than they have been able to in the past.

The second-highest focus area is internal supply chain sys- tems integration. The digital economy raises the expectations of shorter lead times and the requirement to simultaneously deliver higher levels of customer service. Thanks to the success of Ama- zon.com, the Amazon effect conditioned shoppers to order any- thing from anywhere and expect delivery within two days or less.

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This previously unheard-of accomplishment likely drives interest in this area. Companies can no longer rely on independent and disconnected processes and systems and still meet these new, compressed lead time and service level expectations.

Historically, supply chain planners could build forecasts and order plans without direct linkage to the execution systems and assets that must execute against those plans. The new require-new, compressed lead time and service level expectations. ments of the digital shopper, especially during holiday

ments of the digital shopper, especially during holiday and high peak seasonal periods, mandate that planning and execution pro- cesses and technologies must be tightly coupled. Susie can’t sur- vive without that new doll!that must execute against those plans. The new require- As planners build their time-phased constraint-aware plans

coupled. Susie can’t sur- vive without that new doll! As planners build their time-phased constraint-aware plans

As planners build their time-phased constraint-aware plans to support the digital shopper, these plans include a closed-loop view of transportation, warehouse, and labor requirements to ful- fill these new requirements. In cases where the time-phased plan exceeds capacity constraints, companies employ IBP techniques to proactively mitigate exposed gaps.

Lastly, future strategy requires focus on supply chain integration and collaboration. As companies discover the root causes behind why they fall short of fulfilling customer expectations or engage in margin-eroding expediting activities, they learn that the issues causing the greatest pain often occur outside their immediate influence. They just can’t control everything.

As a result, companies within the supply chain often use buffer inventory to mitigate the risk of failure from another company. This approach ties up cash that could go toward product innova- tion or other activities that build market share. Again, knowing the difference between planned and actual consumption could make a significant difference in inventory planning and delivery.

Supply chain integration with trading partners shrinks the time between when an issue occurs and when the other trading part- ner can act to mitigate or resolve those issues. Most importantly,a significant difference in inventory planning and delivery. when companies with an integrated supply chain collaborate,

when companies with an integrated supply chain collaborate, they can all focus on strategies and activities that build joint value. Everybody wins!act to mitigate or resolve those issues. Most importantly, 14 Digital Supply Chain For Dummies, JDA

and activities that build joint value. Everybody wins! 14 Digital Supply Chain For Dummies, JDA Software

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What Is the Future of the Digital Supply Chain?

What Is the Future of the Digital Supply Chain?

A key digitalization focus today will likely evolve to new or differ- ent priorities in the future as the digital landscape is shifting and evolving very rapidly.

The strategies in this chapter would see slightly different rank- ings if broken out across varying industry verticals based on their unique characteristics. For example, RFID saw higher adoption in the apparel and automotive industries than in consumer packaged goods and grocery. Evaluate your digitalization focus areas based on the unique characteristics and environment of your specific company.

Building and executing your strategy doesn’t have to be an all- or-nothing proposition. Companies seeing the greatest value and momentum started their journey in small steps. Consider trying out some new techniques while you maintain your current pro- cess and bring the successful results into your main workflow.

and bring the successful results into your main workflow. Waiting to see what happens is too

Waiting to see what happens is too risky. The digital market shift created a new opportunity for companies to establish competitive advantage. Build your digital supply chain playbook in order to not only survive, but thrive. In the next chapter, we show you how.

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IN THIS CHAPTER

» Evaluating the old playbook

» Creating your new digital playbook

» Understanding the changes to your digital supply chain

Chapter 2

the changes to your digital supply chain Chapter 2 Your Digital Supply Chain Playbook T hink

Your Digital Supply Chain Playbook

T hink about how the internet has transformed business

operations in the past 25 years. Business is now at the cusp

of a similar innovation breakpoint that will redefine indus-

tries forever — and will present huge opportunities for those companies that wish to pursue them. Going digital involves going to market in a fundamentally different way. To cross the digital divide, transformational change is required.

With that said, don’t let the word transformation scare you. It’s not like getting a heart or lung transplant. You can execute your digi- tal initiatives in parallel with your existing supply chain, making transformation much less scary. Test the waters, so to speak. As an example, cloud-enabled applications that focus on transporta- tion, replenishment, and supply chain collaboration can provide proof-of-value pilots in as little as 8 to 12 weeks for a subset of your business.

This chapter guides you through the process.

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Defining Your Playbook for Digital Supply Chain Success

Defining Your Playbook for Digital Supply Chain Success

Just as a football team refers to a playbook for the strategies it will use to move the ball down the field to ultimately score and win, your digital playbook will serve as a guide for how your company will win at business.

A playbook includes a detailed plan for how a company will achieve success given its strengths and weaknesses, the competition, and the overall business environment in which it operates. Today’s business environment changes rapidly — just think about how much smartphones and consumers’ rising expectations affected your business in the past three years — so your playbook must encompass a great deal of agility.

What winning means for one company will not be the same for another. You could define winning in business by any number of metrics, ranging from gaining market share to getting to market— so your playbook must encompass a great deal of agility. faster at a lower cost.

ranging from gaining market share to getting to market faster at a lower cost. Yet, a

faster at a lower cost.ranging from gaining market share to getting to market Yet, a game wouldn’t be exciting if

Yet, a game wouldn’t be exciting if it didn’t have an element of surprise. When the quarterback lines up and notices the defense taking a different approach than he anticipated, he calls an audi- ble to change plans in the play at the last second. Then the team executes a different-but-still-practiced play to better compete against the defense.

The same principle is true for your supply chain. To cross this digital divide, you will need a new set of plays to win in this ever- changing and competitive business environment. As you build your digital playbook, it should encompass the following three elements:

» The offer

» The supply chain

» The asset

The following sections give you a closer look at each of these elements, contrasting the old playbook with the new digital playbook.

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As futurist Gerd Leonhard said, “Almost everything that can be digitized and/or automated, will be.”The offer The offer is exactly that: what your company has to offer. In other

that can be digitized and/or automated, will be.” The offer The offer is exactly that: what

The offerthat can be digitized and/or automated, will be.” The offer is exactly that: what your company

The offer is exactly that: what your company has to offer. In other words, what products or assortments you bring to market.

Old playbook

The offer in the old playbook worked well for most of the 20th century, but as you will see, it is quickly becoming irrelevant. The playbook centers around the four Ps of marketing:

» Product: Products were fixed based on the demographics of a particular region or group of stores. For business-to-consumer (B2C) companies, you could only use so many shelves or racks in a store to display product.

» Place: What you could sell was often constrained based on place, which in this case was limited by the physical space that was available.

» Price: In the old playbook, pricing was static and relatively consistent. If you were a consumer packaged goods (CPG) company, retailers often dictated the price offered to the consumer.

» Promotion: Promotions were also generic and focused on mass consumption. For B2C companies, this strategy meant promoting your offers through TV and radio ads or the weekly store flyer. For wholesale and business-to-business (B2B) companies, promotions were offered in catalogs and at buyer tradeshows. And in both cases, these promotions were executed on a predefined schedule created at least 6 to 12 weeks in advance.

The customer experience also suffered under the old playbook. For many B2C companies, after the shopper left the store with the product, the relationship ended. For B2B companies, such as chemical or industrial parts suppliers and even wholesalers, the old playbook was high-touch. This strategy involved a lot of phone calls with your customer service rep and manual order tak- ing, with very little visibility into the other competitors’ offers.

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New digital playbook

It’s not surprising that digital commerce has turned the old play- book on its head. The four Ps are very different in today’s world:

» Product: Today, companies build intelligence into the product itself. Think about the amount of intelligence included in a new car. In addition to GPS technology, digital tracking and alert mechanisms related to maintenance and temperature may be embedded into the car. Companies are also building CPG products that monitor consumption post-purchase. Companies already bundle that digital consumption data with reordering services to ensure that the product is automatically replenished without any effort on your part. Figure 2-1 shows how the old playbook evolves into the new playbook.

shows how the old playbook evolves into the new playbook. Source: JDA FIGURE 2-1: Old playbook

Source: JDA

FIGURE 2-1: Old playbook versus new digital playbook for the offer.

