Digital Supply Chain For Dummies JDA Software

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

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

Serge Massicotte,
Anand Medepalli, and
Kelly Thomas
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
www.wiley.com
Copyright 2017 by John Wiley & Sons, Inc., Hoboken,
No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or
by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except as
permitted under Sections 107 or 108 of the 1976 United States Copyright Act, without the prior written
permission of the Publisher. Requests to the Publisher for permission should be addressed to the
Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011,
fax (201) 748-6008, or online at http://www.wiley.com/go/permissions.
Trademarks: Wiley, For Dummies, the Dummies Man logo, The Dummies Way, Dummies.com, Making
Everything Easier, and related trade dress are trademarks or registered trademarks of John Wiley & Sons,
Inc. and/or its affiliates in the United States and other countries, and may not be used without written
permission. JDA and the JDA logo are trademarks or registered trademarks of JDA Software Group, Inc.
Allother trademarks are the property of their respective owners. John Wiley & Sons, Inc., is not associated
with any product or vendor mentioned in this book.
LIMIT OF LIABILITY/DISCLAIMER OF WARRANTY: THE PUBLISHER AND THE AUTHOR MAKE NO

REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE ACCURACY OR COMPLETENESS OF THE
CONTENTS OF THIS WORK AND SPECIFICALLY DISCLAIM ALL WARRANTIES, INCLUDING WITHOUT
LIMITATION WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE.NO WARRANTY MAY BE CREATED
OR EXTENDED BY SALES OR PROMOTIONAL MATERIALS. THE ADVICE AND STRATEGIES CONTAINED
HEREIN MAY NOT BE SUITABLE FOR EVERY SITUATION.THIS WORK IS SOLD WITH THE UNDERSTANDING
THAT THE PUBLISHER IS NOT ENGAGED IN RENDERING LEGAL, ACCOUNTING, OR OTHER PROFESSIONAL
SERVICES.IF PROFESSIONAL ASSISTANCE IS REQUIRED, THE SERVICES OF A COMPETENT PROFESSIONAL
PERSON SHOULD BE SOUGHT. NEITHER THE PUBLISHER NOR THE AUTHOR SHALL BE LIABLE FOR
DAMAGES ARISING HEREFROM.THE FACT THAT AN ORGANIZATION OR WEBSITE IS REFERRED TO IN
THIS WORK AS A CITATION AND/OR A POTENTIAL SOURCE OF FURTHER INFORMATION DOES NOT MEAN
THAT THE AUTHOR OR THE PUBLISHER ENDORSES THE INFORMATION THE ORGANIZATION OR WEBSITE
MAY PROVIDE OR RECOMMENDATIONS IT MAY MAKE.FURTHER, READERS SHOULD BE AWARE THAT
INTERNET WEBSITES LISTED IN THIS WORK MAY HAVE CHANGED OR DISAPPEARED BETWEEN WHEN
THIS WORK WAS WRITTEN AND WHEN IT IS READ.
For general information on our other products and services, or how to create a custom For Dummies book
for your business or organization, please contact our Business Development Department in the U.S. at
877-409-4177, contact info@dummies.biz, or visit www.wiley.com/go/custompub. Forinformation
about licensing the For Dummies brand for products or services, contact BrandedRights&Licenses@
Wiley.com.
ISBN 978-1-119-38971-2 (pbk); ISBN 978-1-119-38972-9 (ebk)
Manufactured in the United States of America
10 9 8 7 6 5 4 3 2 1
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
Publishers Acknowledgments
Some of the people who helped bring this book to market include the following:
Development Editor: Ryan Williams Production Editor: Siddique Shaik

