lessons learned: digital supply chain & logistics management
TRANSCRIPT
Thailand Competitiveness Conference 2018
Lessons Learned:Digital Supply Chain & Logistics Management
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Transform (digitally)or die!
We see ourselves as
a digital companyCarolyn McCall, CEO
We will transform
into a digital airlineTony Fernandes, GCEO
We are focussed on
digital transformation Stephen Tame, CDO
We are a tech company
with an airline attached Colin O'Brien, CEO
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Digital transformation –
What does this really mean?
Automation & autonomization of the supply chain and internal processes
Innovation through digital products, services, and business models
Digital transformation
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A popular vision of the autonomous supply chain of the future
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Supply chain control towers will monitor and steerend-to-end flows
Source: BCG
Real-time
controlled flows
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Artificial intelligence and advanced analytics will allow for prescriptive planning
Note: AI = Artificial Intelligencs; AA = Advanced Analytics
Source: BCG
AI and AA powered
planning
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Supply chain considerations will drive every aspect of production operations
Source: BCG
Industry 4.0
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Transactional and physical processes will largelybe automated
Source: BCG
Fully automated
processes
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Source: BCG
Optimized
network and
blockchain
Networks will become increasingly decentralized and support constant optimization
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Past Future
Central controlAutonomous distributed
decision making (AI / AA)
'Perfect planning' Real time optimization
Specialized and highly
optimized automation
Versatile, reprogrammable,
collaborative robots
Closed systemsData integration beyond
company borders
… …
Digitizing supply chains means using digital technology to implement a new PARADIGM
… it's not an isolated novel technology by itself
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Despite an ever challenging global environment …
Expanding global
networks
Broadening product
portfolios
Intensifying global
competition
Strengthening
regulatory oversight
+4-6%Revenue upside
+5-30 p.p.Service quality
Supply chain cost –10-20%
–15-30%Working capital
+2-4 p.p. Overall EBITDAIncreasing political
uncertainty
… supply chain digitization proven capable of delivering value
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We are seeing only the tip of the iceberg – more value expected to come
Already big
Over the horizon
(3+ years)
Next frontier
(within 3 years)
Impact
Big data & analytics
IoT / Edge devices
Cloud computing
Ubiquitous connectivity/mobile
Nanotechnology
Smart implants
Connected neocortex
3D Printing
AI/Machine learning
Autonomous transportation
Blockchain
Robotics
Augmented & virtual reality
API (Application Programming Interface)Foundation
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What does it take to get there?
Best practices along a real life example
Curb-side grocery delivery
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Kroger focuses on the customer, ie, the business
… not the technology
1Everyone is talking door-to-door
delivery …
… but maybe curb-side delivery is
perfectly enough (and a lot cheaper)?
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Kroger seems to follow a holistic digital vision centered around the business
… instead of leaving it to the IT department
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Automation and
autonomization of
warehouse operations
Route optimization
and full automation
of delivery
Kroger took 5% stake
in Ocado valued at
USD 250 million
Pure partnership play –
a mutually beneficial
'experiment'
Suggests a broader digital vision in place?
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15
Kroger dares challenging its current business models
… instead of merely digi-izing the status quo
3Past
Exclusive customer ownership
FutureShared customer ownership
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16
Kroger gets the right people for the job – even if they can't hire them directly
… instead of deluding itself or giving up
4
Principal engineers
Self-driving cars unit
As a 135 years old grocery shop,
how do you hire these guys?
You don't. You partner with them and
rely on your team to get digitally up
to speed while working with them
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Kroger is changing its way of working towards that of a digital startup
… instead of sticking to established processes
5The past was largely sequential
The future is iterative – or agile
Analyze
Design
Build
Test
Roll out
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Kroger is changing its way of working towards that of a digital startup
… instead of sticking to established processes
5The past was largely sequential
The future is iterative – or agile
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Best practices of successful digital supply chain transformations
Focus fully on the customer and their
needs, i.e., the business
Define and follow a holistic digital
vision centered around the business
Dare challenging your current business
models – change will be required
Get the right people for the job, even
if you cannot hire them directly
Change the way you are working –
emulate startups by becoming agile
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Moving to action – structuring a digital supply chain transformation
Industrialize and
integrate with
legacy systems
Adapt and automate
E2E processes
Control
the flows
Power
the plan
Optimize
the network
Create
enablers
Embed agile and
transfer digital
center capability
Initiate new data
architecture
Control
tower pilot
Demand
planning
Predictive
control tower
Full platform for
2-3 E2E flows
Transport
analytics
Digital twin
warehouses
Fully prescriptive
control tower
Embed ‘Digital
Native’ behaviors
Supply network
optimization
Immersion, diagnostic and digital road map4-6
weeks
9+ months
depending
on scale
4-9
months
8-12
weeks
Ignite
Pilot
Scale
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Thank you for your time and attention!