Transcript
Mary Rollman: Welcome to the KPMG supply chain podcast. My name is Mary Rollman and I'm the US Supply Chain leader at KPMG. I'm joined today on this podcast by the partners that lead the US Supply Chain practice. We have Stephanie David, Fred Hensel, Neeraj Verma and Yatish Desai. Our podcast topic today is called range. Let me first take just a few minutes to talk about what we mean by range. Now those that know supply chain know and understand volatility. It's certainly the norm for supply chains across all industries. There's increases and decreases. There's more complexity, there's less complexity. And the greatest supply chain leaders have always been masters at the art of response, and managing the waves of volatility that hit them not only in execution and day to day, but also in the enablement and the longer-term efforts surrounding supply chain volatility. What range refers to is the increase in the number and types of responses to supply chain challenges when they enable the supply chain to respond better to volatility. There's a lot of pressure right now with supply chain leaders to actually select from very traditional back to basic options, right to more advanced and innovative methods. And that's range. The responses are all going after the same issues but they're very different approaches to response. So the art of supply chain is knowing what to use, where and when and that's what we're going to talk about today. So post Covid after logistics cost surged, and the patterns of demand and supply were artificially impacted by everything, there's been a surge of WMS, warehouse management systems, TMS, transportation management systems and supply chain planning systems. Yatish and Neeraj, I'd like for you to comment on your experience and perspective as both of you are working right now with clients that are in fact investing in these new systems. Yatish, do you want to kick us off.
Yatish Desai: This is Yatish Desai. I'm a leader in supply chain and responsible for supply chain execution at KPMG. It's a great question, what we've seen pre- Covid, the logistic systems TMS WMS were growing at the rate of about 8 to 10%. And then coming out of Covid, we've seen a significant increase to the point of 16% upwards for the need for having the TMS WMS systems. And what's really driving that is not just the supply chain disruptions that become very center in terms of increasing the visibility, resiliency and flexibility. But it's also driven because of increased acceleration of digital transformation in the logistics area. The need to optimize your shipping routes, tracking and tracing your shipments, managing inventory effectively. Distribution models are changing. Ecommerce has taken a pretty significant step in the way we operate today, and the need for having also managing customer and consumer expectations around having faster delivery time means more sophisticated WMS and TMS systems. I would like also to have my colleague Neeraj to comment on what he's seeing in the industry as well. Neeraj over to you.
Neeraj Verma: Thanks, Yatish and Mary. This is Neeraj, a partner and supply chain leader in KPMG. So Yatish, you rightly pointed out right. So if we look back, what is forcing us to be here? The pandemic exposed vulnerabilities in global supply chains. whether you call it lockdowns, travel restrictions, border closures. shifts in demand, disrupted supply raw materials across the industry. And on top of that, coming out of pandemic, now there are more compliance requirements in certain industries. This resulted in complexity and supply chains from all perspectives, right disruptions in transportations. As, Yatish explained, and certain considerations regarding localizations and reshoring. So the pandemic caused drastic changes in consumer behavior and demand patterns. Right? We have to quickly adapt our production and distribution or fulfillment strategies to meet this ever-changing customer demand and preferences. The pandemic also highlighted the importance of agility and resilience in supply chain operations. We need to enhance operational agility by enabling real time database updates using newer technologies on scenario planning which traditionally our old systems lack. And hence allowing companies to quickly respond to unexpected events and disruptions. That said, visibility and planning beyond four walls is now a must, no longer an option or a nice to have. I'm also seeing a similar implementation of planning systems. So the way I see is like the old technologies which do, which lack maturity in terms of newer technology advancements and scenario plannings are no longer applicable. Hence companies are shifting towards the newer one. And if you look at how demand vulnerabilities are coming in given the shift of our generation. Also having Gen. Z's and millennials gaining consumer share and their technology adoption is very different from us. Stack forecasting models are no longer working the way they should be working which is forcing organizations to move towards the newer technology machine learning AI based solutions. The advancement in technologies such as artificial intelligence machine learning have made planning systems more sophisticated and powerful, and these advanced capabilities attract businesses looking to gain competitiveedge by optimizing their supply chain operations. So, Mary back to you.
Mary Rollman: Thanks Neeraj, it's really interesting to hear how traditional systems have really had to up their game and adopt somemore of the innovative methods that, I think, is really on the opposite end of the spectrum in terms of the range of responses that supply chain leaders have right with advances in analytics. And we mentioned automation and robotics, machine learning. All of these things have accelerated in adoption with many of the clients that we work with. And they're actually addressing a lot of the similar issues to the ones that Yatish and Neeraj just described. So, Stephanie, I'd love to understand your thoughts on the advances in both data and technology for supply chains. And how are organizations addressing the same issues but with more advanced methods?