Project Editor: Jennifer Bingham Special Help from JDA:
Fabrizio Brasca, Kevin Iaquinto,
Acquisitions Editor: Steve Hayes
Doug Kimball, John Sarvari,
Editorial Manager: Rev Mengle Laura Sanders, Anna Sherman-Hall,
Business Development Representative: Scott Zickert
Kimberley Schumacker
Table of Contents
INTRODUCTION................................................................................................ 1
About This Book.................................................................................... 1
Foolish Assumptions............................................................................. 1
Icons Used in This Book........................................................................ 2
Beyond the Book................................................................................... 2
CHAPTER1: 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
CHAPTER2: 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
CHAPTER3: Creating Your Digital Strategies

andTechnologies........................................................................ 27
Segmenting Your Supply Chain......................................................... 27
Invest in your data......................................................................... 28
Segment your customers.............................................................. 28
Align supply chain strategy........................................................... 29
Table of Contents v
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
CHAPTER4: Linking the IT Department into

Your Digital Supply Chain.................................................... 45
More Information, More Data........................................................... 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
CHAPTER5: 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
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
About the Authors
Fred Baumann, Group Vice President, Global Industry Strategy, is
responsible for JDAs manufacturing verticals. During his 18-year
tenure at JDA, Fred launched JDAs Flowcasting business initiative
and has been instrumental in driving JDAs collaborative trad-
ing community strategies, thought leadership, and launching
the companys 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 bachelors 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 JDAs 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 JDAs 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 bachelors 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 JDAs
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 JDAs 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 JDAs 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
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 JDAs 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
Cloud9s 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 companys 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 bachelors
degree in mathematics, a bachelors degree and a masters degree
in computer science from Universit Laval, and a masters degree
in computer science from York University in York, UK.
Kelly Thomas, Senior Vice President and Chief Product Officer, is

responsible for leading JDAs product strategy and management
and aligning JDAs 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 bachelors degree
in chemical engineering from Rutgers University, where he was a
Slade Scholar.
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 JDAs Intelligent Fulfillment solution.
Doug Kimball, Senior Product Marketing Director, is
responsible for developing sales enablement messaging
andcontent for JDAs 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.
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

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
youll 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
In preparing this book, weve assumed a few things about you:
Youre a supply chain executive interested in learning about

how the latest digital technologies can improve your
companys supply chain.
You work in supply chain management and want an update
on the latest digital strategies, tools, and techniques.
Youre 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
Icons Used in This Book
Youll find a couple of icons in the margins of this book. Heres
what they mean.
This icon indicates a helpful tip on how to get things done or

a handy piece of extra information. Couldnt hurt to read it,
couldit?
Anything with this icon is something that you want to keep in

mind. Always good to refresh your memory!
Wanting just the basics is fine. But if you like to dig into the more
technical details, this information is right up your alley.
Beyond the Book

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,
visit www.logisticsviewpoints.com.
For access to thought leadership in supply chain manage-
ment, visit www.chainlinkresearch.com.
2 Digital Supply Chain For Dummies, JDA Software Special Edition
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
Supply Chain
Digitalization
T
echnology is nothing new in todays world everyone
knows computers that used to fill university basements
pale in comparison to that cheap tablet your 5-year-old
cantoss around her bedroom with impunity. But nowadays digital
technology can advance almost any aspect of any business
inthis 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?
Throughout this book, were 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 3
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 (were 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.
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.
At the same time, computer systems run by companies are
becoming increasingly intelligent and able to make big decisions
in real-time. Heres 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 whats
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 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:
Stores
Transportation
Warehouses
Factories
Inventories
People (and maybe cyborgs)
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. Thats 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 Figure1-1.
Source: JDA
FIGURE1-1: 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, youll 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. Its 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
thats 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 (thats 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 its foundational to a customer-centric
supply chain.
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-
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:
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

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 dont want hundreds
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 dont
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.
Youll invest less in overall assets as a percentage of company

revenue, but youll 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
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
Aisle3!
Table 1-1 shows examples of how digital assists, augments, or

replaces more traditional business processes, supply chain assets,
products, and people.
TABLE1-1 How Digital Supply Chain Technology Replaces

Traditional Supply Chain Processes
Digital Area Description / Example
Enabling interactions Discovery, research, buying, rating, and returns

with consumers through e-commerce and mobile.
Driving business-to-business These interactions become increasingly digital

