Supply Chain

Supply Chain Sustainability – does it matter? in conversation with Professor Yossi Sheffi of MIT

Let's talk Sustainability

‘Sustainability’ is not an easy topic to discuss when most companies have a ‘profit first’ or ‘profit only’ mentality. In one of our Podcasts we cover the topic in detail with one of global thought leaders in Supply Chain:

“Companies need to provide profits, growth, employment, goods. They also have to take care of environmental and social issues. One has to realize that solving environmental issues are actually not up to the companies. Companies respond to what the customers want and when you do actual experiments in supermarkets and other places, you’ll find that only 5-10% of customers are willing to pay a little bit more for environmentally-friendly products. Until the market will change, companies cannot do much in ensuring sustainable practices. And if the market change, of course, companies will respond.”

–    Professor Yossi Sheffi of MIT, Director of the MIT Center for Transportation and Logistics, highlighting issues that company executives face regarding sustainability practices

Here’s the thing: Professor Sheffi is right. Companies are indeed under pressure from various stakeholders to meet their demands – including the demand for greener products. The issue raised here is that the intent to buy sustainable products do not translate to actual decision to purchase.

Research findings echo the statement – although 30% of UK consumers are concerned about environmental issues, they don’t purchase products that are environmentally friendly (Defra, 2006). A study in Sweden also found that although 46-67% of consumers have favorable attitudes towards organic food, only 4–10% of these consumers purchase them (Magnusson et al., 2001).

This is a major issue considering that the fuel that drives companies is profit. With conditions being as they are, comes the next question:

Should you even bother with environmental sustainability practices?

Here’s the thing: You have to.

Most countries now have regulations in place to ensure that companies are generating profit without resorting to business practices that are hazardous to the environment.

In our podcast, Professor Sheffi also mentioned additional reasons why companies should become eco-friendly: “The first is cost reduction. The poster child for this is cutting energy which leads to a win-win situation, where you reduce carbon footprint and you reduce cost. The second reason is to manage risks by making sure that your company is not an outlier by doing nothing. You don’t want your company to be the subject of an attack by an NGO, which would catch media attention and lead to reduced sales and market value. The final reason is to invest in possible growth by catering to the Millenials, who evidence has shown are more attuned to environmental concerns. An example of this is Clorox who made a line of environmentally sustainable product called Green Works. Thus, if the market changes in the future, the company is well-positioned in the market.”

Cost reduction is the golden ticket that many companies prefer to gain by adopting a sustainability position. However, a study done by Boston Consulting Group to gauge the benefits of addressing sustainability issues shows found that though cost reduction is the second most cited advantage, only 10% of the study’s participant experience it in their company.

The benefit that is most felt by nearly 40% of the study participant is actually the one addressed by the second reason: By choosing to pursue sustainability initiatives, their company or brand image has improved in the eyes of consumers which in turn creates greater customer loyalty and satisfaction.

Let’s say you’re now keener to make your company more sustainable – what about your business goals?

“Sustainable Practice & Business Goals” or (Sustainable Practice + Business Goals)?

Most of the time, businesses talk about sustainable practices as an entirely separate entity from business success metrics. This is the wrong way to handle them – instead of treating them separately, consider integrating the two to create more value for your company.

A report by Bain & Company found that companies who realize that is the best approach to take are generating more profit then their market competition. An example of this is Toyota with its Toyota Prius, which holds the record for the world’s best selling hybrid car until now. Another notable example is Timberlands who creates an environmentally friendly image by  using cotton that is produced in a sustainable manner in over 80% of their products by 2018. These companies clearly made some changes in order to achieve the desired outcome.

What changes should I expect to happen?

Factoring in the changes that may occur in your business processes, be it intentionally or unintentionally, is a very important component in ensuring that both your sustainability and business goals are achieved. Walmart is one of the companies that experienced these changes, where the company created a sustainability initiative by requiring their fish suppliers to adhere to certain standards – however,  Greenpeace lambasted the initiative for not doing enough and the fish suppliers and state government officials criticised the program for being too strict.

Professor Sheffi summarized this issue in our interview:  “In this particular case, which is an example of, you know, the no-win situation that companies are facing, Walmart reduce the sustainability standards in response to the Alaskan fisherman. The argument that Walmart had is that the fishermen are still going to sell their fish. The question is, are they going to sell it through Walmart with some environmental restrictions or sell it on the open market with no environmental restriction. So Walmart decided to reduce their stringent requirements.”

In this case, the supply chain process is impacted by the sustainability practice that Walmart chose to implement. This is not an uncommon situation – supply chain operation is one of the main business processes that undergo changes due to sustainability initiatives, as found through a global survey by McKinsey & Co. in 2011.

Put the right person to handle it

The right person is needed to manage this type of situation and this responsibility often falls into the hands of the Chief Supply Chain Officer. In this regard, Professor Sheffi mentions several characteristics that are essential for a supply chain leader to have: “First of all, they have to be good managers and good with people – they understand people and how to motivate them – things considered as standards for excellent managers. They also need to understand new technology and what can be done from them. The beauty of it is that it can be done by joining online courses. Just understand the technology, what it can offer, what it cannot offer. You don’t always need your IT people or a consultant – just try to understand what an AI is and is not, what a blockchain is and is not 3D printers – what it can and cannot do, and in what timeframe, or when will autonomous vehicles become an issue. Just be present to observe the trend or have people around you who can watch it. I don’t think that people need to become technocrats or only come from a computer science background in order to be a successful chief supply chain officer because it is still about people, process, management, and business more than anything else. Technology is one aspect of it and it’s always changing for sure. But then again, everything is changing.”

