The Data Driven Supply Chain

Everyone understands that automation can improve operational efficiency and benefit an organization. However, not making the decision to automate does yield a non-negligible risk outside of the benefit not reaped.

In this podcast, Yacine Mahdid and Hamad Anwar will dive into these business risks to better illustrate the full context of automation in the supply chain and will discuss the following points:

• The current market sentiment of automation in the supply chain.

• What part of procurement or supply chain should you automate (and which you shouldn’t)?

• How does redundant operational work affect churn in procurement?

• Biggest risks of not automating?

• What function in your supply chain should you automate asap?

• Why is ERP not solving all my automation needs?

• How to find the right technological tool as an individual contributor?

Business Risk and Solutions:

• Everything that is mind-numbing and repetitive should be automated asap. This can have a direct impact on the well-being of your employees. Use technological tools or process change to refactor how that part of the work is done.

• Figure out where errors can happen in your supply chain flow and introduce automation to reduce them. Do some light quantitative analysis on how much each of these errors costs using historical data if possible.

• Data collection when not automated can be a major source of risks as humans will make errors in getting the data into the system.

• Automate the flow of work from your ERP to outside organizations asap. The data is most likely not collected and the follow-ups are hard to do for your people.

• Everything that requires an approval process should be automated.

• Watch out for finding one solution that does it all like an ERP system. They have their use case, but it’s unreasonable to expect you will solve all employee’s problems with one software.

• As an individual contributor, do an inventory of where your time is spent and look at what you are currently not doing. This will help you make a business case about why you should be investing in technological tooling.

• Make sure that you connect your tools to your central systems.

• Ensure you have good analytical and data tooling to quantify the ROI of your automation investments.

Out-of-context quotes:

> I think in supply chain and procurement particularly we will see more and more trends toward automation in the near future.

> When a digital transformation project crumbles, it is usually when people try to do too much at the same time.

> One part that you shouldn’t automate is higher-level order decisions, these should act as a gate in your automation flow.

> I could feel her [purchasing professional] tenseness and stress. She was saying “I’m currently at more than 40h to get this thing [purchasing operations] rolling you know?”.

> No one likes that. No one in existence likes these sorts of redundant tasks. There needs to be some sort of creativity or decision you get to do to have some sort of agency in your work.

> The follow-ups shouldn’t exist. “Don’t get me started about follow-ups”. Like, Facebook solved this already. Whenever you send a message you know if the other person saw it. In procurement, however, you have to constantly ping people to check if they received your email.

Procurement has become one of the crucial strategic components of a manufacturing or industrial company in the 2020s.

Ensuring that this function is well attended to is an important strategic move for companies that are worried about risks in their supply chain.

In this podcast, Yacine and Hamad will review the top trends they’ve witnessed in procurement during the year and cover the following topics:

• Hiring procurement vs outsourcing the procurement process.

• Digitalization of procurement.

• Shift in power dynamic with respect to suppliers.

• Sustainability and equitable sourcing.

What Trend will continue in 2023 and beyond

• Hiring for procurement will still be difficult moving forward, outsourcing procurement might become a more desirable solution if roles can’t be filled.

• The procurement role will be much more tech-driven in the future where there are a lot more requirements for having the ability to analyze data.

• Procurement will become a strategic center in a company with high procurement needs.

• Digitalization of the industrial and manufacturing sector will increase. To a more extreme extent, there will be many more digitally native companies in this sector.

• Suppliers will keep having the high end of the power dynamic between buyer and supplier.

• We’ll see an over-specialization in the manufacturing sector (already started in the US, but still getting there in Canada) of the suppliers.

• The consumer will keep pushing for sustainability which will directly impact the company's readiness for sustainability.

• The relationship between suppliers and buyers will need to be much closer in order to align with both companies. The sustainability compliance will still need to be based on trust fundamentally.

Out-of-context quotes:

> There seems to be a lot more demand for procurement people and for senior ones. If companies can’t find these folks, they will outsource that process.

> As soon as this one person that is driving the procurement operations leaves, the whole thing starts to fall apart. They are real currency for the company.

> The company that best fared [during the pandemic] had already started digitalizing. The ones that struggled the most didn’t even start.

> Right now if you go into any software company and say “Hey we are just going to email the source code back and forth”, everyone will be like “What are you talking about”. How can you collaborate with a setup like that?

> After COVID some big companies had to call people in retirement back because the knowledge was so siloed.

> I’ve seen suppliers say “Hey man I’m not going to quote on this, it’s beneath us”. I didn’t think it was like this, but when I went to visit those shops. I was amazed by how much some suppliers didn’t want more business.

