Whirikoka (weaving together) - the convergence of technology and supply chains in Aotearoa
Dave Christie is Director at Synergic Technologies, and Supply Chain Strategy Director at Tainui Group Holdings Limited. He’s a member of the Centre for Supply Chain Management’s Advisory Group. He explains here how the role of technology in supply chain management is changing.
As a geographically isolated country at the bottom of the world, New Zealand has been described as the last bus stop on the planet’s global supply chain (Note 1) meaning our supply chains are disproportionately long and vulnerable when compared to other countries or multi-national businesses. This presents numerous challenges to NZ businesses whose success often depend on products moving efficiently and effectively to or from our distant shores.
Technology has long been touted as the ‘saviour’ of business efficiency and effectiveness – and in recent years this certainly seems to be gaining momentum for many global organisations. But in the case of NZ businesses, not only have we suffered from the tyranny of distance, but also from the lack of scale normally required to justify large investment in technologies. Of course, there are a few exceptions to this - large-scale &/or hi-margin businesses with a strong strategic desire to lead their markets. Yet, while many NZ businesses have the same strategic desire, most have not had the scale, capital nor risk appetite to adopt leading tech in their supply chains.
But that paradigm is changing...the traditional scale, risk and cost hurdles are falling. As the adoption of advanced technology accelerates around the world, it is becoming more ubiquitous and more attainable. As such, technology-led supply chains can now be realistically viewed as the enabler of improved performance and competitive advantage. In NZ businesses we are regularly seeing ROI horizons for implementing new tech between 18-24 months and in some cases less than 1 year.
I’m sure we’ve all been bombarded by adverts in our social media saying that if we aren’t using AI in our business we’re falling behind. Or we’ve received copious emails promoting different types of supply chain tech – from warehouse automation to AI demand management, to real-time visibility platforms, to IoT devices. It’s all quite confusing and complex. So, the question this begs is “where’s the best place to start?”
From our experience at Synergic Technologies, the most successful process we’ve observed for technology adoption in supply chains, is iterative and circular. The starting point is always with what the business is seeking to achieve. But then, it quickly dives into the data – how to make sure it is accurate, relevant, and meaningful. The model below helps to illustrate the different steps and stages for new tech adoption:
A summary of each step is:
- Business needs: Clearly understanding what the business is seeking to learn or understand. This could be achieved through completing a Problem Statement or merely a Statement of Intent, but it needs to clearly define what you are seeking to achieve and how you verify this. A business case evaluating the costs, benefits and risks is often completed at this stage.
- Data collection and storage: All modern technology solutions are required to collect and quickly handle much large volumes of data. This requirement is being driven by the widespread use of IoT devices and a growing demand for real-time visibility. For a business to be able to collect and quickly interrogate masses of data there are two key enablers:
- Data integrity - is your data good? Is there one version of the truth or is it a mess? The better the quality of the master data, the more your business will benefit from automation, insights and AI.
- Data storage and exchange - data lakes are replacing reporting databases, traditional EDI exchanges and expensive middleware as they are better at holding masses of different types of data, scale easily and are much easier and cheaper for everyone to collaborate on.
- Technology solutions - these are the actual software and/or hardware solutions that deliver the advanced functionality the business requires. These cover a wide range of outcome areas including customer experience (CX), user experience (UX), physical automation, workflow automation, machine vision (digital cameras), RFID, cold chain assurance and so on.
- Management and insights - this is the value layer, where the business distils the masses of data into meaningful and actionable insights or alerts. These insights and learnings help inform the ‘next turn of the technology wheel’.
- AI - AI sits across and within all of the top three layers. Many technology solutions already utilise AI to help them deliver better and quicker outcomes.
The main takeaway here is that technology and supply chains are becoming synonymous. Therefore, data accuracy and mastery is fundamental for the success of any tech journey. I’ve lost count of the number of times I’ve seen system implementations being delayed and incur large cost increases because of poor data integrity!
So, if you want to start on this journey … clearly define the business need(s) and then focus on the data surrounding that need. It’s boring and unsexy, but it’s the underlaying foundation stone of any successful and high-performing supply chain.
Note 1: Supply chains to the last bus stop on the planet. Skilling - Prepared for the NZ Productivity Commission, December 2022.