Want to get more insights from supply chain leaders like Professor Sheffi? Check out our podcast here: 

Top 3 Skills Logistics Companies want to recruit in 2018

Top 3 Skills Logistics Companies want to recruit in 2018

 

The face of the typical logistics professional has morphed. This has resulted in the process of recruitment in the logistics and supply chain industries being more streamlined to identify innovative candidates who can speak the right mix of languages, with the right set of skills. In addition to logistics professionals, the increase in the need to recruit digital technology/ IT professionals is indisputable; their contribution is equally crucial to the safe and effective running of such large international businesses that are heavily dependent on data analytics and processing and other innovative advancements.

These shifts from tradition are direct results of the logistics industry having come a long way from being all about mechanics to lift goods, vessels to transport goods, and space to store goods. Being able to move items does not cut it anymore; clients need their items tomorrow, if not right now, and that to at lower cost. Virtually every existing industry has been put through pressure to work faster, safer and smarter since the rise of information technology and logistics is no exception.

In recent times and especially in 2018, we will again witness a plethora of changes. We discuss 3 such developments.

Digitisation

Individuals and businesses want their goods faster and more flexibly. End consumers often make their purchasing decisions based on how fast they can receive their items at low or better yet, no delivery cost. The manufacturing industry is producing more and more customised solutions, which is good for its customers but hard work for the logistics industry. Put all these push factors together, and logistics companies are squeezed in the same pressure cooker environment.

The demands are met though, by making maximum and intelligent use of technology; from data analytics, to automation, to the Internet of Things (IoT). Cost reduction is a crucial benefit to digitisation, along with improved efficiency, and the opportunity to make genuine breakthroughs in the way the industry works. New industry entrants are finding ways to carve out the more lucrative elements of the value chain by exploiting digital technology or ‘sharing’ business models, without being bogged down by heavy overhead. ‘Sharing’ is a big move for logistics now, from Uber-style approaches to last-mile delivery, to more formal JVs and partnerships at corporate level, the whole sector is redefining collaboration. These ventures are only possible with digitisation.

As a result, the need to recruit digital/IT experts is now high within the logistics sector. Recruitment of skills such as analytics and systematization, systems integration/ business solutions specialisation are required to manage complex IT projects and analyse system and infrastructure integration plans.

Also, the term digital transformation is on a the agenda of many boards and CEOs and we expect the recruitment of such skills to be more and more in demand.

Blockchain Technology

With digitization come inevitable risks in security, and blockchain technology is here to help.

The appeal of blockchain technology is its ability to create decentralized and immutable ledgers; networks that have no single point of failure, are maintained by multiple parties and whose information cannot be hacked or corrupted. This increases the security and transparency of all information that is stored on a blockchain across the cycle of a transaction. All the entities in the chain agree that each transaction is valid in terms of payment, warehousing, transport and/or delivery.

Blockchain also can increase the tracking and transparency of the supply chain. Shippers can gain more visibility across their supply chain and communicate important information such as loads, geo-waypoints and basic compliance information with carriers. Similarly, carriers can continually post information about their capacity for shipping vehicles and lanes, promoting fairest pricing based on supply and demand. The transparency and efficiency provided by the blockchain benefits all parties by allocating resources in the most effective way without markups by brokers.

The Philippines’ Top 40 Trendy Startups of 2017

Corporations and consortia around the globe are starting to invest in and partner with blockchain startups that are building proofs of concept in order to test solutions prior to commercialization. Marine Transport International (MIT) is using the technology to record and store Verified Gross Mass (VGM) data. The company, which is part of BiTA (Block Chain in Transport Alliance) , is building a fully integrated supply chain management system that gives insight into each stage of the logistics process. In addition, the company aims to create a decentralized brokerage system. This will essentially be an open marketplace for shippers and carriers. The end goal: optimising cost and time for every shipment.

To be able to carry out such feats, a solid understanding of the principles around blockchain systems and strong software development or engineering skills are essential. Recruiting the experts is hard. Experience in a back-end developer role is sufficient foundation, along with at least fundamental knowledge on cryptography. However these skills are scarce and companies need to be prepared to invest in training and education.

E-Commerce Booming

Amazon Prime Now’s 2-hour delivery service is the sort of level we are currently being catered to as consumers. Whether we are a pampered lot or not is up for debate, but expecting to get what we want on-demand is becoming the norm.

Due to the well-spread availability of internet connection services, the ease of purchasing items with a few taps on your phone and the promise of cheap and quick shipping, e-commerce has become a dominant market disruptor in the retail economy. Its share of total retail sales which is currently at around 10% worldwide will only grow larger; there was an increase of 23.2% in 2017 compared to the previous year. An urgency exists for logistics providers to rise to new supply chain challenges so as to close the gap between current offering and consumer needs.

Most retail giants at the moment have a broad distribution strategy in which they can reach most of their customer base in two or three days. There is a need now to switch to having smaller, regional centres allocated to serve each area batch of customers, from which they can deliver on the same day. This also translates to purchasing less quantity each order of faster-moving inventory and using a more diffuse supply chain network.

The need to recruit competent, quick-thinking managers to run operations in an ecommerce focused way is more critical than ever to retailers and third party logistics companies both big and small. Companies want problem-solvers with commercial awareness, numeracy and a thirst to further boost their business and management skills.

It looks like the future is bright for logistics professionals and logistics companies that work smart, welcome innovation, and take advantage of new technologies to give themselves an edge over competitors in this dynamic industry.

Sources:

Want to stay updated with latest developments in our industry? Our Podcast is out! Stay tuned here – Leaders in Supply Chain and Logistics:

Some of my other articles (would appreciate your feedback):

About me:

I have been working in consulting and executive search roles for the last decade. My focus: helping clients get better results. And building strong teams in the process.

