May 17, 2016
May 17, 2016
Contributor: Christy Pettey
Digital innovation will lead to a new approach to the supply chain.
The divide between what the supply chain provides and what the enterprise needs is widening. Closing that gap requires a new, agile approach to investment in technology, leadership and talent.
This is called the bimodal supply chain.
Opening the Gartner Supply Chain Executive Conference this week in Phoenix, Arizona, David Willis, chief of research at Gartner, told the audience of supply chain strategists that supply chain leaders who succeed in orchestrating the use of digital technology across their entire business will separate themselves from those that merely run the supply chain department.
“To do this, supply chain leaders should divest outmoded capabilities in order to invest in a new approach to supply chain,” said Mr. Willis. “With entirely new technologies that were not viable just a few years ago, the digital supply chain could include, for example, intelligent robots in a digitally connected warehouse, big data supply chain analytics or 3D printing at point of sale.“
Leaders are responding by creating new, innovative digital initiatives that run alongside the traditional analog businesses — a bimodal approach. But success in bimodal does not merely mean devoting some time to thinking about innovation. Bimodal requires an ongoing, sustainable approach, with the goal of driving digital to the core of the business.
Mr. Willis said that the bimodal model will be effective even during a downturn or when implementing cost optimization measures. This is because the economics of technology are changing.
“While it has become the flavor of the day, big data is not the answer. Shift the thinking from big data to big answers,” said Mr. Willis. “Algorithms are where the real value of data lies. The future of algorithmic business focuses on how increasingly intelligent algorithms enable smart machines, systems that will become autonomous over time, and will produce novel outcomes. So while we live in an algorithmic world today, we will live in a world driven by smart machines in the future.”
Algorithmic business will power the next great leap in machine-to-machine evolution — the Internet of Things (IoT), systems that operate in the physical world — both in the home and in industry.
The IoT will create new customer experiences that span personal needs into the physical world, through the virtual. A simple customer request will spawn a chain of activities across a wide variety of platforms, creating a seamless experience.
Smarter algorithms will reduce cost, improve efficiency and create new customer experiences. However, Mr. Willis warned, it is not enough to just invest in technology and suppliers. You must build an innovation competency into your enterprise — a separate Mode-2-driven organization with people who understand how to nurture innovation.
“A key enabler to your organization's ability to scale bimodal will lie in the supply chain's ability to balance both convergent thinkers (Mode 1) and divergent thinkers (Mode 2). For decades, supply chain professionals have been rewarded for focusing on being operationally excellent, risk-averse and trained through continuous improvement techniques,” said Mr. Willis.
“However, that approach is evolving to include strategic thinking, change leadership, and sophisticated finance and communications skills,” Mr. Willis said. “It is crucial to be open to leveraging the wisdom of crowds and looking outside the company — and even outside the industry — for new ideas, and to bring those lessons back in practical ways. Learning how to explore through new means will drive bimodal adoption.”
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