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Relationships and the ability to work effectively with people have a disproportionate impact on our success. Silos, objectives and the ways we choose to communicate can all be barriers, but there are things we can do to make our investments pay.

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This week, IGD published its keynote piece of supply chain research for 2018, Supply Chains for Growth. It’s a fantastic insight into the future characteristics of our industry’s supply chains and an analysis of the response needed. Kudos to my colleagues Alistair and Chris for a sterling job.

 

Supply Chains for Growth outlines the elevated impact that a supply chain team can deliver across an entire organisation. From a cost centre to the strategic hub of a business, supply chain are shaping strategy and driving breakthrough thinking.

With real growth constrained in many developed markets, looking internally to unlock competitive advantage will be an increasingly common strategy. Agility and responsiveness may be the new battleground for manufacturers and retailers alike, with supply chain playing a pivotal role in achieving this.

Addressing three vital questions

  1. How can supply chain innovation unlock growth?
  2. What are the implications for retailers and manufacturers?
  3. How can you capitalise on the opportunities?

How prepared are you?

Respondents answers to our survey were aggregated to give us a view of the industry’s preparedness. We found a great foundation, with 60% respondents making progress and 13% saying they were future ready. But the bar will continue to rise and being ready today will not be enough in a year’s time. The benchmark for preparedness will keep moving forward.

For early adopters, an opportunity exists to lead the way and potentially influence the future direction of important supply chain issues. However, investing heavily in an industry in a state of transformation can be risky!

Source: Supply Chains for Growth, IGD, 2018

Blazing a trail: 10 ways you can get prepared

We’ve grouped the ways in which businesses can prepare for the future in line with the four key foundations of successful supply chains. In the remainder of this blog, I’ll explore four of my favourites

Source: Supply Chains for Growth, IGD, 2018

Customer Centricity: Commit to trust

Trust remains the number one factor in preventing deeper, more strategic collaborative partnerships across the FMCG industry. In our “Building Trusted Partnerships” research, 61% of suppliers and 59% of manufacturers identified this as the biggest barrier in their existing networks.

Source: Chris Tyas, Nestlé SA Senior Vice President, Supply Chain

Trust can take a long time to build and can reap great rewards. Personally, I view trust as the number one enabler of success in my time working with Tesco and United Biscuits (now pladis).

ECR UK’s Reducing Wasted Miles work is a great example of what can be achieved at an industry level when businesses have this mindset. Earlier in 2018, a group of leading retailers and manufacturers agreed to share information on vehicle flows across their networks. Transporeon, a cloud-based platform provider, was able to process this information and roll out a pilot to identify potential routes to share transport capacity, drive cost savings and reduce pollution across Europe. Through tackling issues around trust early on, and developing a portal, compliant with data protection rules, these potentially competing businesses were able to collaborate in a way that benefits the entire industry. A rare example of a true strategic multi-lateral partnership.

Source: IGD research

Powered by people: Be self-disruptive

In my experience of working in several supply chain teams across different industries, questioning the status quo and disrupting the “we’ve always done it this way” mentality is often a tricky hurdle to clear. Working with third parties or incubator partners to test new ideas can be a great way to bring disruptive thinking into an organisation.

Sobeys and Ocado’s recent partnership saw Sobeys capitalising on Ocado’s expertise in managing a successful ecommerce business. The two businesses are partnering to create an ecommerce facility in Canada, using Ocado’s tried and tested technology and robotics platform. This has allowed Sobey’s to potentially position itself as a leader in this highly competitive area, a position that would have been much more difficult to attain without bringing a disruptive partner on board.

Resilient and Responsive: Lead on sustainability and transparency

As shoppers continue to shop based on ethical considerations, businesses are increasingly looking to differentiate themselves through transparent and sustainable ways of working. This can take many forms, from reducing the use of plastics in secondary packaging or providing a transparent end-to-end view of a product’s supply chain. Carrefour has recently announced that it’s using blockchain technology across its organisation to increase food traceability and build trust with shoppers.

Source: Carrefour

A first across Europe, this innovative technology allows a shopper to scan the packaging of an Auvergne chicken in store and displaying details relating to the hatchery of origin and producer of the product. This represents a great leap forward for Carrefour in achieving its Corporate Social Responsibility (CSR) mission and firmly placing Carrefour as a leader in this increasingly critical area.

Transformed by technology: Creating a data-driven culture

One of the biggest challenges that the Internet of Things (IoT) will bring is the amount of time and effort it will take to draw insight from the terabytes of big data produced. Through adopting a data-driven culture early, supported with intelligent systems, businesses will be able to stay ahead of the curve.

Marks and Spencer’s recent collaboration with Decoded has seen it launch a data academy across the business. In the first 18 months, the academy will see 1,000 M&S employees from a cross-section of departments and seniority levels complete the programme. If this initiative is successful, it will see M&S become a truly data-driven organisation. To reap the benefits of this approach, businesses will not only have to upskill individuals, they must also empower them to be change leaders within their organisations.

