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With part two of our Supply Chain Leaders series published last week, I thought it would be a great time to explore further how you can embrace the empirical approach in your journey to supply chain excellence.

Our Supply Chain Leaders work has improved our understanding of how supply chain is changing, and the attributes needed to succeed. The first attribute explored in depth is empirical.

An empirical approach emerged from the survey results, with leaders’ recognising the role data plays in their supply chain, but also the growing importance of experience – two foundations of empirical working.

What it means to be empirical

To be empirical, we can’t make decisions based on theories or intuition alone. What comes out of these tests is empirical data – the objective facts you need to make informed decisions. You may also decide to make use of existing data to verify a theory – let’s face it, it’s sometimes easier and there’s plenty of it available! These are both legitimate empirical approaches.

Being empirical is getting easier

The survey results tell us that conditions for empirical working are improving – there’s more data available to test theory and it’s easier to set up experiments to create new data. But data is only half of the story. Data must sit alongside experience, which should be used to first identify what to test, and where the likely value is, and second, to interpret and bring meaning to results and help determine how best to act on them.

Doing so should be our goal because the consequences for getting things wrong can be severe – wasted time, eroded margins and ceded advantage are all avoidable potential consequences of not testing our ideas. The report outlines five things you can do to embody the empirical approach:

Source: IGD Supply Chain Analysis, Supply Chain Leaders Pt II

Make use of what’s available

I’ve mentioned that the conditions for empirical working are improving. A key driving force is the shift towards digitalisation and automation. 83% of respondents stated that automating processes was a key part of their company’s strategy or it is their number one priority. But, we do need to be careful. Automation and digitalisation will mean machines, in addition to humans, will be using data. Algorithms must use data that’s “tested” and machine learning, in which algorithms update automatically based on results of the previous decisions made, can support this requirement.

This continuous learning loop is needed to ensure we continue to be empirical in a world where humans make fewer of the decisions and are less able to rely on our personal experiences.

In the meantime, platforms like Metro Group’s Supplier Collaboration Tool (SCOT) will remain  crucial components. It provides manufacturers with near real-time data on Metro operations through a 24/7 self-service platform.

Data from platforms like SCOT can be used to check the veracity theories and gather evidence, and can be a great starting point, helping you move from theory to a robust empirical assessment.

Using existing data is a great way to identify opportunities. This is certainly a valid empirical approach but, of course, there’s no guarantee the data you need will be available. In which case, you may need to generate some.

Simulate and experiment

You can do this quite easily and it really doesn’t need to be complicated. We’re seeing “split” or “A/B” testing increasingly used to measure theories. For example, “adding a delivery day to customers’ order schedules will smooth the order profile, making it less erratic”. An A/B is perfect for testing theories like this without committing to action that could drive negative outcomes.

To measure such a theory, an A/B test is ideal and empirically sound. In this example, it would mean allowing a control and a variation, which simulates the conditions outlined in your theory, to take place simultaneously. The results can then be assessed, and the empirical data used to decide how to proceed.

Don’t be daunted by the thought of statistical analysis, our change management tool can help you!

Running an A/B test

 

Source: Supply Chain Analysis, Change Management Guide

The tool walks you through how to run an empirical A/B test and provides a template that you can add data to.

Conclusions

Being empirical will probably change how and where you spend your time. It calls for more upfront investment to reduce time spent late, but in doing so, ensures you don’t waste time and do focus your efforts on the things that can make the most difference.

If you haven’t already, take a look at our first and second parts of the Supply Chain Leaders series.  Look out for the next report, which explores the next of the Five E’s – entrepreneurial.

Alex Edge

Alex Edge

Supply Chain Insight Manager

Download our report to understand how supply chain excellence will be a source of growth and value for the future.

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We’ve just published our first report in IGD’s Supply Chain Leaders series, reflecting the views of over 100 senior figures from more than 60 businesses around the world.  

The survey was run to help us get a better understanding of food and consumer goods supply chains from those who know them best: the people who actually run them. Our respondents reflected a wide range of job titles, including Chief Operating Officer, Global Supply Director, Customer Logistics Director and Head of Supply Chain. 

