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Building a digitally enabled Supply Chain, where the customer is in focus, is for many companies a challenge. The business case for doing so has proven to be worth the challenge though.

According to a survey, which the Digital Supply Chain Institute (DSCI) did, the design of and transformation to a digital Supply Chain with the customer in mind, can reduce procurement costs for all purchases of goods and services by 20% and reduce supply chain process costs by 50%. In addition to decreased costs, the transformation to a digital Supply Chain can increase revenue 10% by creating a better customer experience and new routes to market.

In this blogpost we will provide you with some inspiration on how you can design and transform to a digital Supply Chain with the customer in mind and the role of the Supply Chain manager in doing so.

What does Supply Chain digitalization mean?
Before we dive into the how, let’s have a look at what transforming to a digital Supply Chain means. Real digital transformation is not about getting your company to use a specific set of new technologies. It is about your company’s ability to react and successfully utilize new technologies and processes. In a Supply Chain context, the approach to digitalization could happen at three different levels.

The first level is strategic focusing on having a strategic approach to digitalization as part of the Supply Chain strategy. This level is at the overall business level and is concerned with how digital strategies can improve existing business models or develop new business models.

The second level is about business processes to identify, which processes are influenced the most by digitalization and what projects are needed to be implemented. Business processes and technologies must go hand in hand.

The third level is the enabling level, focusing on the concrete technologies and systems to be implemented in supporting the requirements of business process outcomes.

The human factor is of course of vital importance and is too big a subject to cover here.

Regardless of the size of your company or the sector it is involved in, real digital transformation includes using new devices, platforms, systems, and networks to create:

More profitable business models
More efficient operating processes
Greater access to markets
Enhanced offerings to users
New sources of revenue

The challenges
Transformation in any part of a business has always been difficult. It requires organizations to juggle multiple moving parts, including people, processes, and organizational infrastructure. And it requires them to overcome all the usual technical, organizational, and cultural obstacles to change.

Digitally-enabled transformations add two extra challenges into the mix. First, there is the extra technology component, which must be handled alongside changes to processes, organizational infrastructure, and mind-sets and behaviors. The second, and more significant, challenge for companies, introducing digital technologies, into their supply chains today is the lack of a single, clear destination.

Digital technologies are evolving so rapidly, that there hasn’t been time for many of them to prove themselves at scale. Supply Chains are so specific to each company’s product range, operating footprint, and customer needs that there is no archetype.

All that extra complexity and uncertainty means, that companies can no longer follow the traditional linear transformation path: they need an iterative approach. New digital technologies must integrate with people, processes, and organizational infrastructure—but those technologies will also influence how each of the other elements should be redesigned.

It is all about market responsiveness
Most Supply Chain executives used to be expected to deal with working capital, operating costs, and customer service. In many companies Supply Chain worked in the background, trying to keep operations smooth and all the stakeholders happy.

Supply Chains are still the central nervous system of the economy, and it is supporting the advanced lifestyle that we enjoy. We see the Supply Chain in action, so to say, each and every day, as we see transportation on our roads, rail, sea and in the air. Most consumers do not even realize to what extent they depend on Supply Chains in sustaining their everyday way of life.

Also, as more and more sales happen through digital channels, the Supply Chain is now a key player in the definition of the go-to-market model. Customers going online have become increasingly demanding and the operating environment has become more complex.

The continued, and quick, growth of e-commerce are giving air to the idea, that consumers can interact with retailers and brands through multiple devices, order products through these devices, choose from multiple delivery options and expect a seamless experience throughout is now coming to the fore even more rapidly.

This also means, that the traditional “inside out” approach does not work any more and many companies are on the road to transform themselves, so they become more agile and market responsive. In doing so digitalization plays a key role.

Supply Chain Managers must become more business facing
With the above in mind, Supply Chain professionals must take on more business-facing activities, particularly in the areas of planning and customer relations. Also, companies have begun thinking about end-to-end planning, become serious about demand planning, and aligning different actors in the company such as sales and finance.

From a Supply Chain digitalization perspective this is putting pressure on traditional Supply Chains to improve their master data management, develop new data models and manage a magnitude of orders and product availability complexities.

Supply Chain Managers should look for enabling technologies
Hearing and thinking about Supply Chain digitalization also means hearing about many technologies and buzzwords, and unfortunately very few cases and concrete examples. It can be challenging to find out where to start. For Supply Chain managers balancing the “day to day” imperatives of service, cost and working capital management, as well as navigating internal stakeholders, it can be difficult to know how to approach the topic.

