Speaker 1: If you're still managing your supply chain the same way you were 5, 10, or 20 years ago, chances are you're probably doing it wrong. I'm going to talk about that here today. My name is Eric Kimberling, I'm the CEO of 3rd Stage Consulting. We're an independent consulting firm that helps clients through their digital transformation journeys and supply chain management is suddenly cool again. If you ever lost faith in the fact that it was ever cool, it is back and it's something that's more important than ever. If you look at where supply chain management is now in the 2020s, post-pandemic, there's a lot of challenges that supply chain managers are facing. You have higher raw material prices, you have raw material shortages, you have higher fuel prices, ports are getting disrupted. You even have cyber attacks that are affecting supply chains. The days of focusing supply chain management on driving down costs and just increasing efficiency, those days are gone. That still is a dimension of supply chain management, but the purview of what we need to be evaluating and considering as we define our supply chain management strategy for the 2020s is completely different, is completely expanded than where it was even just 5 or 10 years ago. What I want to talk about today are what are those strategies and tactics you should be thinking about to make your supply chain more resilient in the 2020s and beyond. The first component of supply chain management that's important that is more of a continuation of what's always been important is to make sure that you have cost efficiency and visibility into your supply chain. You want to make sure that you're cost effective, you're efficient, and that you have visibility into what's happening throughout the supply chain. This is the one part of the video that we'll talk about here today that isn't really new, but it's continuing to evolve and advance over time. Finding technologies, whether it's a supply chain management type of technology or ERP, enterprise resource planning types of systems, or procurement or warehouse management types of technologies, all those types of technologies are meant to drive down costs, to increase efficiency, and to give you visibility into your supply chain. This is even more important today than it was five, 10, 20 years ago, because first of all, supply chains have proliferated across the globe, so now we're not dealing with myopic smaller supply chains, we're dealing with global supply chains. Secondly, there's more opportunity for disruption, as we've seen in the last year. Whenever there's a pandemic, or a port shuts down, or fuel prices increase, or there's a raw material shortage in some part of the world, or there's a geopolitical disruption, there's all these different things that can disrupt our supply chain in a way that wasn't as prevalent a few years ago. Making sure that you build a supply chain that takes these factors into account and uses technology and process improvements and organizational improvements to get there is going to serve you well now and in the future. One of the biggest trends we're seeing now that wasn't nearly as important even just a year or a year and a half ago, is that now more than ever, organizations and supply chains need to focus on how to diversify their base of suppliers. Not depending too much on one supplier, to where if there is a macroeconomic or geopolitical impact to that part of the world, or if there's some sort of negative economic impact on any particular supplier, you have backup. You're not putting all of your eggs in one basket for any particular raw material or finished good that you might be sourcing. Supplier diversification is more important than ever, and this is an area where technology can help, but more importantly, process improvements and organizational mindset shifts can help improve supply chains to ensure that they're thinking about how to diversify suppliers and how to evaluate how these different suppliers compare to one another. I'm going to talk more about that here in just a second as well. But in general, be looking for ways to diversify your supplier base and really hedge your risk. All of this is about risk management and being able to navigate the unexpected, which again, as we've seen in 2020 to 2021, there is a lot of unexpected, especially as it relates to supply chain management. Now historically, supply chain managers have assessed suppliers in a couple of different dimensions. One is cost. How much is the supplier charging you for their good or service? And secondly, the quality rating. How does that supplier rate in terms of quality compared to other suppliers out there? And those are still two very relevant criteria that you want to continue to use, but those are in some ways very reactive criteria. Those are after the fact, you understand what your costs are, although you can predict the cost based on whatever arrangement you have. But when it comes to quality, that's something that's reactive. That's after the fact, you can assess how much quality the supplier did or didn't deliver. But the key here is to look at some more proactive criteria as well and to anticipate potential risk and to anticipate problems before they become a problem. So in other words, instead of running into a quality issue, wouldn't it be great if you could anticipate that they might have a quality issue using some other criteria? So for example, we are finding that there's technologies out there now that are non-traditional supply chain management or enterprise resource planning systems that can help you aggregate data to gather information about financial metrics, for example. How well is the