Resilience, Technology, Sustainability: Capabilities to compete in the age of disruption, big data and ecological overshoot
While there is great anticipation about new technologies in the value chain and logistics community, there are some basic principles that need to be implemented before talking about technology: collaboration, resilience and sustainability. This was the main message of the 2015 Logistrans conference in Porto, which took place in May 2015.
- Genuine collaboration is the biggest hurdle to a resilient supply chain. Introducing a culture of collaboration often requires people to bid farewell to well established behaviour.
- Everyone is enthusiastic about omnichannel and big data, but only a few have really started to make relevant (and painful) experiences with this.
- Portuguese companies have not yet exploited their outsourcing opportunities, such as contract manufacturing and service providers.
- Sustainability is still in its infancy for Portuguese companies, with a focus on compliance and context/marketing activities. Short term thinking and looking at risks for businesses is the prevailing approach.
With 500+ participants convening in the Alfandega Congress Center in Porto, the economic and trade capital of Portugal, the 12th Logitrans conference covered an interesting spectrum of ‘hot topics’ for value chain and logistics managers. An interesting mix of international and local speakers, various panel discussions and a local exhibition provided numerous opportunities to network and share knowledge.
The program featured insights from Lego, Planet Retail, Deloitte, the local Port authority as well as numerous retailers and logistics service providers.
I had the pleasure of opening the conference with a keynote speech.
Setting the frame: Resilience, Technology, Sustainability
My keynote speech focused on the capabilities required for successful management in an operating environment where expectations rise exponentially. When aiming to become more resilient, being tech savvy and sustainable are capabilities that are a no longer optional to weather the many storms that value chain managers have to deal with.
However, being resilient, tech savvy and sustainable will only be possible with the right approach to collaboration across the end-to-end value chain. It was interesting to see that the issue of collaboration inspired multiple discussions in subsequent panels and presentations. Despite the obvious interconnectedness of business and the increasing customer expectations with digital channels, an old truth reveals itself once more: habits are most difficult to change.
When it comes to conducting business, Portugal is not known to be a very collaborative culture. The attitude is often protective of the own business: ‘Secrets are the soul of business’ is often said in Portugal. It will be interesting to see if this holds true once emerging technologies are gaining traction.
Calum Lewis, Operations Director at LEGO, explained how deliberate product portfolio decisions, end-to-end philosophy in the supply chain as well as organization wide metrics on the ability to plan helped LEGO to drive 10 years of consecutive growth. However, Calum mentioned as well, that the collaboration and integration with retailer processes could be challenging at times.
Companies are aware that they need to go aboard. They need to be smarter and more reliable. A clear strategy is required and collaboration is a key capability to master challenges.
Risk awareness and resilience capabilities are lacking
Simultaneously managing risks and opportunities are big challenges, but building resilient supply chain capabilities is essential to survive. In many companies the risks to operations are neither understood nor planned. Disruptions are countered as they occur; a short-term view and fire fighting is the norm from internal integration to supplier networks.
The promise of omnichannel and big data
New capabilities through internet, social networks, educated consumers and big data are causing a storm. The conference setup featured the topics of e-commerce and omnichannel fulfilment in several formats. Customers care about convenience, assortment and price. Increasing demand for same/next day delivery capabilities is increasing. While Portuguese companies are seeing a first uptake, countries like the UK and US lead the way. The key message is that the interest to provide such capabilities is great and companies are eager to fulfil this customer requirement. However, several panellists admitted that they are only at early stages in dealing with it. The operational implications are often not understood. This is due to the fact that digital and physical channels have different requirements. While physical channels and its demand are growing in a linear fashion, the digital channel and its demand could grow exponentially. This requires having clear boundaries between these channels and the capability to deliver. Companies that have been brave to take the lead made valuable but painful experiences. If you go into omnichannel fulfilment with a clear strategy (including a deliberate decision what to offer via digital channels versus via existing stores), you might end up in situations where you are not able to satisfy vastly increasing customer demand. This might lead to loss of sales and penalties.
The hype and gold rush mentality around e-commerce and big data is accelerating the need to build capable and collaborative supply chains.
It is time to get started!