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The Supply Chain Digital Disruption 2. About three-quarters (74 percent) of executivespositioned themselves in the middle of the scale ofadvancement, saying that a start had been made onDigitisation, but there was still a way to go.Most executives surveyed and interviewed admittedthey were at the exploratory stage, and it is evidentfrom our research that there is a discrepancy betweenthe anticipated importance and impact of digitalizationand work that has been done so far. None of the seniorexecutives surveyed indicated that their supply chainwas fully digitised, suggesting that their businesses arenot well enough prepared for the challenges to come.While three-quarters of the executives stated thatDigitisation had begun, about half (48 percent) of thosesurveyed advised us that their strategy only considersthe impact of Digitisation on the business, and lessthan a third (28 percent) had a strategy redesigned fordigital integration or was digitally native.These findings suggest that Digitisation of the supplychain has yet to deliver game changing impact.Despite the fact that three out of four executives ratedDigitisation as highly relevant or imperative for supplychain management, only two out of three executivesindicated they had seen significant improvement intheir supply chains to date. At the same time, two outof three executives responded that service will be mostheavily impacted by Digitisation (over inventory andcost).Korn Ferry’s research suggested that the biggestbarrier to digital transformation was the lack of a digitalstrategy, and lack of digital talent was a close second,offering an explanation for the marginal improvementseen to date (see Figure 1). This was caused in turn bya lack of investment in this area, with 88 percent ofexecutives stating that less than 20 percent of theirlearning and development budget was being spent ondeveloping Digitisation capabilities.A respondent to our survey offered an interestingexplanation for the lack of clear strategy: “The missingcapability is understanding of supply chain at boardlevel. Supply chain is seen as cost down, whereaswe should see it as a new revenue model generator.Everything comes back to the leadership challenge;why are we failing to get the right leadership at the top?”asked Professor Godsell. “UK boards are dominatedby commercial and financial backgrounds, and even ifyou change the gender and ethnic mix, this does notovercome every angle of the lack of diversity. ChiefSupply Chain Officers are a relatively new addition tothe executive board, but are not usually on the mainboard at the top table.”In addition to the leadership and strategy issue, whenreflecting on the challenges of building digital capabilityin the supply chain, many of our interviewees felt thatdigital supply chain experts are hard to find, and can behard to attract. Generation Y is considered easily bored,meaning its members could be hard to retain if notgiven new challenges regularly.Figure 1.What are the main barriers when it comes to digitising the supply chain? (can choose more than one)Lack of cleardigital strategyAvailability ofdigital talentLack of topmanagement supportRigidity of governance/organisationMissinganalytics toolsNumber of Responses605101520253035

The Supply Chain Digital Disruption 3. About four in 10 of those surveyed (41 percent)said a key barrier to digitising the supply chainwas the availability of digital talent.Two out of three executives with whom we spoke builtdigital capability in their organisations through hiring,with about half of those doing so by hiring consultantsor by “hiring from companies that are more digitallyadvanced” (See Figure 2). About one out of five hiredfrom universities and research organisations, whileother respondents told us they leveraged learningdevelopment tools through internal training of existingemployees to improve their foothold in digital talent.Despite the acknowledged importance of the digitisedsupply chain, the financial commitment to developingthe required skills is low, with nearly two out of threeorganisations allocating less than 10 percent of theirL&D budget to digitisation, and about the same numberof executives admitting that it was not enough. At thesame time, three out of four respondents said they hadnot formally assessed the digitisation readiness of supplychain employees, and roughly half had no plans to do so.Undoubtedly the impact on talent will be huge; smaller,more educated workforces need to be organised in moreagile ways to respond to changing supply chain KPIs(revenues, not just cost). The war for talent is increasing,and supply chain leaders and HR business partnersfor supply chain must take an active role in attracting,developing, organising, and rewarding supply chainexecutives in innovative ways.“In ten years, we will be looking at a supply chain that isbeing driven by digital, by supply chain simulation thatcan predict what needs to happen, where infrastructureshould be built, and where products should beshipped from,” said Prasad Srinivasamurphy, presidentof BXBDigital, Brambles. “In the future, this will bedone through technology, rather than through tribalknowledge. If you look at a lot of supply chains today,they are run through people’s knowledge. We need tofocus more on customer needs, letting technology runsupply chain.”However, while there will be a transition towards asmaller, more educated, and technologically savvyworkforce in the future, “digital transformation is aboutbringing people in, not just out, but those that staywill require a more agile, flexible approach,” said DirkHolbach, corporate senior vice president and CSCO,laundry and home care, and managing director atHenkel Global Supply Chain B.V. “The implication is thatpeople will cost more. The equation is positive to paymore for fewer people.”Figure 2.How do you build and develop digital capabilities the supply chain? (can choose more than one)Internal trainingExternal trainingConsultancyHiring people with digitalbackground/digital capabilitiesOtherNumber of Responses705101520253035404550