A fervent believer that people are the key in any business, I enjoy challenging assignments most. The ones that involve using a multitude of channels and tools to find the right senior executive to take our clients business to the next level.

I have lived and worked in several countries across the world. Being exposed to different countries and business realities has helped me mature into a rounded international business manager. And luckily over the years I have had the chance to work with and build great teams.

My focus is on end to end Supply Chain Executive Search: C-level, Vice President, General Management, Supply Chain leadership, Logistics leadership, Procurement leadership, Operations, Regional/Global Project Management appointments.

Always happy to connect on Linkedin for future interactions!

AI taking over Supply Chains. Are you ready?

AI and Supply Chain

I had a very interesting talk recently with Paul Bradley, CEO of Caprica International. One of the industry leaders best connected with latest technology start-ups. One of the most interesting topics? AI! It made me realize that change is happening faster than most of us anticipate and AI is a big part of it. Listen to the podcast here.

Moving things forward – “Every aspect of learning or any other feature of intelligence can in principle be so precisely described that a machine can be made to simulate it. These were the words used in 1955 to launch the very first research project that coined the term ‘artificial intelligence.

Surveys

In a recent survey of Accenture’s clients, 70% of executives said they are increasing investments in AI compared with two years ago. One of the most obvious places to start is the supply chain, where we could see full automation.

In Gartner’s recent ‘Predicts 2016: Reimagine SCP Capabilities to Survive,’ the research firm revealed that their recent survey had found supply chain organizations expected the level of machine automation in their supply chain processes to double in the next five years

AI projects in Supply Chain and Logistics

Great examples of innovative projects based on artificial intelligence in supply chain:

  • IBM has super machine learning capabilities because of Watson. IBM has recently launched Watson Supply Chain aimed at creating supply chain visibility. Gaining supply risk insights. The system uses cognitive technology to track and predict supply chain disruptions. How you ask? By gathering and correlating external data from disparate sources. For example social media, newsfeeds, weather forecasts and historical data.
  • ToolsGroup’s supply chain optimization software has strong footing in machine-learning technology. One area of application is new product introduction. The software begins with creating a baseline forecast for the new product. The algorithm learns from early sell-in and sell-out demand signals. It layers this output to determine more accurate demand behavior. In turn, this feeds through to optimized inventory levels and replenishment plans.
  • TransVoyant is able to collect and analyze one trillion events each day. They use machine learning. With data from sensors, satellites, radar, video cameras and smartphones. In logistics applications, its algorithm tracks the real-time movement of shipments. It calculates their estimated time of arrival. It factors in the impact of weather conditions, port congestion and natural disasters. Not bad for a smart algorithm.
  • Sentient uses machine learning to deliver purchasing recommendations to e-commerce shoppers. They use image recognition. Rather than only using text searches and attributes like color or brand. The software find visual correlations with the items that the shopper is currently browsing. It does it through visual pattern matching. Visual data to the next level.
  • Rethink Robotics’ collaborative robots use artificial intelligent software. It allows the robot to perceive the environment around it. With this data it behaves in a way that’s safe, smart and collaborative for humans working alongside production lines. Robots will be very handy assistants.

The big players are already working hard on it

The major tech giants, particularly Google, have made it a major priority. They are already creating and developing such vehicles with a low accident rate. The market for self-driving cars and trucks is expected to grow to more than 10m vehicles by 2020. Representing an annual growth rate of 134%. It’s a matter of time before we see them on main roads.

In factories, Siemens is one company that is already using AI and automation . Their lights-out factory has automated some of its production lines. They can run without supervision for weeks at a time. This could work alongside autonomous vehicles to enable manufacturing. The goods can be transported to another AI-run factory. No need for human involvement whatsoever.

Danone, is already using analytics with machine learning capabilities. They use it to analyze their demand planning. Which resulted in a rapid 20% reduction in forecast error and a 30% reduction in lost sales.

Conclusions

Consider these stats from the 2017 MHI Industry report. The speed of supply-chain transactions from one e-tailer on Black Friday:

“A reported 426 orders per second were generated from the website throughout the day. That equates to over 36 million order transactions, an estimated 250 million picking lines at the distribution centers (DC), 40 million DC package loading scans, 40 million inbound sortation hub scans, 40 million outbound sortation hub scans, 40 million inbound regional sortation facility scans and 40 million outbound delivery truck scans.”

How should industry leaders respond? The answer is clear. Supply-chain companies must embed “analysis, data, and reasoning into the decision-making process. Position analytics as a core capability across the entire organization. Strategic planners through line workers, providing insight at the point of action.”

Want to stay updates with latest developments in our industry? Our Podcast is out! Stay tuned here – Leaders in Supply Chain and Logistics:

Some of my other articles (would appreciate your feedback):

About me:

I have been working in consulting and executive search roles for the last decade. My focus: helping clients get better results. And building strong teams in the process.

A fervent believer that people are the key in any business, I enjoy challenging assignments most. The ones that involve using a multitude of channels and tools to find the right senior executive to take our clients business to the next level.

I have lived and worked in several countries across the world. Being exposed to different countries and business realities has helped me mature into a rounded international business manager. And luckily over the years I have had the chance to work with and build great teams.

My focus is on end to end Supply Chain Executive Search: C-level, Vice President, General Management, Supply Chain leadership, Logistics leadership, Procurement leadership, Operations, Regional/Global Project Management appointments.

Always happy to connect on Linkedin for future interactions!

Morgan Philips Executive Search is the headhunting firm – 21st century version. We have created an extremely innovative digital model enabling you to recruit your talent better, quicker and more effective.

Cyber Security in Supply Chain. Is it that important?

This article was firsts published on my Linkedin Profile – here.