» Placement: Additionally, the space constraints that limited product placement in the old playbook gave way to the endless aisle. Retailers use the endless aisle tactic to save the sale. By using in-store kiosks or mobile phones, shoppers can now purchase product that is not in stock while shop- ping inside the store and have it delivered to their homes.

The attractiveness of the endless aisle emboldened manu- facturers to bypass the retailer in some instances and sell product directly to consumers online. Growing e-commerce adoption also challenges the long-held belief that certain product categories face a high barrier of entry. New internet startups prove they can get their offers to market very quickly and create new levels of competition for industry titans. The quick success of the Dollar Shave Club, acquired by Unilever for $1 billion, illustrates this new phenomenon.

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Leading companies are now using advanced category manage- ment technology to assort products and allocate

Leading companies are now using advanced category manage- ment technology to assort products and allocate space based on the demand patterns of unique shopper demographics in a store. This step represents a huge leap forward from when product assortment could only be localized to a region, subregion, or group of stores. In-store activities also move from common sales to edutainment — educational or interest- ing in-store activities such as cooking demonstrations or digital displays showing how an outfit will look. These items can make the shopping experience more exciting and increase foot traffic in stores.

Only your creativity limits how you reach your customers. We’ve seen retail giants create virtual stores in subway stations where the shoppers view a digital shelf before boarding the train and scan items for purchase and delivery. Your options are endless.

» Price: In the digital playbook, pricing is much more dynamic. Thanks to the internet, customers can easily find the latest deals with just a click. Companies like Amazon use machine- learning algorithms to scan the market for competitive offers, updating prices by the minute.

» Promotion: Promotions have also become shopper-centric. In fact, some retailers publish their own apps! When a consumer walks in front of a product, in-store beacons recognize the shopper’s proximity and push out a promotional offer to the shopper via the app. This experience offers a very different approach compared to the regional flyers that dominated the old playbook.

The customer experience for B2B companies is also shifting radi- cally. B2B companies are moving more toward self-service models, providing customers with recommendations based on their pur- chasing profiles. These companies deliver additional value around each transaction by providing customers with real-time status updates about orders, as well as alerts about possible delays. In addition to real-time promotions, B2B customers receive deeper levels of product education — delivered on their terms, when they are ready to consume it — prior to making the purchase.

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The supply chain

The second element of the new digital playbook is the supply chain. All the radical changes made to the offer require sup- port from significant changes in the supply chain. This support includes supply chain management processes that cover planning and execution functions:

» Integrated business and financial planning

» Demand management

» Category management

» Sales and operations planning

» Assortment planning

» Manufacturing planning and scheduling

» Inventory deployment planning

» Transportation planning and management

» Warehouse and labor management

» Store planning and operations

Old playbook

The old playbook centered around a linear, batch-oriented supply chain. The way you flowed product from the factory to the end customer followed a defined network path of buy-make-move- store-deliver steps, and the interrelationships between these steps were relatively static. Figure 2-2 shows the old, outmoded process.

static. Figure 2-2 shows the old, outmoded process. FIGURE 2-2: The old linear supply chain. Source:

FIGURE 2-2: The old linear supply chain.

Source: JDA

In the new digital economy, this supply chain structure is no lon- ger competitive. Today’s grid-based supply chains use a set of assets that “surround the customer” and dynamically assemble to process and fulfill orders. Take a closer look at how this grid- based supply chain works in the digital playbook.

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New digital playbook

Think of a grid-based supply chain as a set of interconnected deci- sion paths, processes, and systems that enable companies to maxi- mize customer focus and profitability (for a visual, see Figure 2-3). A flexible foundation supports dynamic information sharing with and across trading partners, distribution, and fulfillment points. This new supply chain grid can provide business units within your company greater visibility to upstream and downstream nodes.

company greater visibility to upstream and downstream nodes. FIGURE 2-3: The new digital supply chain. Source:

FIGURE 2-3: The new digital supply chain.

Source: JDA

As the availability of real-time and predictive data increase, the type and amount of information shared across nodes will grow dramatically. Not only will this information provide you with greater flexibility to meet consumers’ ever-changing expecta- tions, but it will also enable you to react quickly when unplanned events occur. For instance, the way product flows through the supply chain grid can react based on real-time data such as traf- fic, port congestion, and weather.

Companies, especially those that operate in the high-tech and apparel industries, also need to adopt new strategies when it comes to returning merchandise. Predicting which items will be returned, and on what timeframe, will become a critical part of the supply chain plan of the future.

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Additionally, supplier collaboration will no longer act as just a tool for price negotiation. In the new digital playbook, this step will take on much greater significance. Whether you’re a retailer, wholesale distributor, or manufacturer, you battle the Amazon effect. Consumers today expect to buy anything, from anywhere, and receive it in two days or less — and in some markets even hours — thanks to Amazon’s business model.

Manufacturers and retailers can confront the Amazon effect by engaging in integrated supply chain collaboration. Manufac- turers that digitally connect with their downstream customers gain better visibility into demand signals and can deliver with higher availability and with lower overall cost. This improvement requires less buffer inventory up and down the supply chain in order to manage demand variability and supply chain disruption. Know where everything is and where it needs to go!

This level of collaboration between two companies may seem

impossible, but it’s not. Leading companies partner on how they promote and flow products through their supply chains, creating

a win-win situation for both, as shown in Figure 2-4.

a win-win situation for both, as shown in Figure 2-4. Source: JDA FIGURE 2-4: Old playbook

Source: JDA

FIGURE 2-4: Old playbook versus new digital playbook for the supply chain.

The asset

Physical assets include your factories, warehouses (also known as distribution centers or DCs), retail stores, transportation, and even the people who manage your supply chain processes.

Old playbook

The asset in the old playbook had a singular purpose. For

there. A shop-

instance, a store was just a store. It was just

per entered the store and purchased an available product. If that

product wasn’t there, the shopper couldn’t purchase it. Similarly,

a wholesale distributor was just a wholesaler distributor, focused

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on shipping products from the manufacturer to the retailer. This process resulted in monster-size warehouses, container ships, and factories as companies leveraged economies of scale to pro- tect profit. And in the old playbook, the company owned all these assets, especially those dedicated to inventory transportation and storage.

New digital playbook

The store is no longer just a store — it now acts as a multichannel fulfillment center. As shoppers buy items online, retailers need to ship product from the store or offer a click-and-collect ser- vice that provides online shoppers with an in-store pickup option. Both tactics enable the shopper to get the product faster as best fits the shopper’s needs, as shown in Figure 2-5.

as best fits the shopper’s needs, as shown in Figure 2-5. Source: JDA FIGURE 2-5: Old
as best fits the shopper’s needs, as shown in Figure 2-5. Source: JDA FIGURE 2-5: Old
as best fits the shopper’s needs, as shown in Figure 2-5. Source: JDA FIGURE 2-5: Old

Source: JDA

FIGURE 2-5: Old playbook versus new digital playbook for the asset.

Old playbook versus new digital playbook for the asset. For more insights into how the store

For more insights into how the store is changing and how retail- ers will need to adapt, check out Chapter 3.

Similarly, wholesale distributors no longer serve the next down- stream node. They now support multichannel offers, including direct fulfillment to end customers. Many wholesale distributors fulfill consumer demand outside their traditional downstream brick-and-mortar customers and have created a web pres- ence to do so. These companies can now reach new customers and markets previously not accessible prior to launching their e-commerce models.

In the new playbook, companies focus less on economies of scale, shifting instead to a more modular focus for their DCs and fac- tories to better support speed and responsiveness. As part of this change, companies build and move DCs closer to market demand. This move is a direct response to the Amazon effect.