In gathering such a variety of ideas and experiences, we have been able to map out the challenges and opportunities facing our industry and so find the capabilities needed to remain competitive in an ever-changing world. However, the survey has also revealed an array of achievements across the supply chain that will, we hope, inspire others in the industry with new ideas for future success.  

The growing demand for leaders and leadership skills  

We know from previous engagement that challenges exist in both recruiting supply chain leaders and in providing leadership training for prospective leaders. To succeed, businesses need to secure skills and talent for mid-upper level supply chain roles. Equally, they must develop those they already have, because leadership is the number one area in which individuals request training1. So, effective leadership is absolutely crucial to delivering an effective supply chain: both now and in future.  

To create and maintain a leading supply chain, a supply chain leader must create an environment that delivers success over the long term; supporting the leaders of the future to emerge, develop and thrive.  

The lay of the land  

Our survey demonstrated clearly the growing scale and breadth of the challenge facing supply chain leaders, and the increasing demand on their time and skills. One respondent reflected that “just ‘keeping up' takes far more effort than 'winning' did five years ago.” 

Before responding to challenges however, you need to know what you are dealing with. So where better to start than by describing the current food and consumer goods supply chain environment as seen through the eyes of leaders?  

To flourish, you’ll need to: 

  1. Reduce your operating cost: 30% say driving out operating cost is the top current challenge food and consumer goods supply chains face.  
  2. Make sense of complexity: 85% say complexity has increased over the last five years with 29% identifying complexity with range and routes to market as their top current challenge. Complexity is here to stay. 
  3. Do more with less: 71% say their responsibility is broader compared with five years ago. Over the same period, one third have seen their people resource decrease. In these conditions, those who innovate win. 
  4. Be more commercially minded: 62% say the role of a supply chain leader has become more commercial compared with five years ago.  
  5. Be part of a network, not a sequence: 83% say there is more emphasis on collaborative and cross-functional leadership. Developing partnerships is the number one capability needed.  

A plan to win  

Success against this backdrop can be achieved by developing specific attributes. We asked supply chain leaders how their capability needs are changing: what are their strengths, and what do they need, both as an individual and as a supply chain more broadly? 

Their responses led us to develop the ‘Five Es’. These are the five must-have attributes that embody both a supply chain leader and a leading supply chain. So, if you’re part of a supply chain or happen to lead one, you’ll need to be: 

  1. Empirical: analytical and evidence-based 
  2. Entrepreneurial: seeking commercial opportunities 
  3. End-to-end: part of a supply network 
  4. Evolved: not constrained by one vision of the future 
  5. Enterprising: doing more with less 

We’ve summarised the five attributes below, and the report provides more detail and context for their selection. 

Next up 

Over the coming weeks we’ll be looking at the things you can do to accelerate progress in each of the five areas: exploring suggestions from survey participants and reviewing cutting-edge examples that you can use to guide you on your journey. In the meantime, read part one in our Supply Chain Leaders series, if you haven’t already, and look out for part two! 

Our acknowledgements to those companies who participated in our survey, some of which are shown below: 

Sources:

1 Mind the Skills Gaps, Supply Chain Analysis, IGD 
2,3 Supply Chain Leaders: a view from the top on leading food and consumer goods supply chains – part 1, Supply Chain Analysis, IGD

Chris Irish

Chris Irish

Supply Chain Insight Manager

This is the first in a series of reports detailing the key findings from IGD’s supply chain leaders global survey.

Get the latest industry news and insights straight to your inbox with our range of newsletters.

We’ve recently published the latest report in our ‘Powered by People’ research stream. It explores how organisations progress on their journey to becoming digitally capable and outlines the need for change in this increasingly important area and reviews case studies from the industry.

This research follows an excellent report my colleagues in our charity team on the same subject. It helps organisations self-assess their digital capability and plot a route to success. Kudos to the HR Industry Leaders Forum and various industry working groups for contributing to this research.

However, it’s not just a lack of awareness around digital capability that is a risk to our industry, it’s the challenge presented by an accelerating rate of change, which threatens to leave laggards behind. This raises two key questions:

  1. What capabilities are leading digital organisations demonstrating?
  2. How can organisations progress along their digital journey?