One thing is clear. Protecting your data is of most importance this day and age. Especially if you are multi million company with global or regional operations. You must take care that your computers, networks, programs are protected and your employees are trained. Cyber attacks can bleed companies of huge amounts of money.

The interconnection of the logistics sectors and their reliance on data/software to track the movement of goods makes industry a standout amongst the most exposed to the danger of cyber attacks.

Data is being shared and stored therefore makes companies in the logistics market ideal candidates for hacking. The motivations can be for acquiring information on customers, such as banking details, or for smugglers wishing to gain control of a specific part of a supply chain.

Cybersecurity is among the top concerns facing organizations today — no genuine shock, given the number of highly publicized data breaches, distributed denial of service (DDOS) attacks, and the growing expense and multifaceted nature of solving these issues. With the proprietary design, pricing and contract intelligence that flow through complex supply chains, supply management organizations must account for and address the cybersecurity risks in their operational planning and execution. This seemingly straightforward  task requires supply management leaders to understand and balance operational performance opportunities and cybersecurity risk trade-offs within current business plans.

Cyberbased data gathering has become the method of choice for several reasons for a expansive range of these organized threats:

  • It’s cheap and easy. Sophisticated attack tools are easily accessible at hacker sites and require little expertise to use.
  • It’s fast. The very nature of the technology allows the attacker to quickly transfer vast amounts of information, and once your information is out, you can’t get it back.
  • It’s nearly undetectable and un-attributable. The ability of attackers to remove digital fingerprints, the increasing similarity between the tools, tactics and techniques used by various attackers, and the ability to mask geographic location in cyberspace make it difficult to definitively assign blame.

Deloitte on  Cyber Risk

A new Deloitte study, “Cyber Risk in Consumer Business.”  mentioned that consumer products companies, retailers and restaurant businesses may be operating with a false sense of security.

The study captures information from more than 400 chief information officers, chief information security officers, chief technology officers and other senior executives about cyber risks and response plans affecting customer trust, payments, executive level engagement, human capital and intellectual property.

According to the study, more than three-quarters (76%) of consumer business executives report they are highly confident in their ability to respond to a cyber incident, yet many simultaneously face issues that critically impair their ability to do so.

Among the findings:

● The majority of executives surveyed (82%) indicate their organization has not documented and tested cyber response plans involving business stakeholders within the past year.

● Less than half (46%) say their organization performs war games and threat simulations on a quarterly or semi-annual basis.

● One quarter (25%) report lack of cyber funding.

● Roughly 1 in 5 (21%) lack clarity on cyber mandates, roles and responsibilities.

Real life examples

When Danish shipping giant A.P. Moller-Maersk’s computer system was attacked on June 27 by hackers, it led to disruption in transport across the planet, including delays at the Port of New York and New Jersey, the Port of Los Angeles, Europe’s largest port in Rotterdam, and India’s largest container port near Mumbai, according to reports. That’s because Maersk is the world’s largest shipping company with 600 container vessels handling 15 percent of the world’s seaborne manufactured trade. It also owns port operator APM Terminals with 76 port and terminal facilities in 59 countries around the globe.

For the transportation and logistics (T&L) industry, the June 27 cyberattack is a clarion call to elevate cybersecurity to a top priority. Besides Maersk, press reports said other transportation and logistics industry giants were affected including German postal and logistics company Deutsche Post and German railway operator Deutsche Bahn, which was also a victim of the WannaCry ransomware hack in May.

Looking for the weakest link

While up until now hackers have seemed more preoccupied penetrating computer systems at banks, retailers, and government agencies – places where a hacker can find access to lots of money and data and create substantial disruption – the most recent ransomware attacks demonstrate that the transportation and logistics industry is now on hackers’ radar.

The transportation and logistics industry has characteristics that make it a particularly tempting target. First, the industry is a global one with tentacles into so many different industries around the world. Complex logistical chains are created around manufacturers, and often logistics companies are embedded within production facilities controlling inventory and handling on-demand needs of a plant.

Like with all forms of warfare, attackers will seek out the weakest link in any chain – the most vulnerable element – as a target. Why steal money from the bank with all its infrastructure and protections when you can steal it on the way to the bank? While efforts to protect it along the way are made, almost any criminal could tell you, it is almost always more insecure in transit.

Bringing security to fragmentation

The industry’s fragmentation and its requirement to operate within the various IT systems of its customers makes figuring out cybersecurity solutions more challenging and has led to lower investment. The industry also operates on low margins, making extensive capital expenditure on cybersecurity unattractive. That may be offset by the potential liability costs from hacks.

There are several low-cost, manageable steps that can demystify the cybersecurity risk discussion. These steps also will help you validate your organization’s perceived risk position and reduce its supply chain’s exposure.

They include:

1) Establishing a common understanding of the interdependence and impact of operational business decisions on cybersecurity

2) Conducting a focused assessment to validate your organization’s perceived risk position and form a basis to prioritize investment and implementation strategies

3) Integrating enterprise leadership and the supply chain into a coordinated solution to deter and handle cybersecurity issues.

Understanding Cybersecurity

Links Bridging the technical and business sides of this complicated problem is critical if senior leadership is to effectively provide cybersecurity oversight and guidance in the areas of IT acquisition, adoption of business applications and processes, cybersecurity budgets and IT outsourcing.

Without a common baseline understanding of the size, cost and complexity of the cyberthreat, and the remediation and transfer options available to the organization, it is difficult to truly appreciate and scope your organization’s risk profile. To make matters worse, without a common orientation, the response and remediation may not be satisfactory when a cybersecurity event occurs.

For example, when the CEO wants to know exactly how long an adversary has been on the system or exactly what was taken, it would be more productive if he or she understood basic cyberforensic capabilities and limitations.

