How to integrate new technology into your supply chain
Let’s assume you’re sold on the promise of the digital supply chain. A brave new world awaits if you commit to best use of rapid technological advances. The big question now is how to integrate these innovations into your business.
In our Guide to a Digital Supply Chain, we outlined why an agile approach, based on scalable pilot programs, is essential to evaluating new technologies in a way that is fast, efficient and cost-effective. Here, we will show what that looks like in practice.
Choose your evangelists
Choosing your team is just as important as deciding which technologies to test. The right people will have a mix of the technical knowhow needed to exploit the technology, a broad understanding of how the business operates, and the emotional intelligence to collaborate and communicate effectively with stakeholders.
This is a rare combination – people who possess those traits are to be treasured. More likely, you will create a small team whose members collectively bring these traits. Ideally, this team will represent a cross-section of your business, so that each member approaches the pilot with a different set of questions and priorities.
The job of this team is to evangelize change, so you need personalities excited by change, rather than team members who see change as a threat. If a pilot shows promise, you need people who can spread it wider, scale it up, and convince reluctant colleagues of its benefits.
You will want a mix of subject matter experts, operational personnel and systems integration specialists. Ask yourself what contributions and expertise you will need not just to run a pilot but also to evaluate its success, and then select accordingly. Consider also whether your choices will be able to cope with a fast pace of work in addition to their normal day jobs, and whether they have the interpersonal skills to work well with partners.
Small is beautiful
There are many reasons to keep initial pilots small – starting with the cost. Very few companies can afford unlimited R&D spend, and large-scale trials are expensive. The point of an agile, empirical approach is to try many things to see which work best, so a series of smaller, cheaper tests will tell you a lot more than a complex and expensive pilot.
Small pilots are also easier to integrate into the normal running of your operations, by limiting disruption, and the number of people involved. Change is hard for most people, so the fewer who need to have their daily routines changed for an experiment, the less resistance the pilot team will encounter.
Small pilots can also adapt quickly to different variables. For example, it might become clear very early that the particular IoT device you are testing to track consignments isn’t accepted on your preferred air cargo partner. A small pilot involving one customer’s deliveries could experiment both with changing IoT devices and with trying a different airline with limited ramifications.
Learning by failing
Most successful pilots can start small, then scale up. But you will also learn from the pilots that fail.
Embracing failure may not come naturally, but it is essential. The simple fact is that many, and perhaps most, of the pilots that you launch will run into serious obstacles. The teams will need to decide whether to persevere with the current solution, try again with a new approach, or move on to the next project. Remember the wisdom from the old ballad “The Gambler” by Kenny Rogers: “You got to know when to hold ‘em, know when to fold ‘em, know when to walk away, know when to run.”
Honest appraisals of why a pilot didn’t work will reveal a great deal about both the technology and the way your own organization is operating. All the knowledge gained should be shared and factored into the design of future pilots, in a constant iteration. Work out in advance how to capture what has been learned. A comprehensive debriefing process is essential.
Failure isn’t final. In any debrief, you should ask yourself whether an unsuccessful pilot is worth trying again and, if so, when – for example, when the technology reaches a certain price point or when a supplier’s or customer’s technical sophistication reaches a certain level.
Picking your partners
In the supply chain, no improvement can be made entirely in isolation. How your suppliers and customers adapt to the changes you make, and vice versa, will determine the success of the chain as a whole.
In Agility’s experience, collaborating on pilots is a win-win. But your partners need to share common goals and agree the following questions: What problem are we trying to solve? How much do we want to invest in finding a solution? Are we prepared to walk away without recrimination if the pilot is not a success? How far are we willing to share what we have learned with the other parties?
If the answers to those questions don’t match, then this might not be the right pilot.
It is also important to run pilots with different types of partners – something that worked well with a local family business might not scale up when applied to a large corporation. Agility collaborates with the full range: from an IoT cold storage pilot with a small firm specializing in one particular cargo in one market, to trials of blockchain with IBM and Maersk.
Don’t rest on your laurels
An experiment doesn’t end when a pilot shows promise. In fact, that is when the hard work begins – working out how to scale the pilot up and what other aspects of your business it can be applied to.
Constant experimentation can be draining, so communication is vital to bringing your workforce with you on your transformation. Strong leaders need to articulate why innovation is necessary, explain the journey, and inspire people to believe that the gain is worth the pain. But they also need to listen to concerns such as increased workload or a fear that their jobs may disappear as a result of the new technology. Anticipate these concerns and have a plan – the hardest part of getting new technology to work is people.
What success looks like
To judge success or failure, you need clear KPIs agreed in advance. A pilot may work in an operational sense, but will you actually extract value from the technology? What are the implications in terms of costs, revenue, customer satisfaction, staffing levels etc? Defining these parameters in advance will stop people getting carried away by a shiny new toy that may not be as cost-effective as it appears.
At Agility, we are constantly running pilots. We evaluate not only the four core technologies that we believe are at the heart of the digital supply chain – blockchain, Internet of Things, Robotic Process Automation, and Data Science [link to each article] – but a watchlist of 16 technologies, ranging from machine learning and the Cloud to 3D printing, virtual reality, autonomous vehicles and drones.
The template for every pilot is the same:
- First define what success will look like, by identifying the key business outcomes we are looking for
- Analyze exactly what we did, and what we found, at each stage of the pilot
- Decide on the next steps, who will be responsible for carrying them out, and the timeframe
- Identify the risks encountered on the way, and what can be done to mitigate them
Using this scientific approach, you can find the technologies that will give you the competitive edge to thrive as the digital supply chain becomes a reality.