(B2B) interactions through machine-to-machine interactions.
Driving personalized The digital supply chain finds a path to deliver what
fulfillment the consumer wants, when and where the
consumer wants it.
Enabling real-time systems The digital supply chain processes digital signals
and physical-digital and big data to create an accurate picture of the
convergence 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 Computer technology is embedded in production

machinery, property, capacity and transportation equipment, providing
plant, equipment status and location information.
(continued)
TABLE1-1 (continued)
Digital Area Description / Example
Replacing physical assets 3D printing digitalizes manufacturing and

machinery, property, transportation by essentially eliminating the need
plant, equipment 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 Mobile apps create the sharing economy. Services
and services offer monitoring and management of consumer
products with embedded chips.
Assisting in the use Examples include cars equipped with driver-assist

of products capabilities or supply chain software that prescribes
decisions for demand and supply actions.
Replacing humans in the Self-driving cars and trucks remain an intriguing (if
use of products slightly terrifying) prospect.
Creating its own digital Humanlike systems that think, act, and understand
scenarios.
What Is Everybody Else Thinking?

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:
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 companys 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.
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 youre 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.
Figure1-2 highlights where companies invest their resources and
bandwidth, according to the 2016 SCDigest Supply Chain Digitiza-
tion Benchmark survey.
Source: JDA
FIGURE1-2: 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.
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.
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-
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 cant sur-
vive without that new doll!
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 cant 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,
when companies with an integrated supply chain collaborate, they
can all focus on strategies and activities that build joint value.
Everybody wins!
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 doesnt 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.
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 youhow.
IN THIS CHAPTER
Evaluating the old playbook
Creating your new digital playbook
Understanding the changes to your

digital supply chain
Chapter 2
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, dont let the word transformation scare you. Its 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.
CHAPTER 2 Your Digital Supply Chain Playbook 17
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. Todays
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
faster at a lower cost.
Yet, a game wouldnt be exciting if it didnt 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.
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
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
12weeks 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.
New digital playbook
Its not surprising that digital commerce has turned the old play-
book on its head. The four Ps are very different in todays 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. Figure2-1 shows how the old playbook evolves
into the new playbook.
Source: JDA
FIGURE2-1: 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.
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
inastore. 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.
Weve 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
shoppers 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.
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. Figure2-2 shows the old, outmoded
process.
Source: JDA
FIGURE2-2: The old linear supply chain.
In the new digital economy, this supply chain structure is no lon-

ger competitive. Todays 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.
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.
Source: JDA
FIGURE2-3: The new digital supply chain.
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.
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 youre 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 Amazons 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 its 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 Figure2-4.
Source: JDA
FIGURE2-4: 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
instance, a store was just a store. It was just...there. A shop-
per entered the store and purchased an available product. If that
product wasnt there, the shopper couldnt purchase it. Similarly,
a wholesale distributor was just a wholesaler distributor, focused
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.

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 shoppers needs, as shown in Figure2-5.
Source: JDA
FIGURE2-5: Old playbook versus new digital playbook for the asset.
For more insights into how the store is changing and how retail-
ers will need to adapt, check out Chapter3.
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.
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 network
strategy, where you build your factories and DCs, and where you
pre-position your inventory.
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 dont
count on Uber drivers to deliver large tractors at this point.
The last mile involves the movement of goods from the last trans-
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 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 youll need to make your digital sup-
ply chain a success.
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
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

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 todays digital world.
CHAPTER 3 Creating Your Digital Strategies and Technologies 27
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 isnt 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 youre shaking out data instead of gold nuggets. (Just
dont bite your storage drives to see if theyre 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.
Align supply chain strategy
Align supply chain strategies with customers and product designs.
Understanding what customers want and how theyre 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.
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
demanding customers will move everyone in that direction very
quickly.
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
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
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 doesnt 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 organizations 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

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
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