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Amazon forever changed the game, and companies across all industries must now figure out how to better compete. Whether you like it or not, the Amazon effect will impact your networkstrategy, where you build your factories and DCs, and where you pre-position your inventory. The

strategy, where you build your factories and DCs, and where you pre-position your inventory. pre-position your inventory.

and DCs, and where you pre-position your inventory. The sharing economy, popularized by the successful

The sharing economy, popularized by the successful business models of Uber and Airbnb, challenges the ownership aspect of the asset. As part of the new digital playbook, the concept of the sharing economy presents a better way to manage inventory transportation and storage, especially in the last mile. Just don’t count on Uber drivers to deliver large tractors at this point.

The last mile involves the movement of goods from the last trans- last mile involves the movement of goods from the last trans portation hub to the final portation hub to the final delivery address. This process typically involves a partial shipment, which is the shipping segment with

the highest associated costs — and the one most likely to nega- tively impact your bottom line. Yet, this low-margin leg of the supply chain is - tively impact your bottom line. Yet, this low-margin leg of the supply chain is growing exponentially. Your company will need to find a profitable way to manage these shipments.

Leading companies looking to Uber-ize their transportation assets leverage third-party logistics providers or portals to deliver the last mile more effectively. Others leverage 3D printing, or addi- tive manufacturing capabilities, to avoid transporting and storing materials completely. Companies in the industrial sector adopted additive manufacturing quickly, especially for slow-moving, expensive components such as jet engine bolts.

Be sure to check out the next chapter, where we discuss digital strategies and technologies you’ll need to make your digital sup- ply chain a success.

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IN THIS CHAPTER

» Taking a look at the parts of your supply chain

» Collaborative planning and execution

» Working with IOT

» Using automation and delivering convenience

» Bringing it all together

Chapter 3

convenience » Bringing it all together Chapter 3 Creating Your Digital Strategies and Technologies T ime

Creating Your Digital Strategies and Technologies

T ime to put your digital playbook into action! In this chapter, we show you the practices and technology you need to exe- cute your well-crafted plans and how to react when your

called plays are put to the test.

Segmenting Your Supply Chain

plays are put to the test. Segmenting Your Supply Chain Recently, the end customers’ influence on

Recently, the end customers’ influence on supply chain has moved from the last mile to the first, forcing supply chain management executives to focus on delivering differentiated customer experi- ences. Not surprisingly, delivering these differentiated customer experiences is difficult due to the traditional, one-size-fits- all supply chain approach. If it was easy, everybody would have already done it, right? But segmenting your supply chain around your customers is a fundamental requirement to remain competi- tive in today’s digital world.

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Supply chain segmentation is the capability to offer differentiated supply chain solutions to address individual
Supply chain segmentation is the capability to offer differentiated
supply chain solutions to address individual customer needs
profitably.

To implement this process, start with segmenting your custom- ers based on their buying behaviors, then designing products for them and aligning the supply chain to deliver the right products to the right customer at the right time. To stay competitive in a world dominated by digital commerce, you must continuously align supply chain capabilities with customer demands.

This concept isn’t necessarily new or different. Marketing depart- ments have segmented customers based on their demographic profiles and propensity to purchase for decades. Digitalization is now forcing you to adopt this principle to even your supply chains. Digital data signals provide the necessary information to help you unearth the value behind supply chain segmentation.

Invest in your data

Knowing and using your data may very well be the key to your survival. Data flow in from many locations in your supply chain:

» Point-of-sale (POS) systems

» Internet of Things (IoT) devices

» Social, news, events, and weather information

» Product attributes

» Customer responses

All these types of data need to be cleansed, collated, and aggre- gated. Machine-learning algorithms must constantly mine and connect various data sources across many systems for insights and recommendations. Think of this process like panning for gold, but you’re shaking out data instead of gold nuggets. (Just don’t bite your storage drives to see if they’re for real.)

Segment your customers

This step represents the foundation of a successful supply chain segmentation strategy. Use sales transactions, social data, basket size, demographics, and other data points to put your customers into homogeneous groups. Your detailed understanding of these segments should inform product design, service-level offering, and supply chain strategies.

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Align supply chain strategy

Align supply chain strategies with customers and product designs. Understanding what customers want and how they’re likely to buy will help you design effective fulfillment and inventory strategies. Individual customers may want front-door delivery of the latest gadget, so last-mile strategies become important. Corporate cus- tomers, on the other hand, may need you to have a warehousing strategy to fulfill their needs. Whatever it is, customize your sup- ply chain accordingly!

Create a visible supply chain

Supply chain segmentation requires transparency and collabora- tion among all parties. Manufacturers need to know how much capacity to set aside and what production strategy to employ for each segment. Logistics companies need to understand ware- housing and transportation capacities and staffing plans. Finally, retailers need to plan their assortments and fulfillment strategies in accordance to the supply chain strategy, thereby completing the cycle of a synchronized segmentation strategy from shopfront to factory.

Reap the benefits!

Employing this segmentation strategy helps you bring in all the goodies. Take a look at some of the advantages you can realize.

Better insights

The capability to collect data across your organization and your supply chain enables your organization to generate significant insights into your customers’ purchasing patterns and your own operations.

Better alignment

Aligning frontline customer strategies with back-end sup- ply chain processes helps reduce complexity and costs. Aligning product design processes based on what your customer wants and what the supply chain can deliver will increase customer satisfac- tion and lead to increased loyalty and profits.

Better speed to market

This process delivers the knowledge of what your customer wants and which products are likely to perform best in which market.

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When you use that information to build a supply chain with a clear plan to deliver, your organization can deliver offerings and innovations to customers with speed.

Many organizations are just starting to make supply chain seg- mentation the core part of their business strategies. Relentlessly Many organizations are just starting to make supply chain seg demanding customers will move everyone in demanding customers will move everyone in that direction very

customers will move everyone in that direction very quickly. Segmenting customers helps drive up revenues while

quickly.customers will move everyone in that direction very Segmenting customers helps drive up revenues while a

Segmenting customers helps drive up revenues while a supply chain segmentation strategy drives down costs, resulting in a more profitable enterprise. Everyone will want to hop on this ride.

Digitally Enable Always-On Manufacturing Planning

this ride. Digitally Enable Always-On Manufacturing Planning Manufacturers have been slow to take advantage of the

Manufacturers have been slow to take advantage of the potential value in the vast amount of data offered by digital technology. Most are hampered by siloed data within legacy IT systems and leadership skeptical of the value and impact of digitalization.

Manufacturers are adopting digital trends when possible, though. Advanced robotics, 3D printing, machine learning, and data har- vesting coupled with cost-effective storage and information analysis will drive manufacturing companies into the future.

Leading manufacturers are already digitally enabling an always- on planning environment. Always-on planning allows companies to better sense and respond to supply chain events and queries in a real-time fashion. The companies can then develop risk mitiga- tion strategies.

These examples showcase the value of an always-on planning environment:

» Sensors alert planners about a maintenance issue on a production line that will delay production. Based on these new constraint data, planners leverage what-if scenario planning and prescriptive resolutions to update the production plan.

» End-to-end visibility capabilities, enhanced by control towers, notify planners when a critical bill of material will not arrive on time. This notification either prompts prescriptive

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resolutions for the supply shortage or triggers the supply chain to repair itself.

» The latest demand plan, updated frequently with inputs from social, news, events and weather, predicts a high probability that demand for a product will outstrip capacity. This information triggers an additional overtime shift to compensate for the capacity.

Technology advancements involving this type of real-time, top- down, middle-out, and bottom-up synchronization of inputs across demand and supply processes make these examples pos- sible. Not only do these advancements eliminate batch processes, but they also drive latency and lag time out of your supply chain.

Advancements in real-time predictive and prescriptive analytics allow your company to proactively plan risk-aware strategies and formulate contingency plans for the supply chain. In other words, you can anticipate most every possibility that doesn’t involve aliens or giant meteors. This capability ensures the most effective and profitable decisions, making it possible for you to monitor business performance and respond collaboratively to disruptive events with unparalleled speed and intelligence.

