The future of supply chain and how those working in it can adapt to the changing demands were the themes of Supply Chain 2020 lunch, hosted by Korn Ferry and McKinsey in the spring of 2015. Jochen Grosspietsch, a partner in McKinsey’s European supply chain practice and leader of its consumer operations group in EMEA, provided context for the debate, reminding attendees just how much the world has changed in the last two decades and identifying a number of key themes which are shaping the function. These were: Innovations in business: A number of disruptive technologies including mobile internet, the internet of things, 3D printing and autonomous vehicles are combining to impact the way we operate supply chains and offer new opportunities. Shorter and tougher business cycles: The interconnected global economy means industries and supply chains are more vulnerable to unforeseeable risks, including climatic and geophysical events, which are increasing in intensity and frequency. Expanding and more demanding customer base: More people are shopping online, and have heightened expectations around customer service and delivery options. This is expected to increase dramatically in the next three years, led by rapid growth in Asia, and China in particular. Big data: More devices will be equipped with sensors and will provide information around the location and movement of goods, helping with planning and enabling further efficiencies. This can already be seen in the efforts made by retailers such as Zara (Inditex) in implanting RFID chips into every item in the supply chain. Event summary Supply Chain 2020 The evolution of supply chain was the topic of debate at the Korn Ferry/ McKinsey global supply chain leaders event in the spring of 2015.
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The future of supply chain and how those working in it can adapt to the changing demands were the themes of Supply Chain 2020 lunch, hosted by Korn Ferry and McKinsey in the spring of 2015.
Jochen Grosspietsch, a partner in McKinsey’s European supply chain practice and leader of its consumer operations group in EMEA, provided context for the debate, reminding attendees just how much the world has changed in the last two decades and identifying a number of key themes which are shaping the function. These were:
Innovations in business: A number of disruptive technologies including mobile internet, the internet of things, 3D printing and autonomous vehicles are combining to impact the way we operate supply chains and offer new opportunities.
Shorter and tougher business cycles: The interconnected global economy means industries and supply chains are more vulnerable to unforeseeable risks, including climatic and geophysical events, which are increasing in intensity and frequency.
Expanding and more demanding customer base: More people are shopping online, and have heightened expectations around customer service and delivery options. This is expected to increase dramatically in the next three years, led by rapid growth in Asia, and China in particular.
Big data: More devices will be equipped with sensors and will provide information around the location and movement of goods, helping with planning and enabling further efficiencies. This can already be seen in the efforts made by retailers such as Zara (Inditex) in implanting RFID chips into every item in the supply chain.
Event summary
Supply Chain 2020
The evolution of supply chain was the topic of debate at the Korn Ferry/McKinsey global supply chain leaders event in the spring of 2015.
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This prompted a lively debate among the senior supply chain and procurement participants, with many noting that it can be difficult to predict which new development will take off and highlighting the risk in focusing on new technologies at a time when markets and economies are changing rapidly. Others felt that there was a risk of information overload, and that they had little idea what to do with the huge amounts of data they are able to collect.
Discussion then turned to the future of the supply chain, which could look even more different. Ingo Aghte, a partner in McKinsey’s London Office and leader of the firm’s transport and logistics operations group in EMEA, spoke about the potential for crowd-forecasting to improve forecast accuracy to 85% on a weekly basis, and for and for ways to incorporate more information into good plans, improving service level and availability across the supply chain. “There will be more information but also smarter ways to allow things to use this information,” he said.
Other examples of practices and technologies enabling better supply chain performance include Amazon’s Kiva “moving shelves” system, where goods move to operators rather than the other way round, and autonomous containers which can act independently and can plan the optimal route to their destination, alerting organisations if they are in the wrong place. Organisations also strive to become more agile, enabling them to adapt products in line with demand and even raw material price fluctuations, and turning swift reactions to potential risks into competitive advantage
Yet the increasing prominence of the supply chain in organisations means those working in the function will need to become more influential within the wider business. Today, just 26% of companies have a function on the board representing the end-to-end supply chain, but McKinsey predicts by 2020 nearly every supply chain-instensive business will have a supply chain executive, and that the supply chain function will be seen as a home to grow talent and develop senior management.
This prompted a lively debate around the nature of the supply chain profession, and its role in the wider enterprise. “The supply chain attracts people who want to get things done, but not always those who want to talk about it,” said one. “Most feel they’re undervalued, but this has to change. Most boards would welcome greater involvement from the supply chain, so the function has to step up.”
‘Supply chains in 2020 will be more agile, better segmented and will have very different forecasting capabilities than today’
‘To create competitive advantage from the supply chain, companies need to turn disruptions and supply chain risks and into opportunities to generate higher margins, additional sales and to capture new customers’
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Others, though, pointed to the influence of people they reported into as critical in whether or not the supply chain is able to impact the bigger picture, while there was also a feeling that often chief executives and boards see the supply chain as a function whose job was to avoid any pain. “Supply chain success is silent running,” one participant said. Another felt there needed to be a bigger focus on the talent coming into the function, with a greater emphasis on more general business skills and more willingness for people to move between other parts of the business.
Part of the problem, suggested Aghte, could be that the supply chain function is unable to demonstrate the value it can bring to the wider business, including being able to speak their language without resorting to complex and unwieldy data. “The supply chain has great ideas but fails to get them heard, so you can end up with other functions taking the lead,” he said. “The challenge is to get the right talent in the team that can facilitate the right cross-functional trade-offs in the decision making process.”
One response to this was that the function needed to change how it talks about issues, using language such as “risk” and “choices” rather than technical terminology. “We need to talk about how the supply chain can be a differentiator, for example, by providing competitive advantage by being first to market,” said one delegate. “What are the elements that can set a business apart, which can be facilitated by the supply chain? We need to be able to show the benefit on the bottom line.”
The global supply chain business leaders’ lunch was hosted by McKinsey & Company and executive recruitment and talent management business Korn Ferry, and headed by Bernhard Raschke, Senior Client Partner. It was attended by leading business and supply chain executives, as well as representatives from Korn Ferry.
‘Today, the supply chain is not communicating in the language of the board. Supply chain leaders need to communicate differently to be heard’
‘The supply chain has great ideas but fails to get them heard, so often decisions are taken only from a commercial perspective.’
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About McKinsey & Company
McKinsey & Company is a global management-consulting firm that serves leading businesses, governments, non governmental organizations, and not for profits. We help our clients make substantial, lasting improvements to their performance and realize their most important goals.
About Korn Ferry
Korn Ferry is the preeminent authority on leadership and talent. For nearly half a century, clients have trusted us to recruit world-class leaders. Today, we are their partner in designing organizational strategy and developing their people to achieve unimaginable success. For more information, visit www.kornferry.com.
About The Korn Ferry Institute
The Korn Ferry Institute, our research and analytics arm, was established to share intelligence and expert points of view on talent and leadership. Through studies, books and a quarterly magazine, Briefings, we aim to increase understanding of how strategic talent decisions contribute to competitive advantage, growth and success.
© 2015 The Korn Ferry Institute
Bernhard RaschkeKorn FerrySenior Client Partner+44 20 7024 [email protected]
James DayKorn FerryPrincipal+44 20 7024 [email protected]
Dr. Ingo AghteMcKinsey & CompanyPartner+44 20 7961 5416 [email protected]
Dr. Jochen GroßpietschMcKinsey & CompanyPartner+34 649 138 [email protected]
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