We don’t just do research

I hope my blog has inspired you to understand more about how other organisations are helping to get ahead of the curve in increasingly challenging times. If you want to build a future fit business, develop a new strategy or just looking for more information, get in touch to understand how we can bring Supply Chains for Growth to life in your organisation.

Alex Edge

Supply Chain Insight Manager

Alex Edge

Alex Edge

Supply Chain Insight Manager

Download our report to understand how supply chain excellence will be a source of growth and value for the future.

13 November, London

With the theme of SUPPLY CHAINS FOR GROWTH, the interactive programme will allow you to create a day that will give you everything you need to enhance your food and grocery supply chain.

Get the latest industry news and insights straight to your inbox with our range of newsletters.

The shopping environment is changing rapidly, as is the external environment which affects our supply chains. This creates a significant opportunity for the supply chain function to develop new solutions, processes and consumer offerings.

IGD has been looking more closely at how organisations can capture this opportunity, and I’m pleased to share a summary of our findings with you. The full report will be available very soon – you can be the first to download it by registering your interest.

Creating new sources of growth

In most developed countries, business growth is getting harder to achieve – we can’t rely on growing populations or greater affluence. This means we have to be ever more creative:

  • Reinventing services to provide more choice, better experiences or greater convenience
  • Selling more premium products, for instance highlighting local or sustainable credentials
  • Personalising products or services to people’s needs and lifestyles
  • Whilst always reducing costs and waste by rethinking ways of working.

Capturing these new sources of growth will require a mindset that looks for opportunities rather than challenges. Our businesses will look for us to combine supply chain ingenuity and problem-solving skills with advanced technology and some eternal virtues.

Three key characteristics

Successful supply chains that operate as a key strategic driver within the business will be characterised by three major features in the coming years:

  1. Skill in applying disruptive technology
  2. Transparency and trust at the heart
  3. Fulfilment for the future

Skill in applying disruptive technology

The increasing speed of technological developments will continue to drive significant change, creating new routes to efficiency, collaboration and responsiveness. As ever-greater volumes of data are generated, the analytical tools that we use to gather insight and actions will be a crucial opportunity for competitive advantage. Much decision-making will become automated, but we must retain human judgement as an important input, especially as these tools will also bring the opportunity for trading partners to work together more effectively. And new operational technology will bring production closer to shoppers, for example in the form of more urban/vertical agriculture facilities.

VertiVegies grow products in Singapore that would otherwise have to be imported. Tiered growing maximises space, while sensors and controlled lighting optimises energy use.

Transparency and trust at the heart

Branding has always been an indicator of trust for shoppers to rely on. In the coming years, we will need to build on that to create new price premiums for our products. Shoppers are taking ethical factors into account when they make decisions, so leading businesses will look to gain trust by offering more precise information about product provenance, or sourcing and manufacturing methods. This increased visibility will create many side-benefits for supply chains, helping us prepare for a future of greater resource scarcity by radically reducing the amount of waste.

We expect that the drive towards greater sustainability will change the way we measure success. Sustainability metrics will come more to the forefront of companies’ reporting alongside financial KPIs, and as a result, it will be embedded in decision-making alongside traditional cost-benefit ratios.

Source: Supply Chains for Growth, IGD, 2018

Fulfilment for the future

Today, shoppers in some parts of China can receive a home delivery from Alibaba within 30 minutes of placing an order. And Amazon Prime, with its guarantee of faster delivery, has become a huge revenue generator. The race is on to set even higher standards of convenience.

Shoppers are increasingly combining online and offline shopping, and growing to expect seamless fulfilment. Retailers and manufacturers will gain great advantage through efficient, sustainable and responsive networks, delivering exceptional availability at speed and affordable cost. Large stores will continue to reduce selling space, creating room for automated online order picking, whilst convenience stores and other “hyper-local” delivery points allow for collection and top-up shopping, or onward delivery. We will continue to see a wide range of developments in the area of last-mile logistics as companies look to experiment and learn.

This is just a flavour of what is to come. When you read the report, you’ll find more examples to inspire, a range of proof points that you can use as you spread the information around your business, and ten key areas to focus on in preparing for this exciting new future for supply chains. We look forward to sharing it with you and receiving your feedback.

Alistair Balderson

Alistair Balderson

Head of Supply Chain Insight

The full report will be available very soon – you can be the first to download it by registering your interest.

13 November, London

With the theme of SUPPLY CHAINS FOR GROWTH, the interactive programme will allow you to create a day that will give you everything you need to enhance your food and grocery supply chain.

Get the latest industry news and insights straight to your inbox with our range of newsletters.

How is your performance currently measured? If, like me, you have a mix of different objectives, each contributing to a different part of the organisation’s wider strategy, with several tangible deliverables helping you achieve them, you’re in good company. It’s not very exciting, but that’s the reality for most.

A better question might be how will your performance be measured in future?

There are lots of reasons to think things will be different and we’ve started to think about what the future holds through a few different lenses. I’ll come to this later, but first I’ll look at what most of us do presently.