Introducing…. A framework for digital capability

To address these questions, we first need to understand where our organisation is on IGD’s journey to digital engagement.  This is measured across four stages of digital capability; Inaction, Recognition, Action and Instinct.  


Source: IGD Research

From Inaction to action

During the Inaction phase, businesses are unaware of the need for digital skills or are consciously not taking any action to address it. They may lack understanding or it may not form a priority in the immediate future. As businesses move from recognition to action there is a clear need for change. But at the Recognition phase, an organisation may be unclear on how to develop it or lack a strategy. When a business understands its priorities, has invested into a digital strategy and has clear capability plans in place, this demonstrates capabilities at the Action phase.

Instinct and beyond: ‘Self-Disrupt or Die’

Even in the Instinct phase, the journey is never complete. We must continue to self-disrupt and continually test new ideas to remain ahead of the curve. In a recent article ‘Self Disrupt or Die’, Tom Goodwin, Head of Innovation at Zenith Media gives several great examples of companies that lack the ability to self-disrupt versus those that do:

“Airlines are endlessly asking for passwords, passport details, frequent flier numbers, and my birthday despite me giving them access to everything always. My cable provider seems to have 42 systems that work separately, in both duplication and parallel, but who can’t talk to each other”
….
 “If I call Airbnb, they seem to know who I am immediately. From Slack to Shyp, from Blue Apron to Amazon, Zuli Smart plugs to Maple, Postmates to Handy, I’m getting increasingly spoiled by companies that seem to just work”
Source: Forbes.com

So why does it seem so easy for some organisations? Simple, many organisations have started at the instinct phase – digital is who they are and core to every business decision. These businesses were born digital. For huge blue-chip organisations with legacy systems, change will ultimately take longer. For other organisations, the route to digital capability may not mean a sequential leap from one level to another. If a suitable culture, structure and skill base exists, the opportunity to jump from inaction to instinct may exist.

Future Challenge

We’re seeing lots of great work by educational establishments to equip young students with some of these skills through an increase in the availability of Science, Technology, Engineering and Maths (STEM) qualifications. However, more needs to be done to expose young people to real life scenarios within organisations, this will help encourage other core skills such as critical reasoning, agile project management and collaboration.  Our report explores some additional best practice examples from Amazon and Unipart, exploring collaborations between universities, government and industry.

The full report is available to access on Supply Chain Analysis.

Thanks for reading, if you would like to discuss how IGD can help your business build its digital capability, get in touch – [email protected]

Alex Edge

Alex Edge

Supply Chain Insight Manager

Download our report to understand how supply chain excellence will be a source of growth and value for the future.

Get the latest industry news and insights straight to your inbox with our range of newsletters.

Presentations

14/05/2019
This is the third in a series of reports detailing the key findings from IGD’s supply chain leaders global survey. This time, the attribute under the microscope is Entrepreneurial – the call to be commercial, creative and courageous. Supply chains need to take a more creative and courageous approach to driving commercial success – if this doesn’t sound like you, read this report to ensure you are not left behind…
25/04/2019
This is the second in a series of reports detailing the key findings from IGD’s supply chain leaders global survey. It focuses on the first of the Five E’s: empirical – combining data and experience If you are not developing this attribute, you’re almost certainly falling behind.
11/04/2019
This is the first in a series of reports detailing the key findings from IGD’s supply chain leaders global survey. The survey collected responses from supply chain personnel around the world, providing insight on leading supply chains. This introductory report outlines the purpose of the research, provides context for the focus areas, introduces five attributes for success and explores how these can be exhibited by a leading supply chain and a supply chain leader.

Access free videos, infographics and toolkits whenever and wherever you need to.

Making your business relationships pay

Relationships and the ability to work effectively with people have a disproportionate impact on our success. This series looks at what makes for good relationships, barriers to building and maintaining them and how they will evolve in future.     

  1. Characteristics
  2. What gets in the way?
  3. Evolution

15 October, London
term technology looks like The IGD Supply Chain Summit 2019 focuses on how to be customer centric. We’ll connect you with the retailers, suppliers and solution providers that are winning with customers.

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