From same-day delivery by drone, to blockchain and robotics, tales of new technology are catapulting supply chain innovation on to the front page.
Sexy as it is, however, tech is not the real innovation story. It is actually collaboration that is walking the talk from the warehouse to the board room.
“It is now not unusual for the C-suite to feature a main board director responsible for supply chain management,” says Jayne Hussey, partner at national law firm Mills & Reeve.
Supply chain innovation calls for greater collaboration
Indeed, the C-suite has effectively woken up to the potential for competitive advantage, says Ben Balfour, commercial director at Advanced Supply Chain Group. “It’s a race to market across almost all sectors,” he says. “For supply chain management, this means finding new and innovative ways of being faster, better and cheaper than the competition, without taking shortcuts on quality, compliance or accuracy.”
While driverless vehicles might grab headlines, real advances are more likely to be found behind the scenes, in software for stock visibility and data analysis, for example.
“Organisations that have invested in supply chain innovation throughout, not just in the ‘last mile’ or consumer-facing element, will reap the rewards,” says Mr Balfour.
A more systemic approach calls for collaboration, says Fabrizio Brasca, group vice president, solution strategy, at JDA Software. “In today’s hyper-competitive, global business environment, collaboration is more important than ever,” he says. “As businesses seek to serve customers around the world, via supply chains which can extend thousands of miles and incorporate dozens of partners, they need to collaborate effectively, at a time when the very nature of collaboration is changing.”
Signs of a shifting risk landscape for supply chains
To a degree, both the rising significance and shifting nature of collaboration are evidence of a changing risk landscape, argues Shaun McCarthy, chair of the Supply Chain Sustainability School, which focuses on the construction sector. “The risks are more significant today, be they reputational and driven by issues such as modern slavery or conflict minerals, or related to extreme weather events fuelled by climate change,” he says.
The existence of the school is itself testament to the emergence of a more collaborative ethos, hitherto almost unthinkable in an historically adversarial sector. With more than 30,000 registered users and over 85 partners, many of whom are direct commercial rivals, the school represents a shared response to common problems.
When it comes to labour issues, such collective action can be built upon formal foundations. The introduction of a supply chain charter in which the client stipulates that their suppliers pay fair wages, provide safe working conditions and treat staff well, is now considered best practice and indicative of new ways of working, says Caroline Hill, head of sustainability at Landsec.
“There’s been an unprecedented shift in business culture when it comes to supply chains in recent years,” she says. “Long gone are the days of businesses not knowing or caring about who is working on their sites or products.”
Supply chain innovation driven by ethically-minded consumers
Especially in retail markets, some might say business has been made to care through democratisation of data. Consumers have come to expect their favourite brands to produce safe, ethically-sourced goods and are highly influenced by critical reviews, says James Calder, vice president, compliance and regulatory programmes, at Assent Compliance. “Responsible supply chain management is no longer perceived as a voluntary initiative. Rather, it has become a legal and social mandate due to legislative and policy changes,” he says.
Transparency laws and expectations are driving data-exchange standardisation, supported by cloud computing and blockchain. In turn, this standardisation has created a real culture of supply chain collaboration among peers and competitors.
Some collaboration is mandated by law, as in the US Dodd-Frank Act, EU Registration, Evaluation, Authorisation and Restriction of Chemicals or Foreign Corrupt Practices Act. With the UK Modern Slavery Act, members of the board, not just the organisations themselves, are even directly, personally accountable, says Mr Calder.
“They are being held to a standard of care, meaning they must be aware of what is going on in the company’s supply chain and may be held criminally liable if they do not apply due diligence,” he says.
Good leadership is key to great supply chain collaboration
While ethics and sustainability will be among the biggest drivers of supply chain innovation, other short-term geopolitical pressures are also in play, notes lawyer Ms Hussey. “The rise of protectionist policies in the US and reverberations from Brexit, mean global supply chains need to be kept under constant review to remain strong and cost effective,” she says.
“We are seeing a real interest from clients looking to explore reshoring, bringing manufacturing back to domestic territories to avoid disruption and counteract emerging barriers to trade.”
In uncertain times, and with purpose, the new watchword of a values-led business, leadership is vital to breaking down silos, says Katie Hart of executive search firm Berwick Partners. “Technological advances will only drive efficiency when combined with leadership prepared to prioritise the supply chain and champion a collaborative working culture,” says Ms Hart.
If leaders are to promote and drive supply chain collaboration sustainably, they must first define what collaboration means and how performance will be measured, says Jens Roehrich, professor of supply chain innovation at University Bath School of Management. “Incentivising supply chain collaboration and drawing out benefits for individuals and partners to work together is key to securing buy-in from stakeholders,” he says.
Signs of supply chain future already visible
Ultimately, using technology to enable multiple stakeholders to collaborate around sustainability goals is the future. The good news is the future is already here.
Accenture has just launched a circular supply chain capability that leverages digital identity, payments and blockchain to reward sustainable practices of small-scale growers and suppliers directly. It effectively and transparently connects both ends of the supply chain, allowing the customer to “tip” the producer financially for sustainability. Accenture is collaborating in this with Mastercard, Amazon Web Services, blockchain pioneer Everledger and humanitarian organisation Mercy Corps.
Collaborative and connective: this is supply chain innovation.