Conclusions

Increasingly, shippers and regulators will require transportation and logistics companies to guarantee the integrity of product and transport data, as well as ensure compliance with stricter cybersecurity laws. This will include carriers and forwarders, who are assuming central roles in supply chains as hubs for data exchange, making them high-value targets.

Every organisation must be as active as possible in building strong systems for protection against cyber attacks. Forward-looking companies will begin to see a safer logistical offering as a competitive advantage, especially if attacks continue. In the end, no industry will be entirely safe from the threat of cyberattacks. But every industry must do its part to at least make the job of hackers hard.

Some of my other articles (would appreciate your feedback):

Blockchain – Revolution in Supply Chain?

This article was firsts published on my Linkedin Profile – here.

Supply chains revolutionized how our society runs, now supply chains are being revolutionized.

The name of the NEW game: blockchain! Supply chains can lack transparency and traceability. Two things at which blockchain is great at.

Systems work based on transactions. They are built on a distributed blockchain ledger can record the transfer of goods as transactions. This transparency can ensure the cost of goods will more accurately reflect the actual cost of manufacturing them. Issues such as use of forced labor and illegal sourcing of materials can potentially disappear. But despite the hype and its potential, it could take a decade or more before the technology achieves its full potential.

We have a few interesting examples. Provenance, a UK-based startup, works with clients so they can use its blockchain-based technology to “share your product’s journey and your business impact on environment and society.” Mining giant BHP Billiton is using the technology to track mineral analysis done by outside vendors. The startup Everledger has uploaded unique identifying data on a million individual diamonds to a blockchain ledger system to build quality assurances and help jewelers comply with regulations barring “blood diamond” products.

Walmart is working with IBM and Tsinghua University, in Beijing. They want to follow the movement of pork in China with a blockchain.

Long term what we should have in mind:

Potential to disrupt many industries

There are parallels between this global-scale distributed technology and previous technology-driven transformative waves, such as the web and the internet. Early technology adoption of blockchain will progress over the next three to seven years, but mainstream adoption across the supply chain and at scale is likely 10 or more years away. Similar to RFID in its early days, business processes and standards must be resolved before blockchain can reach its potential.

It is not a replacement for database tech

Many believe, but they are wrong, that blockchain is a replacement for traditional database technologies — it lacks the ability to create, read, update and delete information. For the immediate future, traditional database management tools and platforms will continue to prevail in supply chain, where data is created, maintained and consumed largely internally. Database capabilities, however, will increasingly need to scale and integrate across a broader number of supply chain network partners and ultimately customers. There is where blockchain is best.

You can’t just buy a solution!

There is no blockchain solutions to buy for supply chain use at the moment. There continues to be a lot of hype, with few even partially deployed and very limited prototypes, for which firmer results or tangible uses cases are still be reported. Only organizations that are especially risk-tolerant and early adopters of technologies should consider supply chain management blockchain initiatives over the next two to five years.

Stormy waters ahead

There are more challenges than we can mention here. Blockchain technologies and associated supply chain best practices bring adoption challenges, including a lack of standards, robust platforms, scalable distributed consensus systems and interoperability mechanisms.Scalability across supply chains will need to be carefully planned.

Laws and regulations — which vary from country to country — also pose a challenge to global scaling of blockchain. Before governments can be convinced to support this effort, industry must agree on best practices and standards of technology.

Adoption too late or too early as part of an extended supply chain and supply chain maturity progression may do damage to the entire organisation.

Also there’s the need to overcome embedded corporate thinking. Business leaders and organizations need to open up to the sharing of information with mainly unseen network partners.

In conclusion

Blockchain is presently at the peak of Gartner’s Hype Cycle, which means the next stop is the Trough of Disillusionment. In supply chain circles the technology is suddenly drawing serious interest, in part because of IBM’s recent push to go public with pilots including one with Maersk and another with Walmart.

As RFID promised to do, blockchain could one day provide certainty on the exact source of every ingredient in every jar, in every case, on every shelf and at all times. Was your palm oil sustainably sourced? Are the cherries in your ice cream organic? Are the avocados in your salad imported from Mexico? Also reminiscent of RFID, however, is a decent amount of uncertainty about the timing of the business case.

Envisioning a digitally enabled supply chain strategy is a must-do activity for everyone. Fitting blockchain into that strategy now means listening more than talking. Listen to your colleagues in corporate IT who are likely ahead of you since they’ve often faced this topic already with financial transactions. Also, listen also to vendors like IBM who are invested in establishing a market for this technology and can afford to find and foster pioneering users like Walmart and Maersk.

Blockchain may still be down the road, but its potential demands your attention now.

Some of my other articles (would appreciate your feedback):

About me:

I have been working in consulting and executive search roles for the last decade. My focus: helping clients get better results. And building strong teams in the process.

A fervent believer that people are the key in any business, I enjoy challenging assignments most. The ones that involve using a multitude of channels and tools to find the right senior executive to take our clients business to the next level.

I have lived and worked in several countries across the world. Being exposed to different countries and business realities has helped me mature into a rounded international business manager. And luckily over the years I have had the chance to work with and build great teams.

My focus is on end to end Supply Chain Executive Search: C-level, Vice President, General Management, Supply Chain leadership, Logistics leadership, Procurement leadership, Operations, Regional/Global Project Management appointments.

Always happy to connect on Linkedin for future interactions!

Morgan Philips Executive Search is the headhunting firm – 21st century version. We have created an extremely innovative digital model enabling you to recruit your talent better, quicker and more effective.

6 Trends in Supply Chain in 2017

This article was firsts published on my Linkedin Profile – here.