Most organisations use a derivative of the Management by Objectives (MBO) framework. MBO is defined as “a management model that aims to improve performance of an organisation by clearly defining objectives that are agreed to by both management and employees.” 1

In short, organisational objectives are cascaded down the hierarchy with managers and employees agreeing a set of goals and actions that support the delivery of the top-level goals. The relationship between lower-level objectives and the higher-level success is key. This means getting objectives right is massively important.

What does the research tell us?

Our recent research on business relationships, which surveyed 100 people from over 60 global food and grocery businesses, suggests that all is not well on the objectives front and that there’s an opportunity and a desire to do some things differently.

Only 30% agree their business has done a good job at breaking down functional silos. Objectives play a key role here, with 51% agreeing that their objectives tend to encourage them to work towards separate goals. This can contribute to an environment of animosity, impacting effectiveness and productivity.

45% identified shared, measurable objectives as having the greatest potential to improve the quality of internal relationships, while almost a quarter believe a better understanding of business objectives would be beneficial. This suggests that some are unclear on how their objectives fit into the bigger picture.


Source: Making your business relationships pay: What gets in the way? Supply Chain Analysis, IGD 2018

What does the future hold?

I’ve touched on internal objectives in the present, but success in the future is likely to require businesses, and the wider industry, to address bigger challenges – packaging, sustainability, resilience in the face of political uncertainty, extreme weather and an ability to rapidly respond to changing consumer needs, to name a few.

To address these challenges effectively, partnerships and deeper relationships will be needed. This means working more externally. It takes time and commitment to gain trust, and cycles of success to embed it.

One way the process could be expedited is through shared objectives, with partner businesses and their employees equally invested and committed to delivering them. 

Working in this way requires a level of alignment and a win-win mindset. Think about how different it would be if you and your business partners had one or more objectives, measured in a consistent way by all, that you were all responsible for delivering. 

This idea may seem like a big leap, but bigger, broader challenges call for bigger, broader objectives! It would almost certainly drive a more collaborative mindset, helping partners achieve more together than they can alone.

The horizon over which objectives are measured may also change. Clearly, some objectives will be grounded in the here and now, but some challenges will take longer to address. I can envisage a modular approach to setting objectives and deliverables, with each review period contributing to a larger multi-year initiative. This may make it easier for employees to see the bigger picture, helping them understand longer-term organisational goals.

Looking further ahead

Technology will have a role to play. It will make performance easier to track and measure, but projecting further forward, it could also trigger some interesting questions.

For instance, if the expected proliferation of AI occurs, how will performance of AI, and in particular, machine learning applications be measured? To whom will objectives be assigned? The developers of the machine learning application, or the application itself?

After all, a machine learning application is one capable of learning and refining its performance over time. At what point does its performance become its responsibility? If and when that does happen, how will it be rewarded? What motivates a machine learning system? Perhaps more processing power…

To conclude

So, to summarise, objectives will evolve to meet the needs of an industry in change. This doesn’t mean simply erasing what’s currently there and replacing it. We’ll need to think more deeply about the objectives framework, taking a longer-term view of business performance, how best to affect it and the tools available to help.

It’s certainly feasible that you’ll have objectives which are shared, not only with internal colleagues but also external colleagues. You may even find yourself setting objectives and overseeing the performance of an algorithm. And who knows, an algorithm may even set some of yours…

We’ll address the subject of how businesses measure success in our Supply Chains for Growth report, part of the IGD Futures series, focusing on the future of food and grocery industry. It will be published next month in time for the Supply Chain Summit. Take a look at the event programme.

Source
1 The Practice of Management, Peter Drucker

Chris Irish

Chris Irish

Supply Chain Insight Manager

13 November, London

With the theme of SUPPLY CHAINS FOR GROWTH, the interactive programme will allow you to create a day that will give you everything you need to enhance your food and grocery supply chain.

Get the latest industry news and insights straight to your inbox with our range of newsletters.

Presentations

10/10/2018
Greencore won the IGD Learning and Development Award in 2018 for Grow with Greencore, its online learning platform. In this case study, we explore how Greencore invested in its people to transform its culture and improve engagement.
03/10/2018
Despite the likely reduction of people and a broadening of supply chain roles, face-to-face communication remains vital. We’ve engaged the global food and grocery supply chain community to uncover what people expect from their business relationships both now and in the future. This is the third and final report in the series.
19/09/2018
We’ve engaged the global food and grocery supply chain community to uncover what people expect from their business relationships both now and in the future. The second part of this three-part series looks at what gets in the way of building and maintaining effective relationships, focusing on internal politics, drivers of behaviour and how alternative approaches may improve outcomes.

Access free videos, infographics and toolkits whenever and wherever you need to.

Making your business relationships pay

Relationships and the ability to work effectively with people have a disproportionate impact on our success. This series looks at what makes for good relationships, barriers to building and maintaining them and how they will evolve in future.     

  1. Characteristics
  2. What gets in the way?
  3. Evolution

29 November | 11.00am
Find out why supply chain excellence will drive growth and value in the coming years, the innovations that will unlock that growth, and what these changes mean for you and your customers.

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A practical one day workshop for all roles in suppliers, to help develop your understanding of the vital part that supply chains play in underpinning FMCG businesses.