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You’re tired, maybe even exhausted. That’s understandable. Shareholders are constantly seeking value, yet many budgets remain tight, and disruptions seem constant. As an operations leader, you know you need to navigate the here and now, when multiple factors create uncertainty. You also know you should be outcomes obsessed and have a strategy to drive sustainable growth.
The pandemic, tech acceleration, geopolitical tensions and other factors demand a fresh look at how you better evaluate costs, consider investments and improve operations — increasing effectiveness now so you can be better positioned for the future. To help with this tall order, we recently gathered PwC partners in operations transformation for a Q&A on actions that can help your organization achieve better outcomes and ultimately help increase business value.
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Too many leaders kick the can down the road With clients, we have both an ability and a responsibility to “peek around the corner.” What's coming that some companies may not be ready for as they address short-term issues?
Steve: I think a lot of organizations are behind today. I don’t know if many companies have really shored up their capabilities post-COVID. And I think two big areas are data and talent. I fear some clients are kicking the can down the road to tackle immediate issues and constant quarterly pressures. If there are 100 competitors in a road race, there are a few folks in the front and then a whole big pack of stragglers way behind, and they’re either trying to catch up or may not even realize they’re behind.
Nancy: Some are investing, but I don’t think they appreciate the speed of change. They think, “Oh, I have a two- or three-year plan. I can take my time.” A lot of these companies don’t have the time, especially those not at the top of their competitive set. They need to get to the data faster and find ways to get some quick wins that can be use cases for further investment and change. Even if you can start to introduce some new capabilities – even if just a fraction of the long-term vision – you can start to empower your people to work differently and move the needle.
Salil: The investments aren’t coming fast enough. Supply chains run the risk of product innovation and customer expectations outpacing them. For instance, the pharmaceutical industry continues to deal with drug shortages, yet technology investments still lag other industries, especially in supply chain and operations.
What you can do
Let go of the past and look beyond the present. There’s no question day-to-day challenges can be a burden and can’t be ignored, but they also can be traps. Assume your competition already has invested in capabilities and talent for growth, and embrace even partial measures toward making up ground.
Can you be bold? Why are many companies too reactive and just making incremental changes to catch up when they should be thinking entirely differently?
Nancy: Most people are a little bit risk averse. They think, “Hey, it’s worked for the last 20 years. I can squeak by another 10 before I retire.” You should have a strategy that’s about embracing innovation and the potential to leapfrog. And I don’t think many companies have been courageous enough to make that call from the very top and continue to reinforce it.
Steve: I like that word — courageous. The technology companies are certainly trying to get supply chains to the next level with cloud and analytics and AI. Yet some organizations are still looking backward to before COVID, when supply chains were dependable and products just sort of showed up at the right time and place. Historically, the focus has mostly been “Let’s start with process first and then we can think about technology.” What if we step back and take a data-led approach and not a process-led approach?
Salil: Here’s another example. Look at all the control tower implementations out there. How many of them were truly successful? The key here is to have the capabilities to draw insights and reap value out of it.
What you can do
Look at where new tech and data opportunities can help evolve or establish new processes instead of plugging into what you’ve always done for years. Treat technology as a fresh canvas in which any new vision is possible versus constraining it in so-called foundational functions.
Evolving from service to innovation What’s stopping supply chains from evolving from their traditional service provider role into a more cross-functional role?
Salil: I think part of the challenge is that many supply chain organizations are consumed with dealing with cost increases, capacity constraints and keeping up with business demands. There’s tremendous opportunity to elevate the role of the supply chain by building capabilities to support functions across the value chain.
Steve: There are all these functional departments across the organization — sales, marketing, product development, engineering, supply chain, manufacturing. Every couple of years they reshuffle the deck chairs with the hope it will foster better collaboration, but supply chains need to have a much more horizontal way of working. Nobody else is connecting the business in that way, but supply chain has its hands in everything and could be the function that breaks through to truly drive end-to-end integration.
Nancy: The challenge is supply chain does touch a lot, but ultimately they’re not often the decision-maker on some of those things. What is the product innovation? What products are we bringing in? How quickly do we need to bring them in? From an efficiency and cost standpoint, there’s a role for a supply chain to bring a lot of this together. We talk about integrated business planning (IBP), but for decades companies still haven’t figured out how to be more integrated. If supply chain can bring the right data points and a single source of truth into those meetings, it could create that glue.
What you can do
Reassess your operating model and strategy for operations to determine where and how the supply chain can help drive greater integration across traditional department silos. Apply and practice with technology so the new ways of working actually stick. Look for ways to improve collaboration and reduce the information lead time in the organization.
Talent is a key for transformation How should we look at talent as operations functions shift from just “doing” to more active collaboration and problem solving?
Nancy: Many companies are still dealing with talent shortages and skills gaps, and addressing those is an opportunity to add value. Operations can become a breeding ground for talent because you often have a view of the entire value chain. It can make you a better product developer, merchant or salesperson knowing what it takes to actually get something into the hands of a consumer.
Salil: Products are getting more sophisticated, and more customer data is flowing through the supply chain with those products. That requires talent that understands the products and technology. But the solution isn’t “Let’s recruit a few people, and they're going to give us the answer.” It needs to be ingrained into your operating model. For example, there’s a lot of demand for data science expertise. Companies should integrate this capability and understand how to make it successfully derive the benefits.
Steve: There's a big shift that needs to happen from supply chains and operations being run on tribal knowledge, judgment and gut feeling. Everybody’s quick to say they need a couple of data scientists, but that’s not somebody who’s going to be an orchestrator end to end across the business, all the way through delivery. And that’s sort of what’s missing here. When you look at an orchestra, the conductor doesn’t play the music but keeps everybody working together.
What you can do
Go beyond the bullets in a resume to find true problem solvers who can collaborate with others. Don’t assume that adding new skills in a function is the answer alone, especially when employees increasingly need to understand other functions and how they can work together to improve efficiency. The DNA of future supply chain talent combines analytics, leadership and diplomacy, and finding those people is only the first step. You also need to create the right environments — training, collaboration forums, platforms — to allow them to be successful. Lean into change management with different tools and techniques.
A change in operations leadership mindset How can operations leaders encourage and enable that end-to-end view and focus on business outcomes?
Salil: We’ve talked about data, the role of supply chain, and where operations and supply chain executives can help drive value. An example of the mindset shift that we are seeing is going beyond “Am I agile enough to react?” to “Can I predict and be in step with my product innovation and customer expectations?” It shifts the conversation of the role of supply chain in driving business outcomes like customer retention.
Steve: Right, what outcome are we trying to drive? There’s a bigger equation there. Balancing cost versus service — that’s table stakes. The complexity of supply chains is unbelievable, and that changes the dynamic. If the heads of sales, marketing and product development knew the cost of complexity, I think they would make different business decisions. Supply chain leaders can be that connective tissue across the company. The future CEOs are going to come from operations and supply chain leaders.
What you can do
Be the olive branch. Get out of your normal world of operations and start taking more responsibility or interest in other areas. Use the strategic lens of the supply chain to support what your business is trying to drive in terms of growth.
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