The Supply Chain Digital Disruption 4. A third of executives surveyed had organized digitaltalent as a centre of expertise or some form of unitin the supply chain function, and the reasons for thisare apparent from an attraction, retention, and culturalshift perspective.While about a third of the organisations we spoke toorganised their digital talent into a centre of expertise(CoE), roughly one in four had decentralised talent acrossthe supply chain function. About half of respondentsidentified technical skills, such as analytics and bigdata, as the main gaps within their organization; lack ofstrategic and user-experience skills was also prevalent.“E-commerce businesses such as Amazon have thedata scientists to plan better, creating innovationopportunity, which allows them to lead in this space,”said Knut Alicke. “GE has their Silicon Valley incubator.Vodafone has cognitive procurement, a department thatpushes these topics. Kellogg’s funds a couple of startups, and then integrates them if they are promising There’s not a single best-practice approach yet—peopleare experimenting and there are several ways of doingthat: a digital taskforce; classical project teams; internaldevelopment; or a small venture-capital fund where theysecond people to a start-up funded by the company; ifsuccessful they buy it back.”The supply chain leaders we interviewed supportedAlicke’s view. Brambles has a standalone digital businessunit, which its leader, Prasad Srinivasamurphy, sees“as a game changer” for the business. He built a teamin Silicon Valley and Bangalore focused on bringing intechnical capability. “I’ve taken a broad holistic view ofwhat needs to be done instead of looking narrow, and havestarted to engage with customers on what opportunitiesthey see for themselves, and how Brambles can enablethem,” he said.“I hope in the future we will have a mindset that everyfunction in the supply chain is primarily focused on digital,”said Mark Tusveld, Senior Director, Global Supply Chain forDigital, at Nike. “My organisation is an incubator, so you8want people out in the organisation as well. Whilethere still might be a central team setting the strategy,deployment will need to move into the functions.”These CoEs or digital units allow for a different cultureto exist within an organisation. It allows a rare failfast mentality that thrives in digital environmentsbut often fails in traditional corporate organisations.Some companies are setting up their digital labsin separate buildings that imitate a Google-styleworking environment to attract digital talent. In thesesub-cultures, digital pilots are incubated, tested, andallowed to fail quickly or be implemented if successful.“We [supply chain executives] are very good atplanning, doing things well, and looking at bestpractice models, but digital is about testing, whichcomes with success and failure,” said ProfessorGordon. “Born digital cultures such as Amazon aremuch more adventurous with teams empowered tomake changes. [The] dilemma in supply chain is thatwe are perfectionists, but perfectionism goes againstSilicon Valley.”Korn Ferry research has shown the difference inpersonality traits between leaders in “born digital”organisations, and those leading a “going digital”effort (see Figure 3), and our interviews furthersupport the cultural challenge of integrating advanceddigital talent into traditional businesses undergoingtransformation. “Born digital” leaders have deepdigital expertise and can develop a radically differentdigital solution to an activity (e.g., a sales transaction)whereas “going digital” leaders can help influence thebroader organisations to develop and evolve existingways of doing business to leverage digital technology(e.g., by automating parts of the existing supply chain).

