The cognitive supply chain: Why your firm needs one
And how the persuasive power of digital nudging can help
Increasing customer expectations around service and personalization are adding significant complexity and uncertainty to global supply chains. Supply chains now need to be highly responsive, agile, and flexible if they are to live up to the C-suite's growth agenda. This calls for seamless collaboration between supply chain partners, real-time visibility into risks and opportunities, and closed-loop adaptive planning.
We've already made progress in these areas. Technological advancements such as the internet of things (IoT), the cloud, and big data have turbocharged supply chains. With the influx of data and digital technologies, supply chain management is at a tipping point. It is now possible to capture, store, process, and share data in real time to make faster and more effective decisions. The next big development is a shift away from transactional to cognitive supply chains – these are the supply chains of the future.
The cognitive supply chain differs from its transactional predecessor significantly. A cognitive supply chain will be digitally-led and process-centric – as opposed to being merely digitally enabled. This new model is already evolving as digital technologies with embedded analytics converge to capture, store, process, and share data. Scalable, more flexible operating models, as well as new skill sets, are natural enablers of this evolution.
The transition is exciting and aspirational, but it isn't easy . It requires change management at every level and impacts operating models, skill sets, and the digital tools required to power it. By driving exception-based issue resolution, for example, companies can establish processes and systems that foster greater productivity. And in a world of information overload, eliminating noise from signals can promote insights and encourage meaningful actions that lead to improvements.
One way to manage change quickly is through digital nudging. The concept owes its origin to behavioral economists, who believe that with subtle encouragement—so-called nudges—they can direct people's decisions. Digital nudging uses technologies to do the same thing at scale. Here are some supply chain examples:
As seen in figure 1, three factors will power the transition to a cognitive supply chain:
The nature of this journey will depend on organizational maturity across several areas. The best place to begin depends on:
The benefits of moving from a transactional to cognitive supply chain include faster time-to-market, improved market share, and increased growth and profitability. As metric outcomes, you can expect to see:
Genpact is a leader in cognitive supply chain management. Our ready-to-deploy global business services and digital transformation framework can help you design a personalized target operating model and show you the digital interventions you'll need to accelerate your journey.