Supply chains have a reputation for being complicated and not the first choice for a career especially for the millennials. But as companies adapt their Supply Chain to the digital economy, and as businesses enable the extended supply chain as part of their digital transformation strategies, that is all about to change.

With all the new “cool” technologies, it is now more possible than before that our kids will come home from school one day and tell us they want to be supply chain executives when they grow up.

So what are some of the most interesting trends that will put the spotlight on supply chain and logistics in 2017? And stand a chance to make the industry cool!

Here are some ideas:

Blockchain Technology

There are many different benefits of blockchain technology that will transform supply chains, from asset tracking and transparency to real-time feedback from customers. Yet, the true scope of the benefits of blockchain technology is unlimited, and it could be one of the most remarkable breakthroughs in the supply chain in history. With a world that is becoming more connected on a daily basis, blockchain technology will inherently develop into a symbiotic relationship with the Internet of Things and today’s advanced logistics and supply chain management systems.

One-hour delivery

Same-day delivery is already taken as common in US. More and more the expectation is also for Asian markets. However even that will be blown away soon enough. We are living in an instant gratification culture and instant becomes faster and faster. Amazon will be entering Singapore and SE Asia next year. And their competition with Alibaba backed Lazada is going to be fierce. Who will be able to roll out one hour delivery first?

3D printing

Supply chains are focused on warehousing and making sure the products are shipped outwards from the point of manufacture to the client in the most efficient manner.

3D printing represents the other extreme of traditional manufacturing. It produces objects by adding, rather than subtracting, material and allows us to create objects customized on our personal desires. 3D printing is the key to customizing your product. And it is getting more affordable. The big Logistics companies across the board have been investing heavily in 3D printing hubs worldwide. Instant gratification will be even faster.

Driverless vehicles

There is a lot of excitement around self-driving cars, also known as autonomous vehicles (AV). They open up a world of opportunities for supply chain and logistics.

As players employ automation to increase efficiency and flexibility, AVs, in combination with smart technologies, could reduce labor costs while boosting equipment and facility productivity. A fully automated and lean supply chain will make the load size and stock problems almost disappear. Smart technologies will connect in real time the decision makers with the distributions centers and AV fleet for maximum efficiency. This year has already witnessed several driveless truck rides. And it is only the beginning!

Augmented Reality

Augmented reality has been a hot topic in the last months. It has exploded as companies grip the potential of this technology to improve business output. In their Trend Research, DHL looks at a few ways Augmented Reality will provide benefits to the supply chain as listed from the Elementum blog:

  • Picking Optimization: Each employee sees a ‘digital picking list’ on a heads-up display. The display calculates the most efficient path through the warehouse, guides that person to the package, scans it as ‘picked’ into the Warehouse Management System, and immediately directs the picker to the next closest package.
  • Dynamic Traffic Support: Most delivery trucks already come equipped with GPS navigation. AR systems are the natural next steps. Heads-up and windshield displays are only a few technologies that will allow players to efficiently re-route shipments in the shortest time. Less distractions to the driver. The display would show the driver critical information including cargo temperature (especially important when transporting medical devices or other fragile goods), gasoline efficiency and other data that can make the process more efficient.
  • Facility Planning: You’ll be able to visualize your next warehouse in full-scale before beginning construction. You can test workflows through the facility, even field test arrangements – all virtually. It will save you money and it’ll allow you to experience what you’re trying to do, before actually doing it.
  • Freight/Container Loading: Augmented reality could replace the need for a physical cargo list and load instructions. How? By allowing to see loading instructions on a heads-up display with step-by-step instructions on how to most efficiently load a container given the size, dimensions, and weight of the packages going into it.

Internet of Things

Sensors. As companies are focusing on real time data tracking and big data analysis, sensors are becoming more popular. Embedding sensors in products  and, as a result, becoming more technology-focused will be a standard procedure for all players. For example, John Deere tractors are now equipped with sensors to transmit moisture and temperature data from the fields. The Internet of Things (IoT) and Industry 4.0 are changing traditional business models by connecting people, products, and assets.

Conclusions

It is a clear pattern that service chains will become more important than product chainsMost players and all customers consider a great product as a standard procedure. It is a given and nobody gets excited about great products (they do get upset when expectations are not met, but that is a different story). Consumers are demanding much more from pre- and post-sales service for the products they buy.

Companies that connect and focus on the pre- and post-sales service supply chain activities (including product knowledge, in-store service, warranties, responsive consumer services) will emerge as the winners. The solely product-centric player will stand no chance in the race of wowing the customers and winning their hearts.

And the implementation of the technologies mentioned above will create a big impact in 2017 and will determine who will win the race.

Some of my other articles (would appreciate your feedback):

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Hottest Supply Chain Jobs in Asia Pacific

This article was firsts published on my Linkedin Profile – here.

According to DHL’s 2016 Trend Radar, the major influences on logistics and supply chain, what they called “megatrends,” are growing security awareness, the increased shift towards cleaner energy production and transportation, and further digitalization. These megatrends translate into the need to develop more cost-effective, efficient, flexible, and eco-friendly solutions, especially for transportation. A lot of faith is being placed in the “Internet of Things” as the next big source of data that will enable higher degrees of efficiency, effectiveness, and flexibility.

The Asia Pacific Perspective

While these trends won’t bypass Asia-Pacific, it is important to understand that the region has its inherited challenges that should also be addressed. According to data from the Asian Development Bank, Asian economies lose 2% to 5% of their BDP due to road congestion, while the number of vehicles on the roads is doubling every 5 to 7 years. Asia-Pacific is notorious for its lack of unified customs regulations. In fact, every significant indicator shows that the region is very far from being uniform. Everything from the GDP growth rate and GDP per capita up to the percentage of active Internet users and the gross domestic expenditure on research and development varies widely from one country to the other.

