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BB Digitization EN PDF
BB Digitization EN PDF
BB Digitization EN PDF
y f o r th e d ig ita l jo u rn ey ?
Are you read
How digitization is redefining the
world of supply chain management
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Supply Chain Digitization –
Are you ready for the digital journey?
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2. Supply chain digitization – system to serve their prime members in Munich
the challenge of multiple opportunities within a freely selectable two-hour time window, at
no extra charge. Amazon is using the opportunities of
supply chain digitization to raise the level of custo-
Inside-out orientation
Business
Model
Technology Innovation acceleration
Logistics 4.0 Speed of innovation
Production 4.0 Now
Customer
Planning 4.0 Distance to market needs &
expectations
Service 4.0
Service innovators Time
Digital supply chain
Outside-in orientation
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3. Service 4.0...
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Figure 2: Supply chain digitization and its touchpoints
Suppliers Customers
Planning 4.0
Fully integrated planning (int./ext.)
Automated demand / supply balancing
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3. The modules to digitize everywhere at any time with or without us noticing.
Supply Chain 4.0 Similarly to a car signaling a driver when its oil is low,
entire production systems send data to a centralized
computer, which analyzes the datasets and creates
Technology focus: Analytics & automation It sounds futuristic at this point, but ADIDAS has
already implemented this visionary approach in
When looking at the technology aspect, two key its Speed Factory. It combines the design and
modules can be identified: analytics and automation. development of sports products with a flexible, auto-
Sensors allow detailed information to be gathered at mated manufacturing process. This flexibility allows
the machine and product levels, which is subsumed ADIDAS to be much closer to the market and meet
under the term ‘internet of things‘. Data is gathered customer demands faster than its competitors.
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Process focus: Modularization & composition their interfaces must be defined in order to allow
a fast setup. The optimal value chain aims to meet
Companies are concentrating on their core compe- customer needs within shortest timeframe.
tencies – this is well known. But digitization will take
this to a new level of sophistication. The pressure In the future, companies will increasingly concentrate
to innovate is increasing because specialized service on their core business and fulfillment model using
innovators are boosting the standards in their area. Supply Chain digitization. The goal is to keep compa-
nies lean and agile in order to pursue a permanent
So, for example, how did Media-Saturn react to the Greenfield approach. This implicates thinking and
fast delivery standard set by Amazon? Installing acting without unnecessary ballast.
its own system would have taken too much time
and risk. To enhance their service offerings to their Modules that companies need for order fulfillment
customers they leveraged the startup tiramizoo, are increasingly being adapted to the core business
providing same-day delivery services for packages using standard interfaces. A company‘s added value
up to 55 kg. is moving away from organization and in the direction
of coordination.
The communication is organized through a mobile
application that interfaces to the Media-Saturn
webpage. Stories like this are popping up more and
more. Big companies are leveraging smaller, innova-
tive suppliers to boost their own level of innovation.
But what is the crucial success factor when doing
so?
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Figure 3: The modules to digitize the supply chain
Production 4.0
Technology Process
focus Planning 4.0
focus
Service 4.0
Automation Composition
Data are analyzed Digital supply chain Products and processes are
automatically, the system clustered in modules.
reacts autonomously Steering occurs decentrally
(e.g. robotics and sensors, (e.g. partner portfolio
M2M communication) optimization)
A B A B
Integration
Digital linkage of departments, business units, supply
chains. Improved collaboration, coordination and
transparency are the objectives (e.g. SC Control Tower)
A B
Modularization and Composition) in mind, the ques- Big data analytics supports a more sophisticated
tion is still how to prioritize digitization opportunities segmentation through dynamic clustering. The ana-
and assess only the most promising of them. lysis of demand patterns, for example, replaces sim-
ple ABC customer segmentation in terms of sales.
At the end of the day, it is the end
KEY MESSAGE consumer that defines the require- Step 2: Identifying the segment‘s
Supply chain ments that a supply chain has to ful- critical success factor
segmentation is the fill in order to drive the company‘s
gateway to a digital success. The customer experience The success factors have to be identified for each
can be quantified using the perceived defined segment: Why is the customer buying this
supply chain
value. This measurement consists product? Which role does the supply chain perfor-
of the supply chain costs on the one mance play in the customer‘s choice? A clear under-
hand and the service quality on the other. The fol- standing of the customer needs is required. In B2B,
lowing approach to prioritization leverages mindset: the time window for just-in-time supply is only four
days; in B2C customers want to replace their broken
Step 1: Supply chain segmentation TV screen immediately, so they can see the big
game.
