Leapfrog supply chain ROIs with strategic partnerships
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Leapfrog supply chain ROIs with strategic partnerships

Supply chains have gained overdue boardroom recognition over the last five years. According to a survey conducted by McKinsey, 93% of senior supply-chain executives intend to make their supply chains far more flexible, agile, and resilient. But what drives this change in mindset today? The aftershocks of COVID-19 in supply chains.

After the pandemic exposed operational and macroeconomic vulnerabilities, companies returned to the drawing boards to rethink supply chain strategies. Despite heavy technology investments and redesigning business processes to bolster supply chain capabilities, the promise of a resilient, networked, and autonomous supply chain is still a distant reality. C-suite leaders struggle with whether technology investments will pay off. How do they align with and enable company strategy? Do the promised technological capabilities enhance core strengths?

Orchestrating entire supply chains isn't a one-click solution. It involves tough decisions on which capabilities to add to your company's digital core and how well they will fit together. Depending on the complexity, process maturity, workforce stability, functional expertise, IT capability, and funding in your organization, elevating supply chain performance requires substantial investment in holistic transformation initiatives, not just technology. The demand for techno-functional expertise is high. And to respond to these needs faster, more and more companies are externalizing their supply chains to strategic partners.

Harness partner capabilities to bridge talent and technology gaps 

Externalizing supply chains isn't new. Contract manufacturers, subassembly companies, and third-party logistics providers are essential to an outcomes-driven supply chain model. External partners often provide flexibility, allowing companies to scale their operations to speed up go-to-market without bank-breaking investments. And sharing supply chain responsibilities can help navigate and manage risks to protect you against global disruptions, market fluctuations, or geopolitical uncertainties.

But that's not all. Today, supply chain leaders use external capabilities to bridge the talent gap that's increased because of the disconnect between how fast institutes train people and what skills the industry needs now. By the time people pick up the skill, the technology is old.

Out-of-date working methods and legacy products add to the problem. According to a report from Dell, more than 70% of software used by Fortune 5000 companies was developed 20 or more years ago. So why would you go to the refrigerator and eat moldy bread every day when strategic partnerships offer a healthier option?

Three strategies to achieve results through externalization 

The buy-versus-make approach of externalizing supply chains refines operations, reduces change management efforts, accelerates decision-making, and improves investment outcomes. When you bring in the expert, you take the pressure off your company to quickly acquire and train employees. This approach enables plug-and-play actions that help companies speed up user adoption of tools and technologies at a lower cost without relying on tribal knowledge.

Once you've analyzed your current state of operations, it can help to break down these operations into functions and phases of implementation. This way, you can work with your partners to define concrete success parameters and know when and how much to invest for faster visible impact.

Here are three ways you can drive outcomes quickly and effectively using a supply chain partner:

  • Use real-time data, advanced analytics, and generative AI (gen AI) to scale up scenario planning and bring decision recommendations to end users
  • Enable end-to-end process visibility for accurate forecasting across customer demands, inventory, working capital, and capital expenditure
  • Absorb new sources of data like the internet of things (IoT), leverage unstructured data, and consume insights to elevate supply chain performance

Through externalization of operations, you can get access to newer technologies and systems, such as tracking tools and supply chain management software, which might be more budget-friendly than developing them in-house.

The power of partnerships in action

A digital supply chain for a leading audio equipment manufacturer 

Challenge: A US-based global manufacturer and seller of audio equipment lacked visibility into its supply chain while new product introductions failed 50% of the time. These challenges trickled down to other departments, such as sales and marketing, resulting in high operational costs. This was the trigger for revamping its entire supply chain process.

Solution: We dug deep into the workings of the firm's supply chain to get to the root of the systemic issues that hindered its operations. And we implemented a whole stack of advanced analytics to solve these pain points, enabling a forecasting methodology based on machine learning that is now run as a managed service, solid supply-network planning, and inventory management.

Result: Forecasting accuracy for new products improved by 65% and could be generated 30% faster. With crystal-clear visibility into the supply chain, the firm reduced planning time by 40% and inventory levels by 15%. The right combination of people, processes, and technologies was key to the project's success. 

Building the networked, autonomous supply chains of tomorrow now

In a world of everything as a service and cutting-edge technologies creating value faster, there's an urgent need to bridge the learning gap. Fifty percent of respondents in a recent survey of 300 supply chain executives see talent shortage as a significant challenge over the next 12 months.

Building capabilities internally is time-consuming and can lack clear direction. Tapping into a broader ecosystem of skills and services to build hyperconnected and autonomous supply chains will open gateways to better risk management, planning, and forecasting while allowing businesses to focus on their core activities. The process of externalization has its share of complexity if there's a mismatch of expectations. You need to choose partners whose long-term vision and expertise align with your company's needs to help navigate the future. Keep in mind your partners' cultural DNA – it cuts down change management friction in the long run.

A strong partner can help you avoid the challenges of selecting technology providers, implementation costs, and technology adoption challenges. After all, there are no lone geniuses in business, only genius partnerships.

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