The digitization of the supply chain is not a solo effort and only ultimately successful if organizations involve their suppliers, partners and customers in the process.
That is one of the key points of advice Meghan Nicholas, senior director of supply chain strategy and planning for Dollar General, made Tuesday morning during the opening keynote address of FreightWaves’ North American Supply Chain Summit.
Ryder is the headline sponsor for the summit, which is being streamed live on Tuesday at live.freightwaves.com.
Speaking with Andrew Cox, FreightWaves’ senior retail and market analyst, host of FreightWaves’ Great Quarter, Guys, podcast, and author of the Point of Sale newsletter, Nicholas laid out some of the key points she believes are essential for any organization in the supply chain when implementing digital tools.
Watch: Meghan Nicholas talks supply chain digitization
“I think it’s important to note that digital road maps and the digital transformations have been ramping up for several years, but 2020 being the year and the wild ride it has been, has made it increasingly clear that we have to move the supply chain into the digital realm,” she said. “What we’re also seeing is a lot of organizations are seeing the disadvantages of not taking that leap earlier in the process.”
Saying that business needs and demands are rapidly changing so any digitization plan needs to be “agile to move with your organization,” Nicholas noted three pillars to a successful rollout:
- Outline the strategy.
- Attract the right talent.
- Ensure internal alignment.
Nicholas said companies need to be methodical through the entire process, but talking with partners, suppliers and customers is important to ensure your digital journey aligns with their journey.
“Make sure you understand what’s the right place to focus for your organization,” she said. “I love the quote that I’ve heard in the industry, which is, ‘If your company is on a bicycle, don’t pitch a Ferrari.’ I think that is so true. It’s important to make sure you have the right fit and you are not overpromising to the organization based on where you are today.”
Consider what your digital ecosystem should look like and be prepared to pivot, Nicholas added. This is especially important during the pilot phase, she said.
“Pilots are a crucial piece to the process,” Nicholas said. “You can have a great strategy and you can have all the organizational alignment you need, but then it’s really imperative that you plot out the pilots and what’s the success criteria that you expect out of those pilots.”
Before pilots even begin, though, organizations need to map out how the digital implementation will look not only near term, but also three and five years out. Can it scale and remain flexible to address disruptions of the future?
Secondly, does the organization have the right people?
“Digital talent is different from some of your operational talent and I think this area is often underappreciated,” Nicholas said. “If you put the right systems in place but you don’t have the right talent for your organization, you’re not going to be able to realize that digital agility that you are outlining in your road map.”
Finally, the organization needs to achieve internal organizational alignment with the goals the digital implementation is designed to achieve.
“Having a well-thought-out road map that you can run through with your cross-functional peers and get that buy-in is a key piece of that journey to make sure everyone understands, ‘What does this mean for me?’ and, ‘How does it play into what’s important for my organization?’” Also, evaluate how you are going to reduce those functional silos and create a collaborative environment.”
Many organizations look at digitization as a cost reduction and that is a key component of any digitization strategy, Nicholas said, but it’s not the only one that should be considered.
“Go in and talk through what this is going to enable for the rest of the organization. How is it going to allow you to meet those enterprise priorities?” she said. “For most organizations, customer experience is key, so make sure you are adding in that ‘what’s in it for me’ component as you think about service level and some of those other things. In most organizations, it is just as important as [driving] cost down.”
Another component of digitization is how it can assist in an organization’s sustainability goals.
“Sustainability across the industry is shifting and I think it is a major priority for organizations throughout the industry. How do we get better from a sustainability perspective both socially and environmentally?” Nicholas said. “So they need to be part of your road map. In order to make sure that you’ve fully embedded sustainability in your supply chain, you need that transparent and quantitative data. You need to be able to see what is happening, and I think even carbon footprint goals – you need to have a good understanding of where you are today to be able to set those [data points] out there. I think the digital supply chain really helps enable that road map for sustainability. I think the two work really nicely together.”
Nicholas pointed to the use of machine learning to identify sustainability risks within the supply chain, augmented reality to understand how to keep employees engaged and overall visibility and transparency throughout the supply chain as examples of advantages digital implementation is helping create.
Nicholas concluded by noting how important advanced analytics are becoming to the supply chain, noting how machine learning is helping improve inventory and replenishment strategies, allowing for the use of dynamic estimated times of arrival and even how distribution centers plan and assign labor.