Stephanie David: Well Mary, I think we can spend an entire podcast on this topic alone. My name is Stephanie David, and I'm one of the partners in our supply chain group here at KPMG, leading our supply chain strategy and analytics practice. Listen, I do believe that advances in emerging technology, in advanced analytics will continue to revolutionize the future of supply chains, offering unprecedented opportunities to enable capabilities for optimization, efficiency, real time visibility and continuous innovation. Here at KPMG we call it the connected supply chain. And as we've heard from Yatish and Neeraj, enabling these capabilities is now possible given the advances we've seen in analytics, automation, robotics, IOT devices, blockchain technology, traditional AI and machine learning and now Gen AI. All across the entire supply chain ecosystem possible given the opportunity to unlock the sea of data that is out there internally and externally. In a recent survey that we have of supply chain respondents, 59% of those respondents stated that they will continue to invest in digital technologies. In the types of use cases that we expect to consistently see, leveraging a fit for purpose orchestration of advanced analytics and emerging technology ranges from, as you've heard, enhancing demand visibility and in reducing supply variability, optimizing inventory levels, analyzing internal and external risk factors to predict and mitigate potential disruptions, personalizing the customer experience by offering a real time visibility into order status, delivery options, personalized recommendations. From a product movement perspective, we will continue to see blockchain technology being leveraged to provide a secure and transparent platform for tracking and validating the authenticity and movement of products across the supply chain which tends to help with counterfeiting but also promoting ethical sourcing and sustainability practices. And to truly operate in a dynamic and interconnected ecosystem we will see progress in enabling intelligent collaboration platforms to onboard and integrate key suppliers, partners, but also customers. So, the point is that the technology already exists. The challenge now lies in implementing and scaling in a cost effective and pragmatic way. And so because it can feel very daunting at times, like every day, is bringing something new. We should expect that access to these types of innovations will only accelerate and multiply. So the question becomes, how should supply chain executives navigate this and approach this? I wholeheartedly believe that it starts by actively adopting a strategic and holistic approach to defining your digital supply chain strategy. Then we need to be building the supply chain architects of the future now. There is no doubt in my mind Mary that as organizations do this, they will be able to not only effectively pave their way to optimize their supply chain operations, but also position themselves for success in an increasingly complex and competitive marketplace.
Mary Rollman: So all 3 of you so far have mentioned something that I think every organization is grappling with. And that's the topic of talent. right? It's been challenging for supply chains for a long time, but now it's starting to feel different. It's feeling much more complex. Let's turn to Fred. I'd love to hear from you Fred in terms of why talent and why the talent equation is getting more challenging for supply chain executives today.
Fred Hensel: my name is Fred Hensel and partner in supply chain focused on manufacturing clients. I think you first have to understand the drivers of the talent problem. First of all expectations have never been higher. There's an expanded set of stakeholders that includes the usual suspects, customers, operations, and suppliers, but increasingly shareholders and regulators. Expectations continue to grow. Some are existing expectations but increase in intensity. You heard you Yatish talk about product availability, variety, and excellent customer service. Some are new, like safeguarding the company's assets and reputation. All of this is happening in an environment with ever increasing risk and disruption. These expectations make the scale of the job monumental with new processes required. Supply chain leaders are expected to take advantage of the alphabet soup that Stephanie described of machine learning AI, IOT etc., to drive efficiencies in the business process and take cost out of the supply chain. There's an explosion of new solutions that aim to solve one or more of the pain points in the supply chain. However, there's no silver bullet to address all of these challenges. Meanwhile many supply chain executives continue to deal with technical debt and legacy ERP and MRP systems that make visibility, agility, and extended management of the supply chain a challenge. This combination of expectations, new processes and skills, and a changing technology landscape creates a talent challenge at all levels of the supply chain professional. Let's start with college graduates. New entrance into the profession do come generally equipped with a basic tool kit, but they have a limited ability to connect to the business, understand the business strategies their stakeholders are undertaking and bring a supply chain value proposition to bear to further those strategies. Our mid-career professionals are challenged to keep pace with the technology and learn the new roles and processes that they may not have learned early in their career. And finally supply chain executives find themselves ill equipped to both manage the supply chain and the stakeholders which it requires a separate set of skills to listen, empathize, and communicate balancing community voices and priorities. Taking collectively, the talent management problem is more complex than ever before. And hopefully, we'll see an increasing focus on supply chain talent management programs to recruit and develop the right skills, knowledge, and abilities to optimize the supply chain. Back to you, Mary.
Mary Rollman: Being a supply chain leader today is definitely not easy. I mean the range of responses, as you've heard have absolutely grown, and I suspect will continue to grow. So, thank you tothe KPMG supply chain leadership team and thank you to you our listeners. For more information about this topic or supply chain at KPMG, you can check us out at KPMG/supply chain. And that's all we have for you today.