The Supply Chain manager can look at the Gartner Supply Chain Strategy Hype cycle, which represents the maturity, adoption, and social application of specific technologies. Though, when reviewing those it is equally important to separate the hype from reality and identify those that have a best fit for the organization. This could mean engaging critically with new revolutions, benchmarking against others, understanding the right fit and developing the internal business case.

Supply Chain Managers must look for gamechangers
New technologies is not the only thing that Supply Chain managers should look for. Running a competitive Supply Chain in a volatile world demands a constant outlook for gamechangers. The impact of political instability around the world is impeding the efforts of global companies to efficiently drive cross border trade. It will also disrupt global sourcing strategies designed to make in-bound Supply Chains leaner through accessibility to a greater diversity of sources.

Adding to that, we have the “Uberization” and the climate change which challenges the designs of the Supply Chain. With Uberization we mean asset sharing, pushing utilization rates up and accompanying transaction down. We are just at the bottom of the learning curve, so there is a long way to go.

In other words, because the likelihood is that centre-of-gravity of a Supply Chain is going to change frequently in the future, given the volatility of the business environment, the need for flexibility in the supply/demand network increases. Resilience comes with a cost so a conscious decision about what level of flexibility the company should provide is key. In other words, all this uncertainty is the enemy of efficient Supply Chains.

The vulnerabilities of the changing Supply Chain were also visible long before the crisis hit. Developments were driven by a need to make the Supply Chain more sustainable, become more digital, adapt to new business models and become more efficient. Simultaneously, the capabilities to respond and adapt to rapid and big changes in volumes and customer behavior. The crisis has just highlighted these vulnerabilities.

Creating an “outside in” approach
The only way you can claim to be truly “people/customer-centric” is to find a way to interpret customers’ expectations, organize these into a small number of groupings or segments, and then directly link these back to the organizations challenges. In other words, mapping the market in this way becomes a frame-of-reference for re-engineering inside the organization.

Designing a supply chain that will function for 5 to 10 years is a big investment. Doing this successfully means understanding the individual values that shape buying behaviors. The first thing to understand is buying behaviors. According to John Gattorna, author of the book: Transforming Supply Chains, you should expect to uncover four or five dominant buying behaviors for any given product/service category in each target market—and that, combined, these will give you about an 80 percent fit to a given market.

Once you’ve done the research to understand the buying behaviors, associated with a particular industry and company and products, it’s a fairly straightforward task to work backward to engineer an equivalent number of suitably structured supply chains. In other words, once you understand the structure of your market, you can replicate that structure inside your business and within the supply chains that are hard-wired into your business.

Buying behaviors will change. The changes, however, tend to involve short-term shifts between the behaviors already identified. This is a process, however, that demands the ability to understand, observe, and connect with customers.

What Gattorna is arguing for is an “outside-in” approach. It’s consistent with the Design Thinking that Roger Martin introduced about 10 years ago— the idea of looking back at your own company through the eyes of your customers, and trying to understand what’s in the customer’s mind.

The digital Supply Chain must be designed
High performance Supply Chain’s do not just evolve over time; they must be consciously designed to fit specific product-market combinations. The design or redesign process must work from “outside in”, supported by design thinking. It is necessary to see the patterns in the market and the demand data and respond with precision.

John Gattorna’s framework Dynamic AlignmentTM is a perfect example of a tool worthwhile looking into. Tailored Supply Chains will help you create the market responsiveness you are looking for, as it provides flexibility. Without flexibility and the right technologies, it is difficult to claim that you have the customer in mind. So first you must understand your business landscape and then you should design the Supply Chain of the future.

As you might recall, according to a survey, which the Digital Supply Chain Institute did, the design of a digital Supply Chain with the customer in mind, can reduce procurement costs for all purchases of goods and services by 20% and reduce supply chain process costs by 50%. In addition to decreased costs, the transformation to a digital Supply Chain can increase revenue 10% by creating a better customer experience and new routes to market.

Summing up we could say that:
1. Look for gamechangers
2. Assess the technologies
3. Segment the customers
4. Understand buying behaviors
5. Build the transformation plan

Supply Chain organizations must rapidly assess new digital strategies and Supply Chain planning technology solutions to accelerate digital business. At the same time, they need to assess and identify automation opportunities, while supporting organizational change. How do they stretch their organizations current way of thinking and operating while at the same time delivering on speed and flexibility? Get some fruitful advice in this blogpost.

What does digital mean?
Supply Chain leaders of today struggle with defining what “digital” means for the Supply Chain. Supply Chain are living in a time where there is a lot of complexity and volatility but also enormous opportunity, significant risk, and lots of uncertainty. Supply Chain leaders are driven to redesign their operating models to better meet the needs of new and existing (digital) business models and incorporate digital technologies.

