Better Supply Chain Management with Technology

Better Supply Chain Management with Technology

By Johannes Giloth, Senior Vice President Supply Chain and Procurement and Chief Procurement Officer, Nokia

Johannes Giloth, Senior Vice President Supply Chain and Procurement and Chief Procurement Officer, Nokia

1. In your opinion, how has the European supply chain management landscape evolved over the years?

The supply chain rules are changing from a relatively simple, but very labor-intensive process to a now complex landscape of managing data. The concept of supply chain management has now evolved around a customer centricity, which drives changes internally and externally. With customer expectations growing faster than ever before, fluctuating demand and shorter product lifecycles are testing the limits of traditional supply chain. In addition to this, Industry 4.0 can drive new levels of capability and performance expectations. We can create solutions that combine digital and physical products and services to transform our supply chain from functional necessity to a competitive advantage. Examples include applying technologies such as Augmented & Virtual Reality, Artificial intelligence & Machine Learning and Advanced robotics. Due to the complexity of this new digital age, we have to ask ourselves, how we can develop a customer-centric supply chain.

"Success depends on embracing, innovation, change, and technology to solve business problems"

2. What according to you are some of the challenges plaguing the supply chain management space and how can it be effectively mitigated?

To stay on the pace of the technological trends and the exponential speed changes, we need to develop our Supply Chain. Companies need to invest in:

Innovation: Due to the impact of new technology we have to think of new ways to add value to a product. With harnessing these new technologies organizations can continuously improve themselves while creating new business models. However, in this specific area, the collaboration with ecosystem partners will provide incremental value. Together new solutions can be built by blending technical and business expertise.

Digitalization: Success depends on embracing, innovation, change, and technology to solve business problems. We need to optimize our processes; this means we must become lean by eliminating redundant steps and automating manually driven processes to gain more efficiency and competitiveness and value for investments. But we are also making use of (good) data to develop prediction and prevention strategies. We need to be able to take many forms of data, structured (Integers, Real numbers, Boolean values like in a database) and merge in unstructured data (Heat, Time of day, cafeteria menu, historical email trails, voice recordings, etc.) and look for patterns. On the other hand, digital transformation is not possible without people. Technology helps initiate the changes in our business; however, it is the people that get organizations or cultural changes across the finish line. We need to make sure that we invest in talent while developing the competencies of the employees.

Move to Total Cost of Ownership (TCO): The Method of delivery and lead time, source of supply, the volatility of demand, and product life-cycle all influence ordering and stocking decisions in a properly managed supply chain. Understanding these components and their respective impact on investment requirements and risk is critical to understand the TCO. This knowledge can help us find the potential for optimization by improving the transparency of the cause and effect chain. Today with improved analytics we can strive to be the best in our core competencies.

Sustainability: It is also crucial to be aware of the technologies and their environmental impact. Many of the technologies we use require a lot more resources, and due to technological upgradation, a large amount of toxic waste is produced. Companies need to look into an industrialized process known as remanufacturing. Three positive things occur when a remanufactured product is delivered:

1) beneficial impact on the environment in terms of greenhouse gas emissions

2) improved business financials such a gross profit, cash flow, and inventory investment

3) customer satisfaction as price and delivery lead time improve

Next generation products disrupt old technology, and thus legacy products are born. Eventually, all legacy products get displaced but rarely all at once. This creates technology overlap, which happens when one customer upgrades their product displacing the exact legacy product that another customer is still buying. Technology overlap creates an opportunity for circular product flow and remanufacturing. Therefore, companies should look into offering trade-ins, buybacks, and client inventory management (CIM) programs. The goal is to acquire displaced assets proactively and to repurpose them as circular products to benefit the company, our customers and our environment.

3. What are a few technological trends that are influencing the supply chain management space? Take us through some of the best practices’ businesses should adopt today to steer ahead of competitors?

Augmented & Virtual Reality changes the way things can be experienced and presented, creating new opportunities. Solutions like Virtual reality for training, Augmented reality for step by step instructions and integrated with Audible instructions for faster-paced individuals. In warehouses, use cases like augmented picking or automated Good Received/Shipped notices based on actual physical material movement and proximity to other conscious elements will become the norm. Artificial Intelligence and Machine learning bring many new capabilities to Supply chains to analyze massive amounts of data and solve challenges that were not possible before. They will transform every aspect of the supply chain from upfront customer order forecasting, “pull” material triggers, predictive maintenance to optimize machine performance and schedule downtime for maintenance in conjunction with build requirements — additive manufacturing used in a broad range of applications. Advanced robotics utilizes sensors in manufacturing and help to automate production in a completely new flexible way.

4. Do you have any suggestions for industry veterans or budding entrepreneurs from the supply chain management landscape?

We need to harness these new technologies as they will add value to our business. Collaboration is the key to cope with market and customer volatility.

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