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-

tive grid will help drive processes for disruption management and
better product movement and youll end up with less excess
inventory in the supply chain.
By tightly connecting planning and execution processes to

what actually happens with demand, youll 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
youll create for analytics-driven responses that consider all
nodes across the supply chain grid.
Dont forget, an effective network design is essential to ensure

profitable productivity and flexibility as products move from pro-
duction to your customers hands.
Use Digital Data to Accelerate

Transportation Insights into Action
As competition increases and consumers become more demanding,
the entire supply chain will look to transportation professionals
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.
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.
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.
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 either
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 where many of the new digital tech-
nologies will become relevant and applicable.
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 dont 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
ships location will be in the future (and whether that frozen fish
will arrive in time for Sundays 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.
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.
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.
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 dont need time off for vacations, and they
dont 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.
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 Amazons 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.
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.
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

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 dont differentiate between a
retailers 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.
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.
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.
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 products) to be
delivered via IoRT-enabled cars or drones. Its as if the pizza
arrives when you first get hungry!
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

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 todays 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 for
who will buy them, requiring a good understanding of what your
customers will buy. Second, you need to design your supply chain
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.
Figure3-1 shows a sample strategy.
Source: JDA
FIGURE3-1: 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, youll go down the wrong path.
At worst, youll crash. You need visibility into whats 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
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 doesnt meet
your expectations.
The power of enterprise-wide visibility involves knowing whats

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 todays supply chains, you need this visualization.
Imagine that an earthquake disrupts a suppliers 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 networks capaci-
ties and constraints to determine an alternate supply chain flow
path that wont 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 companys 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.
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 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.
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 companys 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 organizations primary corporate strategies.
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
Linking the IT
Department into Your
Digital Supply Chain
Y
ou cant 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

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 worlds stored data
CHAPTER 4 Linking the IT Department into Your Digital Supply Chain 45
were created in just the past two years according to SINTEF.This
trend points to IDCs predictions of an estimated 44 zettabytes
(44 trillion gigabytes) of data by 2020.
Keeping Pace with Technology

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.
Apples 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
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 dont want to spend
time using tools to slice and dice data to get to information or
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.
Tear Down the Silos!

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).
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
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 wouldnt
have happened without the smartphones and internet that we use
in our everyday lives.
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
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, doesnt 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
As you embark on your digital supply chain journey, there are four
considerations youll want to keep top of mind.
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
Googles offering. Time to welcome your new machine-learning
co-workers! They dont like brownies, though.
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. Its 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.
IN THIS CHAPTER
Defining your digital strategy
Making the right investments
Keeping your wits about you
Chapter 5
Eight Critical Success
Factors
N
ow that youve been given a glimpse into the future of
supply chain and have seen what is possible, its time to
act. The transition to a digital supply chain will happen
sooner than you expect, but theres no need to panic. Think of this
opportunity as a new means to access new amounts and types of
data. Youll receive greater detail and insights into your custom-
ers and operations than youve 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 companys interests. Youll serve your cus-
tomers better, youll 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.
CHAPTER 5 Eight Critical Success Factors 53
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
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 bottom-line growth.
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 product
lines, your geographies, and all of those intersection points to
drive greater profit and customer loyalty. Refer to Chapter3 for a
refresher on segmentation.
It All Starts at the Top

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
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.
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
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.
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 cant act on this new level of
information.
For instance, you must decide how youre 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 whats 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.
Invest in Digital Talent

As supply chain-related information becomes more transparent
and visible across your organization, youll 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
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

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 wouldnt normally do. At some point, youll 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.
When influential players like Amazon and Uber move markets,

it doesnt 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

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,
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.
Start Small and Fail Fast

Instead of trying to tackle a grandiose initiative, pick a business
area and explore where technology can add value.
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 whats possible with some of the newer tech-
nologies. Examine how they solved a problem. You could also use
a seemingly similar technology approach to solve a completely
different type of problem in your organization. Given the pace of
technological advancements, especially today, youll 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, youll 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. Thats
deep, isnt 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.
Appendix
Glossary
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 59
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.
Notes
Notes
WILEY END USER LICENSE AGREEMENT
Go to www.wiley.com/go/eula to access Wileys ebook EULA.