The capability to explore trade-offs among various scenarios and options lets you make profitable, effective decisions that match up with your organization’s goals. Not only does this always-on planning environment result in greater profitability, but it also enables you to deliver on consumers’ expectations for a personal- ized, consistent, and seamless experience across all channels.

Leverage IoT Technology to Reduce Costs

across all channels. Leverage IoT Technology to Reduce Costs Predictions from market research firms vary, but

Predictions from market research firms vary, but the general agreement is that the number of connected devices will likely increase to between 20 billion and 30 billion by 2020. The power of IoT technology, coupled with real-time status updates from the factory floor, enable manufacturers to monitor machine activity, maintenance needs, and product movement during production.

These smart machines help reduce costs across the digital sup- ply chain by providing data that allow manufacturers to adjust production on the fly. Manufacturing lines will receive updated

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schedules and quality-related information immediately. Imagine being able to leverage IoT data to schedule proactive repairs and maintenance and customize production to meet that “customer of one” focus needed for success in the digital world!

The Industry 4.0 idea of the smart factory will soon be mainstream reality. Smart products with embedded knowledge of their cus- tomers will provide data insights and analytics about the best way to support fulfillment for that customer. All this information will lead to more cost-efficient production and product development.

Digitally Enable Real-Time Collaboration

development. Digitally Enable Real-Time Collaboration Partners will need to collaborate across all nodes of the

Partners will need to collaborate across all nodes of the supply chain to profitably meet customers’ demands. Select technology solutions and supply chain partners that can work within and across your various networks and touch points.

Envisioning your supply chain as a multidimensional collabora- Envisioning your supply chain as a multidimensional collabora tive grid will help drive processes for disruption tive grid will help drive processes for disruption management and better product movement — and you’ll end up with less excess

product movement — and you’ll end up with less excess inventory in the supply chain. By

inventory in the supply chain.product movement — and you’ll end up with less excess By tightly connecting planning and execution

By tightly connecting planning and execution processes to what actually happens with demand, you’ll get a better view of your inventory. Products can more effectively flow through the synchronized supply chain, like water in a digital mountain stream. The more latency you can minimize, the more support you’ll create for analytics-driven responses that consider all nodes across the supply chain grid.

Don’t forget, an effective network design is essential to ensure profitable productivity and flexibility as products move from pro- duction to your customer’s hands.

Use Digital Data to Accelerate Transportation Insights into Action

Data to Accelerate Transportation Insights into Action As competition increases and consumers become more

As competition increases and consumers become more demanding, the entire supply chain will look to transportation professionals

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to deliver the last mile in customer service. These services will also need to support the overall profitability of all supply chain participants.

Although many regard the notion of the consumer-centric supply chain as a retail industry problem, it impacts all the participants in the supply chain, including manufacturers, distributors, and logistics providers.

Supply chain digitalization helps you reduce latency at every node of the supply network. of the supply network.

you reduce latency at every node of the supply network. Historically, transportation management systems (TMS) are

Historically, transportation management systems (TMS) are reactive by nature. However, holistic network views, advanced optimization strategies, comprehensive views of constraints, and improved carrier signals enable transportation to play a more strategic role in the supply chain. strategic role in the supply chain.

Today, companies can use their knowledge to represent down- stream warehouse constraints and have a better understanding of upstream replenishment plans. This knowledge allows you to act in near real-time. Despite these advances, transportation works with average representations and reacts to signals. The real future of transportation will move past its historically static and reactive nature into the proactive and rapidly adjusting world of big data and predictive analytics.

Take a look at a real-world example of goods coming to North America from Asia to see how predictive analytics will further enhance effectiveness and efficiency. This scenario involves a complex series of modal steps:

» Pickup from supplier via truck for delivery to port

» Port operations

» Ocean voyage

» Arrival at port

» Duties and customs

» Pickup by truck for delivery to destination

At any given step in this journey, several things can go wrong, causing delays.

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For years, TMS have been used to represent network constraints, as well as understand costs, timeframes, and capacity availability. The problem is that visibility is limited based on what is eitherknown or can be assumed. EDI signals can provide some visibility into goods in transit,

known or can be assumed. EDI signals can provide some visibility into goods in transit, but these transmissions are often inaccurate and untimely. This step is into goods in transit, but these transmissions are often inaccurate and untimely. This step is where many of the new digital tech- nologies will become relevant and applicable.

digital tech- nologies will become relevant and applicable. While you try to track your goods from

While you try to track your goods from Asia to North America, many different sources already generate or have access to a mas- sive amount of data such as:

» Ocean vessel GPS pings

» Weather and tidal patterns

» Historical information of sailing patterns

» Historical and active port congestion metrics

» Social and civil events

These individual streams of data don’t provide much value if viewed in isolation. But when you put them all together, these data streams form a picture of the current state of goods in transit and help you predict future behavior. For instance, a GPS ping can only tell you where a container ship is at a certain point in time. When you combine that ping with weather, sailing patterns, and harbor traffic data, you can glean an accurate picture of what the ship’s location will be in the future (and whether that frozen fish will arrive in time for Sunday’s dinner).

Predictive analytics also help improve the last mile of delivery. Transmissions of real-time data on traffic conditions, lane block- ages, and weather impacts ensure that routes change in real-time to prevent delays in product delivery.

This level of predictive visibility will drive significant value to transportation providers in the future. Imagine being able to narrow your arrival estimates from days to hours. Not only will your downstream supply chain need less buffer inventory, but you can quickly redirect inventory to address changing market dynamics.

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Digitally Enabling Warehouse Automation and Optimization

Digitally Enabling Warehouse Automation and Optimization

The convergence of dramatic changes in customer demands, along with constant technology advancements, is leading to a revolution in warehouse capabilities. Specifically, your organiza- tion will need to be prepared to improve its warehouse productiv- ity using these factors:

» Workforce technology

» Automation efforts

» Optimization capabilities

Workforce technology

As Baby Boomers retire, your warehouse workforce will be replaced by tech-savvy millennials. These bright young minds will expect to work with leading-edge, “applike” tools that mirror what they use in their everyday lives, or they will seek employ- ment elsewhere.

The warehouses of the future will use augmented reality and gaming concepts, as expected by this workforce. Workers will use a headset or an optical head-mounted display, worn like a pair of eyeglasses. The headset will display role-based information in a “smartphonelike,” hands-free format. Warehouse workers will communicate with software systems via natural language voice commands to complete daily tasks.

Workers will also rely on robotics to remotely control common, everyday activities and tasks. Futuristic robotics technology sys- tems will combine tailored software with inventory storage pods and robots to manage inventory storage, movement, and sorting.

This technology will use a grid-based warehouse configuration, with inventory pods in the center, workstations on the perimeter, and a control system that directs the hardware. These technology advancements will not just improve productivity and warehouse performance, but will also create an engaging environment that will meet the needs of your future workforce.

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Workers responsible for monitoring and managing this infra- structure will demand that their technology providers seamlessly connect with any of these ancillary systems to get real-time updates. This connection will ensure that any issues or challenges are quick to be recognized and raised for end-users to manage. These next-generation workers will expect plug-and-play tech- nology that is easy to on-board and interact with. In other words, these workers want information as soon as possible to act as quickly as possible.

Automation and robots

Significant growth in the use of material handling automation and advanced robotics in the warehouse is predicted.

and advanced robotics in the warehouse is predicted. A predicted labor shortage in the future will

A predicted labor shortage in the future will necessitate the use of more machines to do the work done by humans today. Companies that can maximize the use of machines that can do the jobs of humans will need to recruit, train, and retain fewer workers.

Extreme global competition will continue to exert cost pressures on warehouse operations. One way to address this is to minimize human labor costs, replacing workers with robust equipment that can operate 24/7.

Machines work through typical shift breaks and are not governed by labor laws. They don’t need time off for vacations, and they don’t experience lost-time accidents or require benefits packages.

Satisfying customer demand

To satisfy consumers’ changing purchasing patterns, warehouses will need to fulfill orders in smaller quantities with much shorter lead times from order entry to delivery. Warehouses will use more automation to address the increased velocity of the order fulfill- ment process.

