Not a week goes by without me reading a news story focused on the application of technology by a food and consumer goods business. Most are presented as revolutionary, with the removal of cost, improved productivity and greater efficiency commonly claimed benefits.
Of course, some will do just that and the business that has invested will be very happy with the results. Others won't have the anticipated impact. For some businesses, failure is an accepted part of the improvement process, but it can be costly and I’m sure most would rather get it right the first time!
This got me thinking about what goes into the decision-making process when it comes to technology investment, and specifically, supply chain technology investment. There’s probably no better business to look to for inspiration than Walmart. In the last few years, it’s gone into technology overdrive, embracing innovation to future-proof its business.
At a recent event...
...Walmart's Head of Digital Product, Supply Chain, Vijay Sankararam, set out how it approaches decisions on supply chain technology. Speaking at the Council of Supply Chain Management Professionals (CSCMP) 2019 EDGE Conference, he detailed three recent technology investments. The specific examples he chose will be familiar to most – they are a “who’s who” of on-trend supply chain technology – Internet of Things sensors and machine vision cameras to improve the loading accuracy; real-time tracking on trailers to provide more accurate estimated time of arrivals; blockchain technology to improve the traceability of produce and aid recalls.
The sheer number of available technologies complicates the decision-making process for businesses. But there are lots of other questions… What are my rivals doing? What do my customers expect? Do we have the skills to operate it? The list could go on forever…
Sankararam suggests that it’s much simpler, stating that Walmart asks itself two questions when determining what technology to invest in and implement:
- What supply chain problem are you addressing?
- What value does that problem have to the organisation?
Walmart uses these questions to determine what to invest in and a set of principles that guide how technology should be implemented:
I. Operate with a zero-loss mindset. Maintaining the stability of its systems and processes is a priority for Walmart. A new technology should not disrupt this stability.
First and foremost, an investment should “do no harm” – a principle familiar to anyone working in healthcare – and one that carries over well to those responsible for delivering uninterrupted service to customers, wherever they are in the chain. This sounds obvious and therefore simple to avoid, but when dealing with new technology it’s really not. Often, your business is the proving ground and your rivals stand to benefit from your exposure to risk, either by profiting from issues directly related to the implementation or by investing in a more well-developed product that your business has helped optimise.
II. Drive simplicity in the user experience. A new technology should be as easy as possible for an employee to grasp and use.
This is about remaining focused on the specific supply chain problem being addressed. Features that go above and beyond in areas in which you don’t have a specific need, complicate implementation. This “scope creep” can erode value through underutilisation or misuse and increases overall cost – whizzy features must be paid for!
III. Maintain process consistency. Only change the process when necessary.
Processes exist for a reason and in large, complex organisations, making small changes to supply chain processes can have significant consequences. This is especially so in highly synchronised supply chains where timings and formats govern what is made and moved. Essentially, this is about limiting change for change’s sake.
IV. Preserve clarity with one version of the truth. Walmart wants to limit copies of data.
In the data-driven world in which we live, data dictates the way. Reliable data is a pillar of supply chain management and technological innovation should not undermine this. Before introducing new data into a live environment, businesses must be sure of its veracity. How data is made available is also important – innovation must preserve the “one version of the truth” and not disseminate mixed messages.
V. Leverage mobility and automation to improve operational effectiveness.
Knowing where to focus investment is made more complicated by the changing retail landscape. Walmart has chosen to focus on what’s most important to its customers, selecting technologies that improve availability – loading accuracy and vehicle tracking – and traceability – blockchain. Much of what it has achieved stems from the speed with which information is now being passed across the supply chain, enabled by automation and connectivity.
What it means for you
Walmart has transformed itself into an innovation powerhouse in recent years, with these principles at the heart of how it goes about implementing technology in its supply chain. Applications of digital technology are only going to increase and it's so important to think about how you and your business undertake the process of selection and implementation.
Ultimately, this is what will determine whether the returns are worth the investment while ensuring implementations aren’t just one-off events to be navigated through but become part of the fabric of your business’ growth strategy.
Take a look at our How to digitalise your supply chain report, covering many of the aspects explored in this blog.
Sources: How Walmart chooses which tech to implement in its supply chain, CSCMP’s Supply Chain Quarterly