So, the business case is clear. New business offerings are driving revenue growth and the Supply Chain must adjust accordingly. The good news is, that there is a willingness to invest in digital technologies, especially within Supply Chain planning.

Digitalizing Supply Chain planning
Though many Supply Chain leaders struggle with translating a digital vision into the critical Supply Chain planning capabilities needed, to deliver a digital experience to customers. They also struggle assessing emerging digital technologies and current Supply Chain planning technologies, to operate the Supply Chain in new ways.

Digital planning is not about digital technology. Rather it is about appropriate and effective use of digital technology being applied to planning. As a company moves forward in its journey, and applying these technologies across the business, they are looking to make higher quality decisions in planning.

These trends are bringing new requirements that often obviate those traditional architectures. Organizations are more frequently seeking ways to capture data from external data streams, to provide input for future planning activities. As a result, data and processing of this data require increasingly extensive use of in-memory computing to help with planning speed, granularity, and model adaptability.

In parallel, as higher volume, velocity and veracity of data is brought into Supply Chain planning, this increases the need of organizations to use advanced analytics to drive process automation and get insights from all this newfound data.

Why is there a need to be more agile in the assessment?
The accelerating digital business means organizations must rapidly assess new digital strategies and technologies. As digital planning becomes a top priority, Supply Chain leaders need a way to assess and identify automation opportunities, while at the same time supporting organizational change as planning decisions move from people-centric to decision-centric. It is time to rethink the way assessment is done when it comes to the assessment of Supply Chain planning technologies. It is time to seek and embrace agility.

How to rethink the way assessment is done
Supply Chain organizations should place a greater emphasis on testing, experimentation and learning when evaluating Supply Chain planning technology. They should adapt an agile mindset when considering new Supply Chain planning technologies. They should avoid risky and costly projects with long cycle times. They should build pilots and proof of concept into the Supply Chain technology assessment process, in order to gain speed to value and flexibility while mitigating risk and uncertainty. If they do not, they risk that the business looses out on their business potential.

Before the assessment is started, some essential questions
There are some questions which the organization could consider before starting the assessment of the technology – and perhaps start or continue a conversation with a Supply Chain technology partner:

Where are you today in terms of Supply Chain planning maturity?
What type of business are you and what kind of complexity do you have in your Supply Chain? What needs to be catered for?
Larger companies tend to have more complexity in their Supply Chain
What are you trying to achieve? What challenges are you trying to solve?
Make a list of operational challenges that you are facing and goals that you would like to achieve. Spell out the performance you are looking to achieve with the technology. If today you have decentralized organization – will that change in the future?
What are your must have features?
The type of business you are running will determine the exact tools and features you require to operate effectively. Make sure that the software technology has the right functionality to meet your specific requirements.
How much are you willing to pay?
Costs can vary significantly – keep in mind that paying for essential functionality can end up increasing your profitability and decreasing costs over time. What if you could pay more but get a higher guarantee of business results – would that make a difference? There could potentially be a risk of missing out on business results which can be hard to quantify.
What integrations do you need?
Most but not all cloud-based technologies offer a suite of integrations with other key application.
What kind of organization/training/support do you need?
Most providers offer varying levels and types of support as well as training resources, although costs can vary. What you need to consider is how resources will be organized including key role. What key competences, people and skills are needed for the project team and how will they be provided/acquired.
Which change will your planners and other employees see and feel?
Have an idea about the communication around the change. What is the story?

Whenever organisations manage for change, we reach for the Change Management Toolbox. As experienced managers, we all know the essentials of stakeholder engagement, project management, training, and communication by heart.
Even though we strive to do the right things right, soon most of us learn – the hard way – that sustained change is hard to achieve, and it is basic knowledge from countless studies that the majority of change projects struggle to realize their full potential.
Popular explanations as ‘unrealistic ambitions’ or ‘inadequate change management’ may account for some failures. Still, an amazing number of perfectly orchestrated change initiatives sail into troubled waters.

The success of your change management efforts depends on your organization’s change capacity.

struqtures® founder Birgitte Clausen and Associate Professor Hanne Kragh, Aarhus University have studied what hinders or enhances organizational change capacity, and their research surfaces two interesting insights that go beyond general change management recommendations:

that deep structures in organizations hinder change or pull things back in line
that day-to-day management for change targeting deep structures can create organizations with a high capacity for change and innovation

The core message is, that you can significantly increase the success of the individual project, if your day to day management practices pays attention to factors, that increase the organizations overall change capacity.