The Supply Chain Digital Disruption Figure 3.9

The Supply Chain Digital Disruption With a lack of clarity about talent needs and hiring, thereis a related disconnect between supply chain and the HRfunction, with only about one in four survey respondentssuggesting they were closely aligned. Three out of fourrespondents said their organisations lack a clearly definedsuccess profile for digital transformation of supply chainleaders, with many leaders suggesting that “we don’t knowhow to improve our level of digitisation in supply chain.”With a clear skills gap in digital technology, acknowledgedunder-investment in L&D in this space, and limited intentionto assess digital readiness, there is a significant role for HRto play in driving the digital transformation of supply chain.People, organisation, and the role of HR indigital transformationDigital requires new organisational models (to supportnew business models), new people, and a shift in culture.HR needs to take on a strategic role in close partnershipwith the wider business to help these shifts occur.What form do some of these interventions take?Figure 4.10Recruiting and developing digital talentFor an organisation to “go digital,” there is a varietyof talent that needs to be in place. Figure 4 belowshows the segmentation of leadership talent thatKorn Ferry typically assesses and develops. There aretwo axes. The digital axis shows the level of digitalexpertise required to undertake a role in the futureorganisation. The transformation axis looks at thedegree to which leadership is involved in businessas usual (and incremental improvement) as againsttransforming operations.HR, drawing on appropriate assessment tools, canthen support the business in three ways:1. Assess the type of talent that is required tosupport the future operating model (typesand numbers of talent in the four quadrants)2. Assess the current talent—against the differing“success profiles” for these four quadrants3. Recruit and develop the talent to matchthe demand identified in the first tape

The Supply Chain Digital Disruption Supporting an innovative, digital cultureWhile there is no single “digital culture,” the fastmoving pace of digital innovation does thrive betterin a supportive culture. Employers like Google andAmazon are characterised by a freedom to experiment,low “power distance” between leaders and staff, andresources (time and money) to try out new ideas. HRcan play a supportive role in developing these types ofculture in many ways including:nnnDiagnosing the current culture—and the enablersand blockers to innovation—using tools such asthe cultural diagnostics to develop action plansCreating environments in which innovation developsbest, where innovation is actively rewarded(through awards, recognition, and bonuses) andtaking risks is something that staff are activelymeasured positively againstExperimenting with policies such as “10% time”where a proportion of employee time can be spenton innovating alongside concepts such as “scrumteams” or “tribes” where informal groups developnew approachesFurther support from HR may come inother forms such as:nnn11Supporting organisational and business modelredesign to facilitate integration of differentsales channels or new digitally enabled serviceor supply chain processesEnabling innovation via performance managementagainst new measuresEnsuring new behaviours and efforts are suitablyrecognized by means of reward and compensation

The Supply Chain Digital Disruption The pragmatic approachto digitally disruptingyour supply chainA Q&A with Prith BanerjeePrith Banerjee recently joined Korn Ferry as a SeniorClient Partner for the Global Industrial Practice. Beforethat he was Chief Technology Officer at ABB andSchneider Electric, where he oversaw large scale digitaltransformations. Banerjee lays out the top opportunities—and steps—leaders should take as they journey from afocus on logistics to a holistic digital supply chain.What defines digital transformation?The idea behind digital transformation is using technologyto radically improve the performance and the reach ofenterprises. The technologies themselves are varied:cloud computing, mobile applications, the Internet ofThings, social networks, Big Data and analytics, machinelearning and artificial intelligence, 3D printing, roboticprocess automation, augmented reality and virtual reality,and the block chain.Why should the CEO care about all of this?It can help drive top-line revenue, either through newbusiness models or an extension of products and servicesAnd on the cost-saving side, there’s improving operationalefficiency or improving the employee, customer, andsupplier experience. They have access to all the dataand their life can become easier.In your role, what are your top tips for yourChief Supply Chain OfficerA CSCO needs to adopt digital technologies such asCloud, Mobile, IOT, or AI/ML not because they are cooland new, but because it can significantly impact thebusiness outcomes in the supply chain. Some examplebusiness outcomes may be reducing the manufacturing12cost, reducing the time to produce a product, theability to integrate supply chains with the suppliers toreduce inventory, and improving the quality/reducingdefects of your products, and the ability to track andtrace root causes early as soon as defects are identified.As a leader, you should not try to boil the ocean andtry to embrace all digital technologies and solve allbusiness outcomes at the same time, but instead:1) Test Simple Things. Get early wins to win the supportof your stakeholders, and the morale of your team.2) Evaluate the talent of your supply chain workforcein the new digital world. Your team members must havethe talent and skills to embrace this digital technologyand get the maximum out of it. Your people right nowmay not have those skills. The people, in general, needto be more agile.3) As a leader, always be curious and agile in yourmindset. Empower your team to take risks, try newideas, fail fast and fail often, but learn quickly fromthese failures, and adapt your approach in the newdigital world.