This leaves countries in Asia-Pacific in a position where they have to invest in infrastructure so that they can catch up with other regions, they have to work on further integration and cross-border cooperation to present a more unified market, and keep in line with the global tendencies towards a cleaner, safer, and more efficient world.

The Jobs in Demand

Logistics and supply chain businesses in the Asia-Pacific region have three primary drivers on the job market. The growth of the Asian-Pacific economies and the increase of manufacturing operations in the region is not showing signs of waning. The problems with transportation infrastructure and customs require more careful planning to reduce costs, improve shipping times, and make transportation more eco-friendly. There is an industry-wide increase in implementation of the latest technological solutions that will help improve efficiency.

  • Solution Design managers

 

Solution design managers will play a crucial role in bringing the new advancements into the Asia-Pacific markets. Even though there are initiatives in the region towards further trade harmonization, especially due to the efforts of the Association of Southeast Asian Nations (ASEAN), there is still a discrepancy in the quality of infrastructure between the member countries. And the solution to this problem will not, and can not, be a quick one – the Asian Development Bank estimates that, by 2020, the capacity of airports in the region will be only 41% of needed, the capacity of roads will be 78% of needed, and the capacity of ports will be 48% of needed.

The traditional role of solution design managers as the people who are in charge developing logistics network strategies, designing transport and warehousing solutions will make them indispensable for businesses who are looking to follow the growth rates of the region and stay ahead of the competition. Solution design managers will also be in demand because there will be a need to integrate the newest developments in robotics and digitalization into the work environment, and to make sure that these developments are utilized to the full extent.

  • Transportation Data Analysts

Transportation data analysts will face an increased demand for the same reasons as the solution design managers: the need to make transport in the Asia-Pacific region as efficient, cost-effective, and ecologically sound as possible, as well the need to interpret and implement the data derived from the booming technology of the Internet of Things. In 2015, the world was around a hundred million short of having five billions of things connected by IoT. In 2020, that number is expected to rise to over twenty billion, with some sources estimating it will go as high as two hundred billion.

The IoT is expected to present an opportunity for supply chains to gain an unprecedented level of insight. Today, roughly 40% of all units connected to the IoT are in the manufacturing and supply chain industry. Handling that amount of data will be left to cloud computing, but there will be a need for actual people to do a part of the analysis and to advise on the best ways to implement information derived from big data.

  • Software and Robotics Engineers

In 2012, the global e-commerce giant Amazon purchased Kiva Systems, a robotics company which dealt in warehouse automatization. Amazon has also announced they will be implementing a program called “Prime Air”, which will allow 30-minute delivery of small packages using drones.Amazon’s initiatives to increase automatization of its supply chain using robotics has placed it on the cutting edge of the trend. FedEx and UPS have also been researching drones, as well as other methods to automate transportation.

While we’re waiting for drones to come into widespread use, companies are continuing to use digital solutions to increase the efficiency of their operations, and to offer more convenience to their customers. Daimler and DHL are launching their “smart ready to drop” program in Germany, allowing DHL delivery personnel to deliver goods purchased online directly into the boot of the buyers’ Daimler smart car – without the need for the buyers to be near their car. The whole process is facilitated by the use of a special app.

It’s still not clear whether the big transportation and logistics companies will buy robotics manufacturers like Amazon did, or if they will look outside of their house for robotics and automatization solutions. It can, however, be expected that there will be an increased in the near future for software engineers and robotics engineers who will develop and maintain solutions for the automatization process, as well as the many smart solutions we are already seeing arise.

Opinions

Would be great to hear your perspective on this.

Is there any job or skill set that we missed which is in high demand now?

Any predictions for the future ‘most wanted’ skills?

Looking forward to reading your thoughts.

Some of my other articles on Linkedin:

Always happy to connect on Linkedin for future interactions!

The fight for talent – Logistics Start-ups vs Established MNCs

This article was firsts published on my Linkedin Profile – here.

Rise of Logistics Start ups

In today’s tech-enabled world, just about anything can be ordered anywhere in the world from a smartphone. However, traditional supply chain and logistics services are yet to catch up. A shipment across continents requires multiple layers of providers, takes days and is often complicated to manage. This has provided a golden opportunity to a variety of startups, in Asia and worldwide, that have emerged to tackle the shortcomings. From intra-city delivery, to on-demand storage and innovative web-based tools and platforms, startups are now catering to varied logistics needs for all kinds of businesses.

One of the most experienced companies in growing ecommerce startups – Rocket Internet – has focused a lot on growing their Lazada and Zalora ecommerce brands. And just this week, Alibaba announced it agreed to buy a US$1 billion controlling stake in Lazada. Moreover, this investment, together with US$250 million into SingPost, Singapore’s national postal service, means Alibaba is trying to get their foot in the door into South East Asia ecommerce market.

Further looking at the start-up battleground we have a few remarkable players. Thailand’s aCommerce, has had an impressive growth. With offices and distribution centres in Thailand, Indonesia, and the Philippines and over 140 enterprise clients and 300 percent growth, things are looking up for them. The start-up is providing end-to-end services with focus on ecommerce clients. They have raised over US$20 million in funding and arranging an offline-to-online shift after an investment and partnership deal with DKSH, a major Swiss company.

Another example of a fast growing start-up, Singapore-based online grocery company RedMart is close to raising a massive $100 million Series C round. Their plan is to expand their service across Asia. They already secured over $50 million from investors like Garena, SoftBank Ventures Korea, Visionnaire Ventures, and Facebook co­-founder Eduardo Saverin.

