People often only realize the importance of something when it breaks, right? The supply chain is finally having its zeitgeist moment, and budgets are shifting because it’s becoming a top priority.
We’re living in an extraordinary time. There are secular trends of inflation and labor shortages. There’s dramatic uncertainty in demand and supply coupled with rising shipping container costs. Then there are the longer-term trends of e-commerce acceleration, last-mile delivery and sustainability. According to a recent Gartner survey, 68% of supply chain executives feel they’re constantly responding to high-impact disruptions, and the same number said they don’t even have time to recover before the next one hits.
Meanwhile, customers are becoming more demanding — expecting shorter lead times, improved service, free returns with no fees, and a commitment to sustainability. And across sectors, organizations are seeing a significant growth in competitors, rise of digital natives, cross-border commerce and more, putting pressure on price, profit and market share.
All these pressures have pushed supply chain to the top of the agenda for any C-level leader. But supply chains weren’t originally designed or built to address these stressors, and teams are struggling to solve ever-evolving complex challenges with the tools they have. They are unable to keep up with increasing market complexity, data volume and velocity, or supply chain disruptions because they are shackled to legacy technology. As they reach accuracy and effectiveness plateaus, teams are being forced to manually intervene over and over again, consuming valuable time and energy, which has led to record levels of burnout and attrition.
If organizations are going to continue weathering these perpetual storms, something has to change.
Why are supply chain solutions falling short?
1. The supply chain technology category has never been consolidated or platformed.
Supply chains are still primarily served by point solutions. And there’s good reason for it: Consolidation is really hard to do, it’s deeply specialized, and systems were originally designed to meet the traditional, linear approach to supply chain management. Supply chains have historically been broken into functions due to their inherent scale, complexity and diversity. This functional approach created silos within silos. Decision-making was broken down into different time horizons running at different cadences, and traditional processes and systems reflected these organizational and decision silos. We inadvertently designed technology that couldn’t adapt to modern processes. As these technological limitations are reinforced, they perpetuate the flaws in how our supply chains are being run.
This is why supply chains remain highly fragmented and comprise a diverse application topology, driving disconnected stakeholders and processes. While this approach may have worked in the past, our new environment requires more real-time coordination, event-driven decision-making, and synchronized planning and execution. The siloed, reactive approach won’t cut it anymore. We must finally break with the norm.
2. Lack of scalable computing means teams sacrifice quality and speed.
Existing architectures are limited in their computing power, which results in hours and hours of batch processing work. As a result, especially in a world where decisions must be made quickly in response to dynamic market shifts, teams are forced to trade
accuracy for time. But this sacrifice isn’t even paying off. Inadequate agility and responsiveness further contribute to a lack of supply chain coordination, and the figurative walls that were created by system silos grow higher.
3. Data is getting more and more expensive to manage and move.
Businesses have become overwhelmed by the sheer volume and velocity of available data — from suppliers, customers, partners and third-party sources — all with different formats, product hierarchies, taxonomies, etc. They also lack the infrastructure to collect, harmonize, analyze and apply data to their everyday decisions. Instead, it is scattered across the extended supply chain in disparate point solutions. It’s not centralized, accessible or actionable.
The bigger, broader and more diverse data gets, the more expensive and inefficient it becomes to move. But we still do it all the time — because we have to — resulting in stale, disjointed decisions.
4. Customizations are being used to “fix” technology shortcomings but carry hidden costs.
Enterprise software often comes encoded with supposed best practices — the implication being that if you adopt the software as-is, you’ve automatically implemented best practices into your company. But those “best practices” are based on the supply chains of yesterday, are likewise shaped by inhibitions and context of yesterday, and have the unintended consequences of limiting coordination due to the inherent nature of siloed supply chain applications.
Bespoke customizations, from specialized workflows and business rules to integrations with external business applications, may seemingly serve as a quick fix to address the challenges of disconnected systems or outdated processes, making older technology more suitable for today’s environment. But these customizations make technology stacks harder to maintain and upgrade, stunting innovation over time.