The Supply Chain Digital Disruption Looking AheadOver the past 10 years, supply chain has transformedfrom back office to strategic enabler with theability to create competitive advantage in a muchmore strategic way. Whilst supply chain leaders areincreasingly represented at the executive board levelin several industries, there still remains a lack at themost strategic or highest governance level, withfew non-executives on main boards bringing thisinsight. Even companies that embrace the value ofan effective and sufficient supply chain often stickwith incremental changes rather than choosing ahigh-risk/high-reward transformation towards a trulyintegrated, re-invented supply chain whose DNA isfundamentally digital. Most organisations are weldingdigital capabilities onto traditional supply chains, thuscreating hybrid models with additional complexity.In effect, these organizations are trying to constructnew buildings on old foundations: re-fitting, re-wiring,and re-adapting instead of re-inventing, but the cardsare stacked against them in the long run. The lowrate of supply-chain digitisation to date has muchto do with the capabilities of the technologies thatcompanies have had available until recently.Real digital transformations—as opposed to digitaladd-ons—are a huge challenge. However, the potentialgrowth and profit-enhancement opportunities thatdigital technologies offer are even larger. Some argueit will be an evolution rather than a revolution but noone disagrees that the pace of digitisation will increaseas cross-industry initiatives aim to better connectsupply chains among companies to achieve next levelcost and delivery speed optimisation. The degree oftransformation for supply chains will depend on theindustry sector and company.13McKinsey observes that most of the disparitybetween potential and actual gains from supply chaindigitisation can be explained by technology gaps andpoor management choices. However, now that betterdigital solutions have become available, companies canmake greater and faster improvements in supply-chainperformance. Korn Ferry argues that digitally enabledsupply chains have new talent requirements that arequite different in many ways from those of conventionalsupply chains. A critical mass of selected supply chainmanagers will need to be able to translate their businessneeds into relevant digital applications leveraging allnew technologies at hand. The integration and effectivedeployment of data scientists into a traditional workforcerequires a cultural shift. This requires a new breed ofsupply chain leader who is able not only to develop aroad map planning several years ahead but can alsocorrectly gauge the ease of implementing changes,partly because technology is continually improving atrapid speed. What is impractical today might becomean obvious solution in a years’ time.Digital transformation needs are being driven fromthe top, personally mandated by the CEO. This appliesalso to the supply chain. A supply chain leader whocannot get the CEO’s ear, however technically savvy, haslittle chance to meet the challenges ahead. This calls fora new type of supply chain leader, the digitally savvyCSCO who is both a trend spotter and resource provider(see below).

The Supply Chain Digital Disruption Who is the future chief supply chain officer (CSCO)?It has been argued for some time that the modern chief supply chain officer needs to think like aCEO, foster collaboration, have excellent communication skills, and be a strategic relationship builder.As the focus turns to digital transformation, what does a digitally savvy CSCO need to bring overand above these demands? As digital technology is reshaping supply chains, the CSCO’s role keepsevolving. Fundamental drivers such as hyper-customisation and customer-centricity are calling fora new type of executive who thinks beyond supply-and-demand networks

position to lead digital supply chain management, with most (92 percent) reporting to a COO, Chief Supply Chain Officer (CSCO), or to a supply chain leadership member. "The Supply Chain Digital Disruption" aims to provide some insights, particularly from a talent perspective, on the contexts, visions, and challenges