New Digital Capabilities for Supply Chain

Professor Mary Long

Meet Mary Long, managing director of the Global Supply Chain Institute’s Supply Chain Forum at the University of Tennessee, Knoxville’s Haslam College of Business. A board advisor, lecturer, writer and international speaker, Long utilizes her expertise from a long and fruitful career to inform and shape her teaching. Before coming to UT, Long was Vice President of Logistics and Network Planning at Domino’s. Prior to that, Long’s previous posts included time at Campbell’s Soup, General Mills and Pepsi. Since 2019, Long has co-authored two white papers: “Future Trends Shaping Transportation” (2019) and “Young Women’s Perspectives on Supply Chain Diversity and Inclusion” (2020).

Before we dive in, do you mind explaining the difference between ‘digitization’ and ‘digitalization’ as they relate to supply chain?

I’ll give you a simple practitioner perspective. “Digitization,” involves taking processes that already exist and putting them in digital format. So when you move someone’s very cool spreadsheet to a transparent system process, you are making that information available in digital form to be shared and used by others instead of only residing on the creator’s laptop. Digitalization is really stepping it up to a strategy level, and saying, ‘What is my data strategy related to all of this information that's coming in?’ and ‘How does it relate to my digital strategy around capturing that?” and, finally, “How does it relate to analytics?”

That’s an important nuance. With that in mind, can you describe some challenges that companies may face when attempting to digitize their supply chains?

The challenges that companies face in this digital space driving this kind of transformation start with defining their digital strategy. They need to understand their transformation drivers and set their priorities based upon their strategy. Another challenge for supply chain organizations is linking this digital transformation strategy to their organizational business strategy. Supply chain practitioners often jump to the ’how’ really quickly. We think about systems and technology, and the next “bright shiny light” solution. Hype cycles for technology can create digitalization ideas that become distractions or disconnected initiatives that do not link to a unified strategy. For some companies, sudden C-suite interest in blockchain, might be an example. These initiatives deliver more value if they help to advance alignment between organizational and digital strategies versus creating other stand alone projects.

I guess this also wouldn’t be a robust discussion of digitalization challenges without mentioning governance. It is foundational to say, ‘Where are we going?’ and ‘What is our digitalization strategy to get us there?’ And then, that will quickly highlight issues with data governance. Beyond governance, it also becomes an internal challenge of literacy or illiteracy around understanding data, and what the data is going to do. To be clear, that's not just an operator level issue or something linked to frontline workers; this type of issue spans from the frontline, all the way to the C-suite. Everyone must understand what they’re asking around analytics and why; they must know what is driving the data. Then, when they get an answer, they must be sure they understand how to change behaviors by drilling down on questions rather than resorting to outdated practices.

Switching gears now to digitalization opportunities: How big of a role would you say digitalization plays within a supply chain?

It's a huge role. I’ll draw an example from my past experiences. Let’s take a look at Domino’s from a digital strategy perspective. When you think about the transformation they made, beyond the product changes, the foundation was a digital strategy and an intentional move to digitalization. And, thanks to those efforts, they’ve had four times of Facebook valuation, in the time since I worked there to now. That transformation was built on digital capabilities, in supply chain as well as IT and marketing. This growth was enhanced by automating processes and implementing new capabilities like product traceability and end-to-end visibility built on customer-focused feedback loops linked to supply chain operational processes. All of these capabilities are part of a digitalization strategy.

What competencies do companies need to consider to accelerate their supply chain digitalization efforts?

There are a few competencies that I think are critical. Some of this comes from the work that I've done in humanitarian supply chain and disaster relief: when you think about that space, it really helps to amplify agile resilience. We have to respond to reduce suffering and save lives, and we have to get our act together super quickly. That involves coordinating and collaborating across responding entities, all while encountering risks. There are a few behaviors we see in instances like this that are core to what supply chain has done for years. First, collaboration, internally and externally, is super important; I think some companies only pencil it in but haven't really dug down into that mindset as a strategy. A second competency that’s core to what we all want involves adjusting to a ‘VUCA’ environment—‘Volatile, Uncertain, Complex and Ambiguous’. This entails dealing with ambiguity by getting comfortable with the fact that even the most intricate planning systems can change and often evolve from a more targeted forecast and shift instead to predicting using more broad forecast ranges. A third and final competency to aid digitalization is an inherent curiosity and interest in solving complex problems.

It sounds like digitalization will naturally lead to new ways of working. How is this changing the fundamental understanding and the operation of supply chain management?

Digitalization requires everyone—the C-suite, the supply chain executives, the team members, and then their ecosystem, the suppliers, the customers and service providers—to better understand digitalization. Organizational leaders have to be able to articulate a clear vision for where they're going, and what they're asking of their C-suite. Where, exactly, should we invest? Why do we need this money? And, finally, what are we going to deliver to you? Then, for the team members, we must address why and what we are asking you to change. We must also explain how said changes are going to help enable an organization to get to where it needs to go. For suppliers, a lot of changes are required. The same is true for service providers: being able to share those stories with people and really engage them in this transformation process is key.

“What we’re seeing is the most valuable intel and insights come from people like frontline workers, customers, and suppliers. That information can help an organization design in more innovative ways with an eye on future processes. That's where the transformation comes from: being able to take both these views--a system view and a design view—and apply what you observe internally and externally.”

How have companies leveraged digitalization to help ride the ongoing volatility of COVID-19?

One of the interesting things that supply chain leaders have experienced during COVID-19- and they're really internalizing this as a leadership approach- is integrating a blended view of systems thinking and design thinking. So putting those two things together where you take that 30,000-foot-view of what the connections are between systems and how the linkages relate to having a clear focus of what information is most valuable. What we’re seeing is the most valuable intel and insights come from people like frontline workers, customers, and suppliers. That information can help an organization design in more innovative ways with an eye on future processes. That's where the transformation comes from: being able to take both these views—a system view and a design view—and apply what you observe internally and externally.

And it’s your belief that this approach will reduce volatility?

Maybe not ‘reduce’ volatility, because that's actually outside of the control of supply chain organizations. Instead, think of it as being able to better adapt by being agile, in terms of an organization’s response. What I've learned over my career is that it's like earthquakes in California: not a matter of ‘if,’ but ‘when.’ Some sort of unforeseen disruption is always going to happen in supply chain. Success in dealing with that hinges entirely on your response. As a person, individually, can you center yourself in that space, and be able to demonstrate and model behaviors around resilience? If so, how does your team perform? How does your company perform? All parties must strive to stay more even-keel. That's the goal.

Mary Long’s industry-leading knowledge of supply chain organizations and the efforts to embrace more digital capacities is one of many areas of focus at the Haslam College of Business at the University of Tennessee, Knoxville. Driving value and societal impact through tracking evolving supply chain trends in real-time is one of the ways the Global Supply Chain Institute educates the next generation of supply chain leaders. Expand your supply chain management knowledge and opportunities by pursuing Haslam’s Executive MBA in Global Supply Chain