company doing? How healthy is the supplier? If the supplier is not healthy, then obviously that's a risk that you can start to anticipate and you can start to hedge your risk and maybe look for even more alternative suppliers in the event that you might need it. That's just one example. Another example is looking at employee satisfaction. If you know that employees are unhappy at a certain supplier and that there's a lot of turnover and other issues internally and organizationally, that's a risk that you can anticipate and maybe start to diversify and hedge your bets. So these are just two very small examples of many that you can be using as leading indicators that allow you to anticipate where the risks are so that you're not caught flat-footed if and when there is some sort of disruption throughout one of these pieces of your supply chain. Many organizations we work with nowadays are focused on sustainability. What is the impact to the climate of our efforts in our supply chain? What level of emissions in climate impact are we producing as a result of our supply chain? If that's an important topic for you, then you want to be able to evaluate and assess your supplier's alignment with that sustainability goal. So when you're looking at your potential suppliers, it's not only important to look at the financial indicators and the quality indicators and the leading indicators that I mentioned before, but you also want to make sure that they're aligned with your goals for sustainability to the extent that you have those. So this is another area where technology can help. This is another area where a scorecard can be expanded to include things like sustainability and impact to the climate or impact to the environment or whatever criteria might be important to you as it relates to sustainability. And then another dimension of sustainability is just the long-term viability of that particular supplier. As I mentioned before, if they're on solid financial footing, that's different than a supplier that is weak, is maybe shrinking in size, or losing market share in the industry. So really understand what sustainability goals you have and make sure that you're assessing your suppliers throughout your supply chain against those goals. One of the things that organizations are finally starting to see in recent years is that supply chain management isn't just about back office, distribution, logistics, warehouse management, procurement, all that stuff. It's really about the customer experience. How does the supply chain affect your customers? How quickly can you deliver to customers? How flexible can you be? What type of service are you able to provide to your customers? Those are all things that supply chain management directly impacts. And so you want to look at your overall customer experience and think of your supply chain not just as a cost efficiency opportunity or to make sure that you have the right relationships with the right suppliers. You're not doing that in isolation. You're doing those things in the context of how do we provide a better customer experience and how do the decisions we make in our supply chains affect that customer experience. Part of the reason for this is because of the Amazon effect. Amazon has really honed in on and mastered the whole concept of supply chain management as has Alibaba and other e-commerce providers throughout the world. So even if you're not a direct-to-consumer type of provider, you still want to understand that most people in the world right now have this reset expectation of how supply chains should service their needs and their requirements. So when you're analyzing your supply chain, it's important to look at it not just from an internal cost efficiency and supplier-based perspective, but to look at it from your customer perspective as well. Just as supply chain management is more important than ever to your customer experience, supply chain management now affects other parts of your organization in a way that hasn't been true or as true in the past. For example, human capital management. To run an effective supply chain, you need good talent. To find good talent, you need good human capital management processes. So it's important to not just look at supply chain management in its own one-dimensional focus, but to look at what other parts of your organization can affect and improve your supply chain and vice versa. On the flip side, how does your supply chain affect other parts of your organization? For example, if you have certain financial goals as an organization, whether it be inventory related or return on assets, whatever the case may be, how can you design your supply chain and build a supply chain that supports those financial metrics? So again, it gets back to this whole concept of looking at your supply chain, not just as it is as a supply chain, but how that supply chain affects other parts of your organization and ultimately even outside the organization as it relates to your customers as well. So these are some of the things to be thinking about as you define or redefine your supply chain strategies for the future. For more information on this topic, I encourage you to download our 2021 Digital Transformation Report, which is a guide to any sort of transformation, whether it's an ERP implementation or in the case here, a supply chain management sort of transformation. So in this report, we rank the top supply chain providers in terms of technologies. We provide best practices on how to transform your supply chain, so I encourage you to download that as well as other resources we've included below. So I hope you found this information useful and hope you have a great day. Thank you.