Current supply chains of global manufacturing
companies have plenty of suppliers, production Step 3: Find out the core lever
sites and distribution centers around the world. The that influences success
immense variety of products, business partners,
distribution channels and customer requirements What needs to be done to achieve the expected res-
ends in a loss of control, which is even magnified by ponse time? What is the decisive lever that needs to
new technologies and changing business models. be assessed? The answer is not necessarily given by
As an example, customers buying standard make- fancy technologies but by the intelligent addressing
to-stockproducts focus on fast delivery. of the core lever. In the example, one possibility for
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achieving the requested response time is to steer the customer the driver‘s location. These maps work
the customer interface by limiting the freedom of on standard formats like *.kml.
choice. The system ensures that the customer can
only place a feasible order in line with the standards. Step 6: Composition
Flexibility through a highly automated warehouse or
integration with a service platform like Uber would Likewise, in the world of LEGO, composition impli-
not be the key lever and therefore should not be cates finding the perfect fit for the defined modules,
addressed with highest priority. This would just be a own capabilities and partners in order to set up
factor to extend the standards. a customer-centric company. The future supply
chain is composed of experts, like invoice-clearing
Step 4: Technology assessment specialists, supplier-collaboration platforms, distri-
butor-fulfillment partners and 4PL providers. This
Simplicity is the key. The company needs in-depth composition needs to be highly adaptable to cope
knowledge of where and how, in order to enable with the challenges created by customers and
a casual user to execute tasks usually done by service innovators.
experts. Augmented reality for user self-help, the
fridge ordering milk or a technician ordering spare Step 7: Business case
drills via an app are examples of simplified user inter-
faces. These perceived values and the enablement of Although ‘lighthouse projects‘ are used as a learning
execution and real-time interaction with the partner platform, the final evaluation and decision must be
drives the technology assessment. The app provides calculated within a business case. It is not about
real time feedback on when the driver will arrive at having fancy apps.
the construction site to replace the broken drills.
This seven step approach of concentrating on the key
Step 5: Modularization factors of success is paving the road to digital trans-
formation. Similarly to the Theory of Constraints, you
Modularization enables companies to in and out- should not seek the bottleneck, but rather the sweet
source modules quickly, depending on the changing spot of technology impact. Using this approach, a
customer requirements and the partnering oppor- specialized manufacturer of commercial vehicles
tunities on the market. The modularization limits increased spare parts availability by 15 percentage
the change impact and allows technology to be em- points, while reducing inventories. The technological
bedded quickly in the end2end supply chain. The enabler was monitoring the installed base while
mobile application leverages external maps to show leveraging machine learning algorithms.
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Figure 4: Barkawi funnel of technology prioritization
Segments
1
2
Critical success factor
3
Lever
Perceived value 4
a) Customer experience Technology
Assessment
Response time Business
Automation case
Service quality
& Analytics
b) Supply chain costs 5
Standardization
Compo-
6
sition
7
Technology-centric
Integration (e.g. Control Tower)
Company-centric
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Questions to be answered!
1. Do you track your customer satisfaction with
regard to supply chain performance?
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Barkawi Management Consultants Disclaimer
Barkawi Management Consultants was founded in Data contained in this document is not binding and
1994. Today it has more than 100 employees and serves information purposes only.
offices in Munich (head office), Shanghai, Moscow,
Atlanta and Vienna. The clients of Barkawi Barkawi Management Consultants GmbH does not
Management Consultants are global enterprises accept any liability for material or intangible damage
with capital-intensive and logistically complex resulting from the use of this publication.
business models, for instance 3M, BMW, Coca-
Cola, Daimler, Fresenius, Siemens, Vodafone, etc.
© 2016 Barkawi Management Consultants GmbH.
Barkawi Management Consultants GmbH & Co. KG All rights reserved.
Baierbrunner Str. 35
81379 Munich Image rights:
Germany
Shutterstock: Pages 1, 6, 9, 14, 16
Phone: +49 89 749826-0
Fax: +49 89 749826-739
info@barkawi.com
www.barkawi.com
Awards
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Due to the performance of digital leaders like Amazon, Uber and other highly innovative and disruptive
business models, supply chain managers are confronted with the task of optimizing their delivery
performance to keep pace with these exemplary benchmarks. Concepts like scanning-point based tracking &
tracing or computer aided tour planning are already everyday services today.