Big players in e-commerce are also busy with expanding their footprint. Infrastructure developments in the region is happening on the border of Hong Kong and China. Over 2 million square feet of e-commerce warehousing are being constructed, that nearly triples e-commerce logistics capacity in Hong Kong since 2014. TaoBao, JD.com and others are driving the expansion as they continue to enable China’s consumer desire for genuine products and foreign-made brands in South China.

But it’s not just about ecommerce. There is a lot of excitement around the future for on-demand platforms like Uber or Grab. Uber CEO Travis Kalanick announced the company will eye logistics as its next frontier “We’re in the business, today, of delivering cars in five minutes. But once you’re delivering cars in five minutes, there’s a lot of things you can deliver in five minutes.”

So “Uber for logistics” is well on the way. In Asia, however, where the logistics industry remains less sophisticated than that of the US or western Europe, this wave is already happening. Companies offering logistics-on-demand face growing demand by the day . It’s more important to get things done than have a great plan. By doing without fancy black cars in favor of white vans and trucks, Lalamove, Ninja Van and Gogovan have beaten Uber.

Funding for Logistics Startups in Southeast Asia has been on the rise

Who will get the best talent: Startups or Established supply chain organisations?

With the startup wave rising, the logistics industry is witnessing employee movement, especially in mid- to senior-level, from established 3PLs or Supply chain organisations to new age ventures. Employees are moving to startups mainly because of the exciting work culture, sometimes even substantial pay rise and significantly larger roles. All of the above can be clearly attributed to “meaningful aspirations” employees have today from their work and workplaces. Startups are also wooing employees with stock options. This allows them to engage employees for a long term. Candidates view this as an attractive opportunity with the potential of cashing-in when a company is bought over or announces its IPO.

Additionally, established start-ups are easily able to attract talent thanks to their appealing employer brand. Top young candidates would be reluctant to go join an established 3PL or supply chain organization because of its perceived conservative culture. However, the same candidates would probably jump at the opportunity to work at Uber, Amazon, Grab or why not Red Mart.

Working as a senior executive in a MNC means making a high salary, maybe driving a sports car, using a corporate card and other perks. So why would anyone give that up to take a pay cut, network with programmers and give up the fancy corner office for a desk at a coworking space?

The answer is – to change the world!

A 2011 report commissioned by the Career Advisory Board and conducted by Harris Interactive, found that the No. 1 factor that young adults ages 21 to 31 wanted in a successful career was a sense of meaning. The Google Careers homepage sums it up in their simple yet bold headline: “Do cool things that matter.”

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As a great example, RedMart, managed to hire ex-eBay marketing director Todd Kurie last year. Take Lazada and Zalora’s management teams, who are made up almost exclusively of finance professionals, ex McKinsey and other high flying individuals who are leaving their corporate careers behind for the technology industry.

This has been the trend at Rocket Internet’s companies, as portrayed by an ex employee: “Everyone was coming from a banking or consulting background. Rocket Internet CEO asked himself where he could find the biggest overachievers. He knew that type came from Goldman, McKinsey and other consultant firms. They had the pedigree that made it easier for him to raise money – every investor respected these employees because they had the same background.”

So should established 3PLs and Supply Chain organisations be concerned?

Yes! Absolutely!

Given that top-tier people with such a broad profile are hard to find. A recent survey of 400 executives of multinational companies by Deloitte found that 71% have difficulty recruiting senior leadership for their companies’ supply chains; 74% said they would need strategic thinking and problem-solving skills in their supply chain managers, but less than half said their companies are good at it now.

Companies that don’t invest in hiring or cultivating talent now will suffer greatly 3 years down the road. This coupled with the fact that the top young graduates will continue to prefer joining a Uber or Amazon rather than a brand perceived as traditional, will spark serious trouble for a lot of companies.

As I have written before, the investment needs to be done in employer branding and building a talent pipeline. But even beyond this two points, established organisations need to walk the talk!

And their senior management needs to move beyond hierarchical and usually slow decision making and to much faster ability to respond to market conditions. And give these high flyer and overachiever profiles enough scope to make an impact. Fast!

Moreover, companies should consider injecting new blood from outside the traditional industry into their executive teams, to be catalysts for these changes. Because at the moment, the picture is not very rosy. And most established organisations failing to adapt fast enough. And this is something we are hearing again and again from our C-level candidates themselves!

Innovation is the key!

For example, an obvious question, looking at the 3PL organisations: why is there none of them implementing their own GoGoVan or UBER? When these startups were small, they could have even been an acquisition target. Though time is not lost, with more start-ups coming and growing aggressively. However courage and ability to take tough decisions is required.

And don’t get me wrong, there are some companies which can be shared as positive examples. XPO is probably one of the more aggressive and progressive out there, having allocated $400 million annual investment in technology worldwide to drive innovation.

Also, take DHL, they were the first and fastest to create the ecommerce business in response to market conditions. And subsequently, SingPost and their logistics arm, Quantium Solutions, actually built on DHL strategy, attracting their top senior management and then establishing themselves as key players in ecommerce themselves. Not to mention they also were quick to name at that point in time two key partners of McKinsey, Wolfgang Baier and Sascha Hower, as CEO respectively COO, to drive the change.

Conclusions

The market today is more dynamic and moves faster than anything we have seen ever before. Supply chain and logistics are obvious catalysts for productivity and cost improvement and are prone target of these fast changes.

Hence, in order to stay relevant and keep attracting top talent, the key questions senior executives of established organisations should ask themselves are:

  • How can we speed up our decision making process?
  • How can we attract and give freedom to take decisions to our top talent?
  • How can we leverage our top performers to to reinvent our business?

Established organisations need to pay attention to the fast pace of change that happens in the industry – from start-ups to new technology. And try to keep up! The more nimble you are, the faster you will adapt.

References:

Always happy to connect on Linkedin for future interactions!