Supply chains are becoming faster and more precise, but most companies are still struggling with Supply Chain 1.0.
Years ago, I worked in tandem with a production planner who analysed material requirements through a very expensive German ERP system. He would send me purchase requisitions one at a time—for one piece at a time. When I asked for some rudimentary analysis on quantities and planning horizons so I wouldn’t drive my suppliers crazy, he said, “I do what the screen tells me do.”
While this was a decade and a half ago, I think I was indeed victimised by the digital supply chain. Perhaps, I was its first victim.
The digital supply chain, or what McKinsey & Co. recently called Supply Chain 4.0. In their definition, authors Knut Alicke, Jürgen Rachor and Andreas Seyfert write that it is the application of the Internet of Things, the use of advanced robotics, big data and analytics, and ubiquitous networks. They say the digital supply chain will significantly improve performance and customer satisfaction.
Not so fast.
Consider this scenario. It is 4 p.m. on the Friday before the 4th of July weekend. You are about to leave the office when you get a call from field service that a customer is in crisis. Your supplier holds the key to successfully resolving the problem but you know they are closed for the holiday weekend. But, being the expert supply manager you are, you have the private cell phone number of the operations manager. You catch him loading his car for a long weekend at the lake and explain the problem. Within minutes you receive a call from the applications engineer ready to solve your problem. A quick patch to the customer and boom! Problem solved.
This problem was not solved by the digital supply chain. It was solved by a string of human relationships that took time to nurture and develop. And to me, that is where our value is: the human touch.
Of course, I understand the merits and needs of the evolving digital supply chain. As the authors note, the digital supply chain supports increased global trade, changing customer demands and high service expectations. Supply chains need to be become faster, more granular, and much more precise. I get it.
Figure 1: The McKinsey Digital Compass
Perhaps I am a holdover from a past generation. I may go the way of the drafting board, the blueprint machine, Windows 95 and free coffee in the workplace. But I don’t think so. Most companies are still struggling with Supply Chain 1.0. They are nowhere near 4.0, or whatever is coming next.
When 3D solid modelling came into vogue at a past employer, we hired a bunch if engineering students fresh from the local tech university. They did a wonderful job designing beautiful models on their workstations…most of which were wrong. They knew the program inside and out but had hardly stepped foot on the manufacturing floor.
I remember my friend Dan dragging one engineer away from his desk and onto the factory floor after yet one more nasty call from a local machine shop. The last words I heard were, "Oh…that’s where it goes!"
I was there at Supply Chain 1.0. I worked for a software company for a while and witnessed the birth of Supply Chain 2.0. I dabble in Supply Chain 3.0 as a professor, consultant and writer. But I worry a bit about Supply Chain 4.0…aka the Digital Supply Chain. Once we name it…it exists!
Perhaps our avatars can chat about it over a virtual cup of coffee.