Digital Supply Chain For Dummies JDA Software

Caricato da

Informazioni sul documento

Titolo originale

Copyright

Formati disponibili

Condividi questo documento

Condividi o incorpora il documento

Opzioni di condivisione

Hai trovato utile questo documento?

Questo contenuto è inappropriato?

Copyright:

Formati disponibili

Digital Supply Chain For Dummies JDA Software

Caricato da

Copyright:

Formati disponibili

These materials are 2017 John Wiley & Sons, Inc.

. Any dissemination, distribution, or unauthorized use is strictly prohibited.

by Fred Baumann, Glen Ceniza,

LIMIT OF LIABILITY/DISCLAIMER OF WARRANTY: THE PUBLISHER AND THE AUTHOR MAKE NO

Manufactured in the United States of America

Development Editor: Ryan Williams Production Editor: Siddique Shaik

CHAPTER1: Supply Chain Digitalization.................................................. 3

CHAPTER2: Your Digital Supply Chain Playbook............................ 17

CHAPTER3: Creating Your Digital Strategies

CHAPTER4: Linking the IT Department into

CHAPTER5: Eight Critical Success Factors............................................ 53

vi Digital Supply Chain For Dummies, JDA Software Special Edition

Table of Contents vii

Glen Ceniza, Group Vice President, Product Management, is respon-

Anand Medepalli, Vice President, Retail Planning Product Strat-

Serge Massicotte, Executive Vice President and Chief Technol-

Kelly Thomas, Senior Vice President and Chief Product Officer, is

Fabrizio Brasca, Vice President of Solution Strategy, is

The authors would also like to acknowledge JDA colleagues Kevin

About This Book

Because this is a JDA Software Special Edition, we also dive into

Youre a supply chain executive interested in learning about

This icon indicates a helpful tip on how to get things done or

Anything with this icon is something that you want to keep in

Beyond the Book

2 Digital Supply Chain For Dummies, JDA Software Special Edition

Learning the value of digitalizing your

Examining how other companies

Physical things incorporating computer technology

CHAPTER 1 Supply Chain Digitalization 3

Digital technology is rapidly becoming the basis for competition.

Likewise, external big data from many sources is now available

4 Digital Supply Chain For Dummies, JDA Software Special Edition

Intelligent computer systems and software can learn and

Devices with embedded computer technology coupled with exter-

Forging Your Digital Supply Chains

Improve customer experiences

Like an orchestra needs a conductor, the interconnectedness of

In the dynamic grid, relationships among nodes in a supply chain

6 Digital Supply Chain For Dummies, JDA Software Special Edition

In the past, some time elapsed between what happened in the

Embedded computer technology, external big data availability,

Merchandise financial management

The Value of a Digital Supply Chain

CHAPTER 1 Supply Chain Digitalization 7

Likewise, supply chain management software can increase pro-

Youll invest less in overall assets as a percentage of company

Additionally, digital composition of the supply chain will naturally

Of course, digital technology also becomes a bigger part of prod-

8 Digital Supply Chain For Dummies, JDA Software Special Edition

Table 1-1 shows examples of how digital assists, augments, or

TABLE1-1 How Digital Supply Chain Technology Replaces

Enabling interactions Discovery, research, buying, rating, and returns

Driving business-to-business These interactions become increasingly digital

Enabling learning systems Supply chain software employs artificial intelligence

Assisting physical assets Computer technology is embedded in production

CHAPTER 1 Supply Chain Digitalization 9

Digital Area Description / Example

Replacing physical assets 3D printing digitalizes manufacturing and

Replacing labor capital Robots automate production processes, and labor

Assisting inventory Embedded chips provide real-time location

Replacing inventory Supply chain software reduces inventory.

Enhancing products Almost all value-add content of cars in the past 10