Lights-out facilities (fully automated facilities) will continue to gain traction globally, but humans will maintain a presence (if only to keep our would-be robotic overlords at bay). Humans will monitor automation, manage productivity, and respond to pre- dictive analytics to ensure these sites run at full capacity and are cost effective.

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Smart optimization

Amazon emerged as a global warehousing force due to several factors:

» Purpose-built facilities

» Efficient space planning

» Optimal stock-keeping unit placement

» Robotic automation

» Well-connected planning and execution solutions

Yet Amazon’s practices only scratch the surface of smart ware- house optimization.

Optimization can improve how tasks, resources, equipment, and infrastructure are leveraged based on existing information and constraints. constraints.

leveraged based on existing information and constraints. So how can a warehouse management system (WMS) hope

So how can a warehouse management system (WMS) hope to identify the most optimal next task, at a minimal cost, in a space that is full of artifacts and constraints?

The most cost-efficient, high-value, and high throughput facili- ties will feature intelligent optimization solutions that con- tinuously improve every task. This process requires continuous visibility into necessary inputs and constraints including the following:

» Order profiles

» Delivery times

» Inventory availability and placement

» Employee and machine performance

» Employee certifications

» General facility layout bottlenecks

As people and machines work merrily throughout the day, opti- mization processes act to continuously improve that work. This occurs by measuring and improving all levels of performance on an ongoing basis.

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New adaptive learning technologies will help WMS platforms achieve this goal by using information gathered throughout the day, learning from constraints and other challenges. You could use these insights to improve employee skills, inventory avail- ability, task accuracy, and machine reliability while better adapt- ing to external factors like weather and traffic. Next-generation WMS solutions help warehouses become well-oiled, smart fulfill- ment and production centers.

Deliver a Seamless Store Experience

and production centers. Deliver a Seamless Store Experience The shopping experience that you know today will

The shopping experience that you know today will transform with the emergence of the next-generation shopper. Born and raised on digital commerce, these shoppers don’t differentiate between a retailer’s digital and physical store. Additionally, a projected labor shortage will dramatically influence the technologies needed to support the store experience.

As a retailer, you need to merge the digital store and the physical store into one seamless experience.

The seamless store experience

Digital will surpass the physical store as the first step of the future shopping experience. For example, consumers will identify mer- chandise of interest via online browsing and social ratings. Those selections will then be communicated via an online profile to the store, ensuring a high-touch retail experience when the consumer arrives at the store. Options for human associates, remote virtual associates, self-service kiosks, and even social feedback mecha- nisms will assist consumers with the fitting and selection process. Every step of this process will rely on the previously transmitted digital shopping intelligence. That experience includes all digital purchases and flexible delivery options. If needed, merchandise returns (managed by the retailer) will be scheduled online.

returns (managed by the retailer) will be scheduled online. Although this may seem futuristic, we already

Although this may seem futuristic, we already see the emergence of fitting room technology. Digital mirrors can perform virtual sizing and fitting demonstrations. Kiosks can help select product. Robotics act to simplify retrieval of merchandise.

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You will need enabling technologies and systems to provide this personalized experience:

» A digital shopper profile can seamlessly and quickly trans- pose across e-commerce, customer relationship manage- ment, workforce, task, and IoT systems.

» Analytic systems can gather, analyze, and assimilate relevant information at a personalized, shopper-level granularity. These systems will serve as the foundation for enriching all phases of the consumer shopping journey, from targeted offers to assisted selection and selling in the store.

» Virtual experience technologies (which leverage intelligence about the consumer) within the physical store.

Staffing the store

The impending retail workforce shortage may make the high- touch retail experience seem challenging, if not downright impossible. But necessity is the mother of invention, even in the retail store. Technological advancements in retail store operations will feature next-generation capabilities for executing intelligent store tasks and workflows.

IoT technology

Advancements in IoT technology hold promise in terms of real- time monitoring and communication to track inventory, custom- ers, and employees. Real-time visibility via IoT will help solve pervasive retail store problems. Make sure your shelves never lack the latest video game system — or whatever those crazy kids want this year.

Internet of Robotic Things (IoRT)

Today, most robots handle automation of repetitive retail tasks, such as storing and retrieving inventory or packaging product. Typically, inventory and tasking software systems direct what the automated robotics systems should do. The convergence of IoT connectivity with robotic systems that can execute proactive, automated tasks and decisions based on IoT signaling is referred to as IoRT. IoRT is where the intelligence and automation of the retail store will truly become extraordinary.

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Imagine a world in which IoRT in the store communicates in real-time with IoRT in distribution, enabling the entire fulfill- ment model from distribution to store shelf to be fully intelligent, accurate, and automated.

Nearly zero-touch retail will also become a reality in the future. IoT technologies in the home and store will communicate orders (including automatic replenishment of certain IoT technologies in the home and store will communicate orders (including automatic replenishment of certain products) to be

delivered via IoRT-enabled cars or drones. It’s as if the pizza arrives when you first get hungry!automatic replenishment of certain products) to be As you can see, the future of retail store

As you can see, the future of retail store operations will provide exceptional shopping experiences. In addition to the advances in IoT and robotics, foundational elements of store operations tech- nology will remain necessary to provide the intelligence needed for these technologies to work effectively:

» Workforce management solutions can effectively plan and mobilize people and machines in the future.

» Category management solutions can provide the necessary floor and space intelligence required for efficient merchan- dise display based on analytics of customer demand patterns.

» Store logistics solutions can provide the intelligence for maximized, efficient decision making and interleaving of tasks to both people and machines.

Bringing Your Digital Strategies Together

and machines. Bringing Your Digital Strategies Together To truly design and optimize your end-to-end digital sup

To truly design and optimize your end-to-end digital sup- ply chain, you must first understand how customers want their orders fulfilled. This knowledge affects how you position inven- tory and labor across all the various supply chain nodes, from fac- tory to store.

To succeed in today’s digital world, you need to connect the first mile with the last. This process involves two key steps linked to your segmentation strategy. First, you need to design products forthe various supply chain nodes, from fac - tory to store. who will buy them, requiring

who will buy them, requiring a good understanding of what your customers will buy. Second, you need to design your supply chainstrategy. First, you need to design products for 40 Digital Supply Chain For Dummies, JDA Software

will buy. Second, you need to design your supply chain 40 Digital Supply Chain For Dummies,

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for how these products will be bought, impacting where you put your facilities, and how you handle distribution.

Invest in a digital hub: a supply chain application strategy that brings a digital dashboard, rapid response components, and improvement capabilities into one collaborative environment. Figure 3-1 shows a sample strategy.

environment. Figure 3-1 shows a sample strategy. Source: JDA FIGURE 3-1: A sample digital hub business

Source: JDA

FIGURE 3-1: A sample digital hub business strategy.

Enterprise-wide visibility

Everyone knows that driving in the dark without your headlights on is a dangerous activity. At best, you’ll go down the wrong path. At worst, you’ll crash. You need visibility into what’s happen- ing across your entire organization to ensure you travel down the right road.

To achieve enterprise-wide visibility, you must collect data from throughout the supply chain and collate it into a centralized dash- board. To ensure you have full visibility across your organization, capture information such as:

» Consumer demand via POS data or transactional data logs

» Customer fulfillment patterns from distributed order management data

» Digital and IoT signals that provide product dwell patterns, consumer demographic patterns, and workflow patterns

» External factors that affect demand and visibility, such as social, news, events, weather, and traffic patterns

From this dashboard, you can track performance against key performance indicators. For instance, if you plan to fulfill online orders in one day, regardless of cost, then the dashboard can provide visibility into how your company performs against that

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service level objective. The dashboard would provide you with vis- ibility into supply chain constraints, bottlenecks, and the parts of the business where the service level performance doesn’t meet your expectations.

service level performance doesn’t meet your expectations. The power of enterprise-wide visibility involves knowing

The power of enterprise-wide visibility involves knowing what’s going on and turning those insights into guided, actionable information.

