The Digital Supply Chain Challenge

CHAPTER OVERVIEW

Any technology initiative can only succeed if it is part of a broader business strategy and addresses a key driver. Thinking only along economic lines in terms of return on investment both limits the universe of available choices and may serve as a cudgel to crush innovation altogether. Many benefits of SCD can be difficult or impossible to quantify properly or must be seen in the context of opportunities to support growth or new markets and not simply in terms of efficiencies. In the second section – “The Real Industry 4.0 Challenge” – we try to offer a framework in the form of three key questions a supply manager should address when embarking on an Industry 4.0 or SCD program: finding the right technology fit with the business strategy, calculating the business case and overcoming barriers to implementation. Topic 3: Is AI the answer for planning? It can be useful when starting to reflect on SCD to recall that, on the whole, most companies start from modest beginnings in their use of data and tools. A Supply Chain Quarterly study 2 is helpful for positioning the current state of affairs. Some highlights are: • Excel is by far the most common supply chain analytics tool • Less than 5% of companies use advanced tools such as databases, structured query language (SQL) and control towers • Only 10% of companies use a business intelligence tool This is a good reflection of our experience in interactions with supply chain executives. Companies are struggling simply to keep up in data literacy and to exploit the tools available to them now, let alone take advantage of the proliferation of end-to-end planning packages and data analytics tools. Almost every supply chain manager has a story to tell about spending time and money on a new demand planning tool with sophisticated statistical algorithms to provide accurate baselines, only to find that the demand planners are first downloading historical data into Excel, then using Excel as they did before all the money was spent, and finally uploading Excel into the new tool. If this sounds familiar, you are not alone. In such a context, it is hard to imagine the potential of a technology like artificial intelligence to bring about a revolution in demand planning, as explored in the third section – “Demand for AI in Demand Planning.” Topic 4: E-commerce: Buying market share with supply chain We are witnessing a historical restructuring of the world of retail. E-commerce is ascendant and changing the way consumers behave and interact with retailers and brands. This new order is triggering a retail apocalypse, 3 which also includes

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