Understanding SCM in today’s fast-paced world

By Rashika Fazali

As Supply Chain Management (SCM) becomes a competitive entity due to the ongoing demands of customers, NEXT Institute of Supply Chain Management (ICSM) together with Accenture organised the first Colombo Supply Chain Forum, held at the Cinnamon Grand Hotel on 19 February.

Starting off the first day of the three-day event, Coats Global Digital Director Hizmy Hassen gave an introduction on what SCM means and how it is perceived. He posed a few questions for the CEOs in order to get them thinking about their businesses and how they manage their SCM: “Do you value your risks? Have you build strategies effectively? Is your supply chain efficient? What does your supply chain really cost the business? Where can you improve and gain competitive advantage and reduce cost?”

So why does SCM matter to an organisation? Hassen stated that SCM becomes a source of competitive advantage to the organisation, many challenges and risks will be seen and it also delivers customer reports.

He showed in a study that 800 companies over nine years lost 8% of their shareholder value on simple glitches, adding, “It is the minor things that change things.” He added that if your supply chain is not set to execute and the right training staff is not available, then you are not going to achieve anything.

Speaking about supply chain organisation, he stated the three levels in which SCM works starts from the top of the pyramid, the CEO or board that works on the strategically level, SCM that deals the logistics, procurement and manufacturing and the bottom level, the supply chain operators that deal with the lesser planning and the execution.

World business trends

Accenture Management Consultants Operations Managing Director, Operations Finance and Risk Global Lead and Procurement Strategy and Services Global Lead Carlos Alvarenga spoke about a few business trends that are evolving which are changing or will change the SCM for competitive advantage, and some even for redundancy.

Trend # 1: See for yourself

Alvarenga demonstrated a heat map that shows a customer’s way through a supermarket and in which area they happen to stay the longest. The longer the customer inquires about a product, the redder the map will show.

Now in this trend, he noted that organisations want to see it for themselves on how customers work and why they look into certain products for longer. He further stated that data models are just not enough anymore, adding, “I want to see it myself.”

In newer technology, he spoke of the feature-based object recognition that does the job of identifying and tracking which products are available, misplaced, missing or even sold.

In this trend, he explained that the customer itself is the product and there is a need to evolve rapidly. This gives the ability to push over the SCM, stated Alvarenga.

Trend #2: Markets of 1

Technology enables doing day-to-day things easily and doing two things at once. Alvarenga demonstrated a model built for scanning the structure of a person which in return will provide the correct measurements of the person’s body. The final image is sent to the store and from there on that measurement is used. He noted that with the use of this product, time spent on fitting on clothes is kept to a minimum.

He then showed three images – a pair of earrings, a dress and a smart phone. These three products had one thing in common – they were imprinted. Today with this less time consuming printing technology, you can produce batches of products in a day.

The dangers of such an improvement in technology can lead consumers to make their own designs, which will create a new market and hurt the industry in many ways.

Trend #3: Rise of the machines

As much as machines are helpful, they leave many people redundant. However, the use of technology in today’s world has skyrocketed and the bottom line is that technology makes our lives a lot easier. Alvarenga noted that robots for instance are light, moveable, and can be easily programmed to do a task.

He further explained that hospitals abroad use robots when doctors are not available. One doctor in specific could not always make the trip to the hospital as he lived a bit far. So he found an alternative to do two things at once.

With a robot placed at the hospital, he could still consultant, go on his hospital rounds, and treat patients. All this done while at home with a web cam and a joystick. Alvarenga asserted that today the doctor is able to treat more patients than he used to.

Alvarenga explained that this brings in ‘micro-automation,’ which changes the way things are done with more speed and precision and it also completely changes the way we interact with people.

Trend #4: Rich man, poor man

“Big things are not always better,” said Alvarenga. He explained that the youth today are rethinking customer value and finding ways to create better things which are smaller and less costly. He noted that one small shop owner bought a battery-powered refrigerator rather than a normal one for many of the reasons above.

He asserted that innovation can come from anything and this comes to the next point of not having a trade-off between cost and sustainability.

Trend #5: Sell different

Alvarenga noted that certain companies sell the same product in a different way. Mysupermarket.co.uk, a total independent shopping site, shops for the customer and looks for the cheapest products in all the supermarkets in that town. This enables the customer to save time as well as money. What does this mean? It means old style retailing is dying.

Trend #6: What am I?

Alvarenga demonstrated two bags of the same print, colour and size, but one of them was a counterfeit. He explained that products must be ‘self-authenticated’ so that consumers can buy the right one instead of a counterfeit. A product self-authentication can be done by embedding a small design image into the product that does not allow people to create or produce a fake.

Trend #7: East = West

Did you know that the top five brands of China earn more than most of the famous brands in the world? You will be surprised to find out that most people around the world do not know or have not heard of China’s top five brands. How did that happen?

Alvarenga explained that the West grasps new innovations and seizes opportunities faster than the East and they work and perceive things differently. What can be seen as innovative to the East is seen as boring to the West.

He stated: “Asian companies still have a lot of room to grow as innovative demands are expanding.”

In conclusion he stated that SCM will be a complicating and a competitive entity in the future.

Pix by Upul Abayasekara