Supply chain modeling

Another key component of the digital hub application strategy involves supply chain modeling capabilities to support rapid deci- sion making throughout your organization. Given the intercon- nectedness of today’s supply chains, you need this visualization.

Imagine that an earthquake disrupts a supplier’s plant, impacting your factory production and schedules. This incident also hampers your transportation plan and delivery to the end customer. Using the modeling tool, you can analyze your overall network’s capaci- ties and constraints to determine an alternate supply chain flow path that won’t result in delayed delivery. Whether you source from an alternate supplier or ship from another warehouse, mod- eling the supply chain helps you determine the right course of action for your company’s overarching business strategy.

These capabilities should include:

» Prescriptive analytics

» Scenario modeling and analysis

» Trend analysis

» Resolution and recommendations

Response management

Visibility and decision-support capabilities only benefit you if you then put those insights and decisions into action. You need response management capabilities. This responsive flow control mechanism triggers workflows and actions across all your other supply chain applications.

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These supply chain applications support the flow paths from the first mile to the last mile, including design, sourcing, production planning, assortment and inventory planning, demand manage- -

ment, warehousing, and transportation. Control tower technology , often used across manufacturing, transportation, and ware- housing, also plays a Control tower technology, often used across manufacturing, transportation, and ware- housing, also plays a critical role in response management. This technology senses unexpected events across the supply chain, diagnoses the root cause, and presents a choice of corrective actions. The technology enables you to conduct what-if analysis for each option, then make optimal guided choices that balance short-term responsiveness with long-term strategic goals. Weigh your options, then make your move.

strategic goals. Weigh your options, then make your move. This response mechanism enables you to maintain

This response mechanism enables you to maintain control over the flow and position of inventory, labor, and space across all of your supply chain capabilities.

Your company’s collaborative business strategy guides the digi- tal dashboard, rapid response components, and improvement capabilities — bringing them together in perfect harmony. All these digital hub applications must be configured to track perfor- mance against your organization’s primary corporate strategies.

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IN THIS CHAPTER

» Handling the massive influx of big data

» Implementing new tools and technology

» Acting on what you know to gain a competitive advantage

Chapter 4

on what you know to gain a competitive advantage Chapter 4 Linking the IT Department into

Linking the IT Department into Your Digital Supply Chain

Y ou can’t implement the newest software and hardware tools without involving your friendly IT department. The new digital world gives you unprecedented visibility into

physical assets moving across the supply chain. These advances also provide a significant opportunity to improve customer ser- vice, efficiency, and profitability. This chapter introduces several specific IT considerations.

More Information, More Data

specific IT considerations. More Information, More Data As mentioned earlier in this book, market research firms

As mentioned earlier in this book, market research firms predict that by 2020, between 20 billion to 30 billion connected devices will generate trillions of data points sourced from both industry and consumers. These connected devices, often referred to as the Internet of Things (IoT), feature heavily in many evolving initia- tives such as Industry 4.0, the convergence of data and automa- tion in manufacturing. The current growth trajectory for data is tremendous; approximately 90 percent of the world’s stored data

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were created in just the past two years according to SINTEF. This trend points to IDC’s predictions of an estimated 44 zettabytes (44 trillion gigabytes) of data by 2020.

Keeping Pace with Technology

gigabytes) of data by 2020. Keeping Pace with Technology Technology has been changing the life of

Technology has been changing the life of mankind for centuries. Even so, this current blistering pace of technological advance is unprecedented. Here are three examples of everyday technology to get a better idea of how fast the pace of change accelerated:

» Estimates put the first use of the wheel sometime around 3200 BC. Yet, it took another 1,500 years before any advances were made to the wheel from its primitive form.

» The Wright brothers made their first flight in 1903. Twenty- seven years later, in 1930, the first prototype of a jet engine came around. It took another 22 years before the first commercial jet took to the air in 1952.

» Apple’s iPhone debuted in 2007, changing the way we connect with others, take photographs, and listen to music. There have been seven generations of the iPhone since the initial model — each with greater features and functionality — at a pace of nearly one generation per year.

Automated Decisions, Decisions, Decisions

per year. Automated Decisions, Decisions, Decisions The new generation of digital natives in the workplace make

The new generation of digital natives in the workplace make a big impact. Born and raised with technology, their expectations of the business systems they interact with differ greatly from previous generations based on their experience using technology in their personal lives. This generation expects a mobile experi- ence that provides access to information on-the-go from intui- tive yet immensely powerful applications. Applications powered by sophisticated algorithms and user preference data now bleed over from the consumer space into the enterprise, driven by the demands of these digital natives. These users don’t want to spend time using tools to slice and dice data to get to information or

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make decisions. They expect software to be prescriptive and “bring to the surface” information needed to make quick deci- sions. If it delivers good coffee and a ride home at the same time, even better.

Current projections show that by 2025, millennials will comprise 75 percent of the workforce, according to the U.S. Census Bureau. 75 percent of the workforce, according to the U.S. Census Bureau.

of the workforce, according to the U.S. Census Bureau. Tear Down the Silos! As pointed out

Tear Down the Silos!

according to the U.S. Census Bureau. Tear Down the Silos! As pointed out earlier, the digitalization

As pointed out earlier, the digitalization of the supply chain pro- vides new levels of visibility. For instance, imagine the benefits of full end-to-end visibility — from tracking goods as they are produced, shipped across all modes of transport, moved in the warehouse, and delivered to the retail location (or shipped direct to the individual consumer). To unlock this opportunity, you first need to eliminate the silos that exist between the systems used to manage these business processes across your organization.

Combine your solutions for greater value

From an IT perspective, enabling cross-solution business pro- cesses or workflows requires solutions and systems that expose services. This approach is often referred to as a service-oriented architecture (SOA).

referred to as a service-oriented architecture (SOA). For example, take a transportation management solution that

For example, take a transportation management solution that can generate a shipment date using the least-cost carrier selection when given basic inputs:

» Source

» Destination

» Product

» Volume

» Need date

All of this info arrives through a back-end system call. The execution of a workflow occurs through tools that provide a pro- grammatic way to define the process and pass messages between

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systems. This enterprise service bus (ESB) allows creation of sophisticated business logic using a graphical user interface to orchestrate the interaction between the services in the SOA tier.

Create a platform for consuming innovation

You could argue the impossibility of predicting when and where technology will disrupt a market. Who would have thought that the long-established taxi industry would have been turned upside down and inside out? But Uber did exactly that, and it wouldn’t have happened without the smartphones and internet that we use in our everyday lives.

smartphones and internet that we use in our everyday lives. To gain competitive advantage, you must

To gain competitive advantage, you must leverage innovation from a number of software vendors and select a small num- ber of strategic partners to give you access to a broader set of capabilities.

Combine SOA solutions and an ESB to create new opportuni- ties and increase profitability. The SOA/ESB architecture para- digm allows you to avoid the constraints of monolithic enterprise resource planning (ERP) systems that lock you in a single thread of innovation. Never thought that whole all-of-your-eggs-in- one-basket thing would come up in the high-tech world, did you?

Also, SOA/ESB architecture provides a platform for transitioning from on-premise solutions to cloud software-as-a-service (SaaS) solutions. SaaS solutions can provide significant leverage.

Take it to the cloud

Companies using cloud-based solutions usually move expense from a capital expenditure to an operational expenditure, with an expectation to reduce total cost of ownership. Initially, the move to cloud was financially motivated. However, cloud-based solu- tions offer many new reasons to move.

A natural extension to the digital supply chain

Cloud-based solutions drive the digital supply chain because many cross-process and cross-enterprise solutions only exist in a cloud

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framework. Connected devices use the internet as their highway for information, making cloud-based solutions an obvious choice.

Consuming innovations faster

Cloud-based solutions provide you a faster way to adopt and consume innovation from your software providers. In addition, you avoid the need to deploy, manage, and upgrade the solutions and infrastructure. Eventually, your application landscape will become an ecosystem of cloud-based solutions or services where an SOA-based architecture functions in conjunction with an ESB to implement workflows. Almost sounds like an after-school spe- cial song, doesn’t it?

