If there is one thing we have learned from the recent events like war and the international energy crisis, it’s that market conditions can change overnight and that companies need to be able to respond swiftly. 2022 was a traumatising year in so many ways; even so, we were seeing an exponential growth in digital capabilities. Technological innovations and ground-breaking software solutions are finally starting to live up to the long-time promise of enabling the kinetic enterprise – an enterprise built to evolve, no matter what tomorrow brings.
At Deloitte, we have long wanted to work at the forefront of digital transformation, not least in the supply chain space. In 2018, we announced a global collaboration with Kinaxis, provider of RapidResponse, a leader in the 2022 Gartner Magic Quadrant for Supply Chain Planning Solutions for the eighth consecutive time.
Aimed at helping companies accelerate their transition to a digital supply network, Kinaxis is not only designed to enable faster decision-making with synchronized planning processes, but also improved productivity and profitability, and increased agility for addressing changing market needs.
Major breakthroughs in 2022
Although the digital supply chain journey has been years underway, we saw some major breakthroughs in 2022 among Danish and Nordic companies, many of whom are now fully committed to breaking away from the slow and complex supply chain systems landscapes of the past where planners spend more time updating Excel files and correcting errors across systems than actual planning and scenario building.
What this also means is that we are moving away from the traditional supply chains with their linear and delayed flow of information where each step is dependent on the preceding step with often incomplete and siloed data. Slowly, these old supply chains are being replaced by digital supply networks that provide real-time visibility into each node of the network powered by an interconnected flow of information.
The breakthrough of these new capabilities is of course based on growing computational power to handle big data as well as increased machine learning, planning functionalities and integrated data modelling possibilities.
Today, the leading systems already allow organisations to integrate planning layers and models, thereby enabling end-to-end visibility and synchronized planning.
In the near future, for the most ambitious companies, the vast majority of activities in supply chain planning will be handled by digital solutions, allowing supply chain planners to fully focus on reviewing the exceptions, responding to events as they happen and collaborating closer with other functions.
Creating the digital twin
The outcome of the improved technologies is that real-time scenario planning is now a reality – offering companies what many people refer to as the “intelligent digital twin”.
Kinaxis, for example, describes the digital twin as a “real-life sandbox in which the design thinking phases of ideate and prototype can be worked continuously. The information that is gathered from those steps can then be reintroduced into the process, allowing for an ongoing evaluation of possible changes… an iterative learning cycle that treats forecasts almost as a living organism[i].”
The ‘digital twin’ setup already exists in some companies, and it is showing promising results. For example, in the case of the current war and subsequent energy crisis, the most digitally advanced companies were able to react quickly to the market disruptions. Within hours they knew what the impact of various decisions would be (e.g. reshuffling inventory, sourcing suppliers, evaluating alternatives, forecasting demand, and so on). Over the next 10 years, this will likely become a more widespread capability. Eventually, systems will start to learn from the decisions taken by planners and will eventually make these decisions themselves – based on rules that were defined by supply chain planners in collaboration with various stakeholders inside and outside the company.
Reaching your full potential
In short: the leading digital solutions are here to fulfil their promise. The next 10 years will see the rise of even higher levels of automation of supply chain planning. Many companies are already taking the required steps towards a shift in mindset and company culture. And we’re not only talking about major companies across the Nordics (for example, you can read about Carlsberg’s journey with Kinaxis here https://finance.yahoo.com/news/carlsberg-selects-kinaxis-harmonize-planning-110000290.html); even midsize companies are taking advantage of these opportunities in order to create the supply chain operating model of the future.
In the old world, data were often incomplete, fragmented and siloed; systems were often custom-built and hard to maintain; decisions were often based on static spreadsheets; and knowledge was often exclusive to a small team and therefore not fully understood.
In 2023, many more companies will be moving into a digital supply network setup where concurrent planning creates an ‘always on’ visibility into supply disruptions and changes in demand. A network where one centralized data model connects all key functions to deliver harmonized and cleansed data to the organisation; where planners can leverage rapid decision-making enabled by scenario-planning capabilities; and where companies can integrate strategic goals and tactical supply network plans with daily operational planning.
Ask me about: Supply Chain Management, Supply Chain Planning, Supply Chain Resilience, Advanced Planning Systems (SAP IBP, Kinaxis etc), SAP Supply Chain Transformations, Digitalization, Operating models & Sustainability in Supply Chain Lars is a partner in Deloitte and the Nordic Lead of our Supply Chain Practice. Lars has a background as an SAP and Supply Chain consultant, with more than 25 years of experience in Supply Chain and SAP transformation programs, where the underlying theme is end-to-end supply chain optimization enabled by IT. Lars works with Danish as well as Nordic companies, advising on Supply Chain transformations in close collaboration with our SAP & Digitalization offerings.