> Having a transactional way of doing procurement and trying to mix that with sustainability won’t work.

> What we are going to see in the near future is a more holistic view of procurement where cost isn’t the sole parameter.

Yacine Mahdid

Since the start of the pandemic, disruptions on supply chains has been one of the only constants that was reliable and you could count on.

In this podcast, Yacine and Hamad will outline the top supply chain risk in 2022 and cover the following topics:

• General state of supply chain risk in 2022 (i.e. a lot more risky than pre-pandemic).

• Cybersecurity risk in the manufacturing sector : Why does it keep happening in big organizations?

• Geopolitical risk in the manufacturing sector and how it affects the supply chain.

• Human Resource risks in manufacturing : labor shortage and what to do about it.

• Quality risk in the goods produced.

How to mitigate some of your supply chain risks:

• Educate yourself about the major cybersecurity risk, here is a blog post to get you started and ensure it’s a priority for your organization.

• Do a checkup on how old your systems are and make sure there is a budget to modernize your infrastructure (otherwise you keep yourself exposed to lots of potential attacks).

• Ensure your suppliers are also mitigating the risks on their side.

• Backup your important digital assets for your company operations so that it builds you time.

• Have direct visibility in your supply chain operations digitally and built-in flexibility so that you can adapt to geopolitical risks.

• Ensure that you have a stimulating and challenging work environment for your employees on the shop floor.

• Integrate technology in your supply chain to ensure that the very redundant (but crucial) work can get automated.

• Having more data on your suppliers allows you to take more bets on suppliers. This information needs to be easily searchable and useable.

• Ensure that you have very good information transfer with your new suppliers so that there isn’t any misunderstanding on the goods produced.

Out-of-context quotes:

> The procurement department, they have no choice but to talk to outside folks. The case for a social-engineering attack is much much easier to do here, just by the nature of the industry.

> They have their forecast planned out properly [the attackers]. Yeah in their CRM they will ping back this company and ask if they are still interested in their service [laugh].

> Welcome to the 2020s, now every manufacturing company needs to understand that cybersecurity is a core component of your operations.

> I’ve seen buyers that can’t innovate and improve their operations because they can’t hire in procurements.

> We [a manager in a manufacturing company] have hired a journalier/freelancer and after the dinner pause he just left. He didn’t say a word, he just walked out the door.

> The most effective strategy to curb labor shortage I’ve seen was to train the employees. The best at this were literally teachers.

> [talking about pushing too much for low prices] No one is happy when the prices are below the competency line. The buying company is not happy because there will be delays and lower quality. The suppliers that bid too low aren't happy because they are losing money on the deal. The optimal supplier is not happy because they know the part will be messed up. You have essentially pissed off everyone as a buyer!

Yacine Mahdid

A data-driven supply chain has become one of the core competitive advantages of manufacturing companies in modern days.In this podcast, Yacine Mahdid,

COO at Axya, and Hamad Anwar VP of Product at Axya will demystify this term and cover the following topics:

1. What is a data-driven supply chain and where does Machine Learning/Artificial Intelligence/Deep Learning fits?

2. Why can't companies just be data-driven? (hint: the data is usually not great)

3. What is supply chain 4.0 in the context of industry 4.0.

4. How to get started with digitizing your organization.

5. Should I do the digitization myself with my IT department, outsource it or hire people?

6. Who should be owning in an organization the digitization project?

7. What are the competitive advantages of having a data-driven supply chain?

Core tips to start your journey in modernizing your supply chain so that it’s much more data-driven:

• Ensure your decision makers are data literate and understand what is data.

• Understand that not all data formats are the same.

• Focus first on the data that you collect. Ensure it’s of high quality for analysis and processing.

• Don’t forget your partners when thinking about collecting data for your supply chain.

• Start with a simple project to digitize your organization, don’t do it in one swoop!

• Ensure that digitalization is a core priority of your executive (like at the CEO level almost).

Out of-context quotes:

> If your company is based on tribal knowledge passed down from generation to generation and you are telling everybody “Hey guys we’re not doing this anymore, we are doing this other thing and it’s gonna cost us millions of dollars”. At the inevitable first problem you will encounter people will revert back to the old ways.

> It’s a bit counterintuitive, but when your own data is moving through an external application built by advanced technological people and comes back to your stuff. It’s usually much better structured than if it moved through your own systems.

> The two companies that I’ve seen that were top-notch in their digitalization in the manufacturing space were Traf Inc. and SBB in Quebec. The common theme between the two is that the owners understood the importance of digitalization and were spearheading this endeavor.

> Top benefit is total flexibility. You will be able to witness trends before they happen and make the moves. Almost as if you are prescient.

👋Yacine Mahdid