Making the impossible possible

The current shift toward the public cloud makes it possible to per- form work there that was previously not economically possible, or certainly cost prohibitive. For instance, the exponential growth rate of data makes it very expensive to keep all the information in an on-premise infrastructure. Not even if you use a REALLY BIG external hard drive on your laptop.

Invariably, this move forces new ideas in big data and machine learning toward a budgetary discussion instead of a value-based discussion. In addition, elastic computing capacity gives you access to massive amounts of computing power on demand, which is necessary to process large amounts of data in a timely manner. Elastic capacity enables your organization to react and adapt quickly to new sources of data to extract insights that can be acted upon in meaningful ways. In other words, you get both the brain and the muscle on-demand to get your tasks done.

Creating a Digital Mind for Moving in the New World

done. Creating a Digital Mind for Moving in the New World As you embark on your

As you embark on your digital supply chain journey, there are four considerations you’ll want to keep top of mind.

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Connecting the informational dots matters

IoT and other internet-based sources of information create a breathtaking amount of data. Some of those data are structured, such as shipment rates, and other data are unstructured, such as tweets. The true value of these data come from connecting these information sources to derive business insights. For example, overlaying planned truck movements with weather and traffic information can be used to determine on-time delivery impact and make routing recommendations to ensure the highest level of customer service possible under all conditions.

Finding the same insights in an ocean of data

The conventional way users generally derive insights involves slicing and dicing historical data through analytical tools. It is beyond the capabilities of a human to look at such a vast array of information constantly streaming in from connected devices. Additionally, it is human nature to repeat what is known, tried, and trusted. Perhaps like skipping the meal prep entirely and reaching for a box of mac and cheese. Unfortunately, the typical user will search the answers to the same questions, unearthing the same insights time and time again. This approach leaves little room for discovering new insights and is a direct consequence of the sheer volume and velocity at which data are captured.

Computers find new patterns

The new digital supply chain leverages big data, advanced ana- lytics, and machine learning to discover new insights and make intelligent recommendations. The public cloud makes these tasks more available at less expense. Computers can obviously process much more information than humans, and machine-learning algorithms can use this capacity to explore data with little or no supervision from a user. Machine learning predicts future out- comes using streaming data in real-time based on pattern rec- ognition in a historical data set. This predictive analytics approach offers advanced capabilities via machine-learning applica- tion programming interfaces that are easy to consume, such as Google’s offering. Time to welcome your new machine-learning co-workers! They don’t like brownies, though.

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Turning insights into action

Predictive analytics requires more than the enabling technology to extract business value. These tools require specific domain knowledge to train the models and eliminate the false positives that can occur due to erroneous data. Machine learning, just like a small child, can make poor decisions without an understanding of the ramifications they might have. And the after-effects could lead to a bigger disaster than a mess of baby food on the floor.

The training process involved in creating a machine-learning model requires domain knowledge to drive the right behavior and make sound conclusions of insights that might be discovered. So how do you ensure that the insights and predictions can be lev- eraged as an actionable item? Seek partners with deep domain knowledge, in this case, in the supply chain space. It’s kind of like finding a good school on the macro scale.

The result of the intelligence implemented through machine learning enables the creation of a user experience suitable for digital natives. You can present actionable insights versus placing the burden on the user to wade through a massive amount of data. Note that digital natives will expect this user experience as they continue their domination of the workforce of the future.

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IN THIS CHAPTER

» Defining your digital strategy

» Making the right investments

» Keeping your wits about you

Chapter 5

investments » Keeping your wits about you Chapter 5 Eight Critical Success Factors N ow that

Eight Critical Success Factors

N ow that you’ve been given a glimpse into the future of

supply chain and have seen what is possible, it’s time to

act. The transition to a digital supply chain will happen

sooner than you expect, but there’s no need to panic. Think of this opportunity as a new means to access new amounts and types of data. You’ll receive greater detail and insights into your custom- ers and operations than you’ve ever had access to before.

Digital data (increasingly available from things and people and their interaction) enable you to gain a greater understanding of what is happening in your business. You can then react in a way that best serves your company’s interests. You’ll serve your cus- tomers better, you’ll be the hero, and then you can enjoy a snack or something.

As you embark on your digital supply chain journey, keep in mind these critical success factors to help you win the day.

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Define Your Digital Strategy

Define Your Digital Strategy

A digital supply chain will take many forms, depending on your

business model and the industry you serve. What works for one

company will not necessarily work for another. Before you embark on any level of digital supply chain transformation, understand and define what digital means within the context of your busi- ness, the competitive framework of your company, the industry

in which you operate, and your digital value levers.

Value levers refer to the mechanisms within your organization to manipulate and drive greater business value, such as return Value levers on assets, return on invested capital, or economic profit. When on assets, return on invested capital, or economic profit. When

defining your digital strategy, take a closer look at which digital technologies can augment how you deploy your people, capital, and assets to drive top- or technologies can augment how you deploy your people, capital, and assets to drive top- or bottom-line growth.

capital, and assets to drive top- or bottom-line growth. After you define what the digital supply

After you define what the digital supply chain means to you as

a company, determine what value levers to pursue and how to

execute against that digital strategy. For instance, are you focused primarily on delivering a better customer experience? Or are you focused primarily on increasing profit? Whatever your primary aim, your digital strategy will need to align and support your over- arching corporate strategy. A high-growth, low-margin business

will require a substantially different company strategy than a business focused on maximizing margin. Regardless of your com- pany strategy, your digital strategy needs to complement it. Think

of

your digital strategy as a digital thumbprint — something that

is

unique to your organization (just with less messy ink).

Going digital means you can support multiple supply chain strat- egies. Smart companies leverage intelligence from a multitude of digital data sources. Segment your customer base, your productunique to your organization (just with less messy ink). lines, your geographies, and all of those

lines, your geographies, and all of those intersection points to drive greater profit and customer loyalty. Refer to Chapter 3 for a refresher on segmentation. drive greater profit and customer loyalty. Refer to Chapter 3 for a refresher on segmentation.

It All Starts at the Top

3 for a refresher on segmentation. It All Starts at the Top The executives in your

The executives in your organization must embrace the poten- tial impact of digital capabilities and your digital strategy. The new digital world affects the entire business, from transforming

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supply chain processes to altering the types of products and ser- vices your company delivers to the market.

In the past few years, leading companies elevated digital initia- tives to the executive level of the business by hiring chief digi- tal officers or chief analytics officers. These new digital leaders work with teams or centers of excellence to identify leverage points across the business that can add value. Many executives have achieved success with this approach. Teams involved should include marketing, e-commerce, and supply chain. Often, these functions deploy digital strategies independently, leaving oppor- tunities for value or future challenges on the table.

oppor- tunities for value or future challenges on the table. The chief executive officer must drive

The chief executive officer must drive a digital agenda that will benefit both shareholders and customers. Gain organizational support of the digital strategy by engaging in a change manage- ment process. Assign a member from the executive leadership team to collaborate upon and deliver the holistic strategy.

Digital Supply Chains Require New Competencies

strategy. Digital Supply Chains Require New Competencies The number of things connected to the internet will

The number of things connected to the internet will grow dra- matically. This level of digital connectivity will obviously produce a wealth of new data. Data science will become a core competency in this digital world, requiring businesses to become math houses. Resist the temptation to think of fraternal organizations solving complex equations. These internal and external math houses will form to solve problems existing at the fringe of existing solutions.

Today, processing information about social, news, events, and weather, along with predictive and prescriptive analytics and machine learning, can add tremendous value to your replenish- ment planning, inventory deployment, and demand management activities. You can also use this information to gain competitive advantages over your competitors. But you can only gain these advantages if you know how to use the data.

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Visibility Alone Is Not the End Goal

Visibility Alone Is Not the End Goal

Right now, you can access supply chain systems that model the real world well. Yet, you must reconfigure this static model over time to reflect real-world scenarios. This type of reconfigura- tion will increasingly occur in real-time, providing you with an unprecedented level of real-time supply chain visibility. Yet vis- ibility alone is not sufficient if you can’t act on this new level of information.

For instance, you must decide how you’re going to take those capabilities that are entrenched in a machine on a factory floor and leverage the real-time information you receive. If you learn that a machine is breaking down through sensors and Internet of Things (IoT) technology, you can use that information to alert maintenance, enabling you to avoid a problem that could lead to production delays. The donut-making will continue unabated!

In this area, control tower technology will gain importance in the future thanks to this movement to real-time visibility. The capability to understand what’s happening globally in your sup- ply chain at any point in time and to react faster and smarter than any of your competitors will give you an edge. The company that finds out about a capacity shortage faster, understands how to best respond, and reacts quickly to snap up capacity elsewhere will do so at the expense of its competitors.

Going digital will not solve all your problems. You can build a digital supply chain that gives you access to unprecedented levels of new information and still make poor decisions.elsewhere will do so at the expense of its competitors. Invest in Digital Talent As supply

levels of new information and still make poor decisions. Invest in Digital Talent As supply chain-related

Invest in Digital Talent

and still make poor decisions. Invest in Digital Talent As supply chain-related information becomes more transparent

As supply chain-related information becomes more transparent and visible across your organization, you’ll see a convergence of supply chain processes and roles. This transformation will require significant changes and flexibility in employee skillsets. Real- time visibility and collaboration will help create more fluid orga- nizations and remove some management layers.

Your organization will need to rethink its recruiting practices to hire more graduates and professionals with data science and

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predictive analysis skillsets. You will also need to consider the personality types of these new employees. Younger generations typically appear more tech-savvy than older employees. As digi- tal natives, they share information digitally, rely on devices to deliver knowledge, and expect most decisions to be made in col- laboration with peers or with smart technologies. These expec- tations will influence where they want to work. Make sure your corporate culture attracts and retains top digital talent.

Keep an Eye on the Competition

retains top digital talent. Keep an Eye on the Competition Adopt a digital supply chain strategy

Adopt a digital supply chain strategy to remain competitive in the future. As you compete with close-to-zero profit margin busi- nesses like Amazon, you may be driven by your competitors to do things that you wouldn’t normally do. At some point, you’ll need to grab as much market share as you can, create as much of a loyal following as possible, and then hopefully pick up profitability on the back end through long-term relationships. Digital strategies will play a critical role in accomplishing some of these objectives.

a critical role in accomplishing some of these objectives. When influential players like Amazon and Uber

When influential players like Amazon and Uber move markets, it doesn’t matter how smart you are or how smart you try to be. You must capture market share to avoid becoming marginalized in the future.

Accept This New Reality

becoming marginalized in the future. Accept This New Reality The next-generation supply chain involves increasingly

The next-generation supply chain involves increasingly dynamic models, made possible by the availability of digital data points from everywhere. This information provides much more precise synchronization among manufacturing, warehouses, stores, and, ultimately, end customers. These dynamic and smarter supply chains will sense, process, react to, and learn from those data over time. The faster you can accept this reality, the faster you can move your organization toward the digital supply chain of the future.

Imagine a manufacturing production line outfitted with self- monitoring smart machine components that can automatically transmit status or need for repair. Mobile-connected users could collect and analyze data on the fly, adjusting production as needed and informing other parties across the enterprise. Beyond that,

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production facilities, connected via IoT, could share capacity and constraint information, enabling companies to shift production for greater profitability and to meet customer needs. This is not a Jetsons-like fantasy, but examples of technology that exist now.

The process of transforming big data into actionable information creates wealth. Companies that do it better than others will be more competitive. creates wealth. Companies that do it better than others will be more competitive.

that do it better than others will be more competitive. Start Small and Fail Fast Instead

Start Small and Fail Fast

others will be more competitive. Start Small and Fail Fast Instead of trying to tackle a

Instead of trying to tackle a grandiose initiative, pick a business area and explore where technology can add value.

a business area and explore where technology can add value. Take a look at the type

Take a look at the type of business problem to solve and examine

the types of technologies that could help solve the problem. At the same time, look at what’s possible with some of the newer tech-

nologies. Examine how they solved a problem. You could also usetime, look at what’s possible with some of the newer tech- a seemingly similar technology approach

a seemingly similar technology approach to solve a completely

different type of problem in your organization. Given the pace of

technological advancements, especially today, you’ll want to look

at it both ways.

Develop working pilots that allow you to fail fast. This accelerated approach of deploying new technologies via the cloud shifts the paradigm to one of continuous releases, enabling you to learn les- sons fast and drive innovation. By enabling legacy applications to co-exist with new-generation technologies, you’ll mitigate risk and squeeze the most value out of your existing physical and IT assets. As you move forward with new technologies like predictive analytics or machine learning, you can apply that value to your existing assets. Enable the future while honoring the past. That’s deep, isn’t it?

Whatever you do, though, you better get started. Digital tech- nologies are beginning to impact every aspect of business, and this disruption will cause some companies to succeed and others to fail. Create a strategy that respects the past while moving as quickly to the future as possible.

To paraphrase Jeff Bezos: “Amazon did not happen to bookstores; the future happened to bookstores.”

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Appendix

Appendix Glossary 3D printing: The process of using a three-dimensional digital model to create a physical

Glossary

Appendix Glossary 3D printing: The process of using a three-dimensional digital model to create a physical

3D printing: The process of using a three-dimensional digital model to create a physical object, which is built using successive layers of material during the printing process. Also referred to as additive manufacturing.

advanced analytics: The systematic analysis of data or statistics to derive meaningful patterns of information. Supply chain practitioners often use advanced analytics to uncover insights about their customer and supply chain activities and make prescriptive changes.

automation: The use of machines and technology to operate or control a process by automatic means, thereby minimizing (and often eliminat- ing) the need for human intervention or input.

beacon: A technology-enabled device that alerts apps or opt-in websites when a user is nearby a location. For example, beacons can push a coupon to your mobile device when shopping.

big data: Extremely large structured, semi-structured, and unstructured data, which can be mined for critical information.

data harvesting: The process of extracting data from websites. Data harvesting can also be referred to as data mining.

decision-support capabilities: An application that analyzes data, enabling users to make better business decisions.

digital native: A person born during the age of digital technology and raised using the Internet and computers.

digitalization: The process of using digital communication, technology, and data to enhance business strategies, processes, insights, collabora- tion, and more.

digitization: The process of converting information into a digital format.

APPENDIX Glossary

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Enterprise Service Bus (ESB): A tool that allows sophisticated business logic to be composed using a graphical user interface to orchestrate the interaction between the services in the Service-Oriented Architecture tier.

Industry 4.0: The fourth industrial revolution, which involves the convergence of automation and data exchange in manufacturing technologies, made possible by the Internet of Things.

machine learning: An artificial intelligence technique for processing big data based on algorithms that recognize data patterns, learn from the patterns, offer insights, and become smarter through time, just as humans do.

optimization technology: Technology used to improve how tasks, resources, equipment and infrastructure are leveraged based on existing information and constraints.

point-of-sale (POS) data: Data collected when a retail transaction completes.

predictive analytics: A type of advanced analytics used to make predictions about unknown future events.

prescriptive analytics: A type of advanced analytics that identifies the best course of action for a given situation.

sensor: A device that detects or measures an input, such as light, motion, or sound, related to a physical environment and responds by transmitting the information digitally.

Service-Oriented Architecture (SOA): This type of software design enables services provided to other components by application compo- nents through a network communication protocol.

smart machines: Intelligent devices, such as robots or self-driving cars, that use machine-to-machine technology to make decisions without human intervention.

Software-as-a-Service (SaaS): A software licensing and delivery model that licenses centrally hosted software on a subscription basis.

zero-touch retail: A retail environment managed entirely by technology and technology-enabled products to support the purchase and delivery of orders without human intervention.

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Notes

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Notes

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These materials are © 2017 John Wiley & Sons, Inc. Any dissemination, distribution, or unauthorized use is strictly prohibited.

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