Watch out for deep structures

Deep structures are relatively stable and reinforcing patterns that guide peoples’ behaviour, and as such, deep structures may hinder, limit, or enforce change.

Using an iceberg metaphor, change management is above the waterline while deep structures are below. Deep structures are invisible strings, ‘taken for granted’ ideas and patterns of behaviour, that guide

Deep structures are different from culture and climate. Instead, they are long-lasting consequences of organizational members’ interactions that shape culture and climate.

Deep structures are the strings that pull your organizations culture off track

It is an old refrain that culture eats strategy for breakfast. However, the mere thought of cultural change makes many management professionals take a deep breath and head for the next topic.

Culture is to abstract, too diffuse and to slow to change. And most people do not have the time, the patience, or the knowledge to really get started.

Our study offers good news. You do not need to run cultural change project to increase to increase your organizations’ change capacity.

4 areas of attention are essential to enable high change capacity

You can integrate certain practices in your daily management efforts, and thus manage for change and increase your organisation’s change capacity. In essence, you should emphasize 4 focus areas:

enhance the relational structures in your organization. The better related your people feel, the faster the speed of change.
beware of organizational myths and fairy tales from Once Upon A Time. Remember, that how we talk about past experiences shapes our expectations of tomorrow and determines our actions today.
accept that emotions beat rationality. We normally cherish rationality as the uncontested good guy in management. However, behaviours at all levels of the organization are constantly derailed by strong underlying emotions.
stop relying on your leadership autopilot. Fly manual instead. Even though they may have served you well in the past, your preferences, beliefs and organizational logics are most likely also your blindest angle and the enemy from within preventing you from achieving what you want most.

This Blog post is published in collaboration with Birgitte Clausen, Speaker, Trusted Advisor, and Managing Director at Structures, a Strategic Business consultancy focusing on Change Capacity. Learn more about the offerings of Struqtures here.

The most perfect project plan, the most perfect training plan, the most perfect communication plan will fail if it is launched in an organisation with low change capacity.

Change management is often presented as the magical silver bullet that can ease the way of any project. When a project fails, you will soon hear people blaming it on poor change management.

Bad timing. Bad communication. Bad training.

When things do not work out as planned, an automatic reaction is to blame it on the people.

We individualize the problem. We blame it on someone, on somebody: if only somebody did a better job, if only somebody were better, if only somebody knew better – then everything would be fine.

Very often, the problem is not the people. Nor the project.

The problem is very often the setting, in which the project takes place. The settings, in which people work.

Ease of change depends on organizational characteristics

Think about it like this: The project is the foreground of our focus. The organisation in which the project takes place is the blurred background, that receives limited attention.

Often, we direct our full attention to what goes on in the project. We look at the foreground, and we interpret everything related to the project within the narrow definition of the project. And we forget the background. We forget that the project takes place in an organisation with certain characteristics, and that these characteristics may determine the success of a project.

Imagine that you are the project manager of a construction project. You are tasked with building castles of sand.

You may be the ultimate builder, project manager, communicator, or trainer – but the success of your sandcastle depends just as much on the characteristics of the beach, where it is built.

It depends on the composition of the sand, the tidal waves and the weather. The context where you build your castle is just as important as the management of the sandcastle project itself.

The same applies to change projects in organisations.

Some organisations are more favourable to changes than others. Not because their people have better skills or are less change resistant, but because the organisation is configured in ways that ease the speed of change.

This is called change capacity.

Change capacity can be built

You can build your organisation in ways that increase or decrease your change capacity.

Work is organized by means of a web of structural components, that determine how people behaves. You may ask them to do A, but if the structures pull them in the direction of B, they will move towards B.

Strategic priorities, hierarchies, rules, processes, systems, dominating behaviours, logics and old stories are examples of such structural components that shape the way people act and react.

Change capacity is a function of how well the different structural pieces fit together.

All organisations organize work in some ways. They lay out all sorts of structures. You cannot not have structure in an organisation. Because deciding not to have structures in place is also a kind of structure, because it organizes how people work.

The web of structural components is not permanent. You cannot compose them in any way you like, if you aim for change capacity. But you can learn the logics or structural fitness and integrate them as mindset and an approach to daily management practices.

Are you sometimes wondering what makes Nordic Business Leaders so unique in a global context? We may come from small countries, but with great innovation capabilities, we have the know how to build great companies ready to do good in the world – focused on more than just short-term profit and the bottom line.

Times are changing and so is the need for a new leadership paradigm. The rapid discoveries, innovations and developments demands a different style of leadership. It is the leader’s role as a navigator of change, and as a guide towards the future, to make sense of what is seen by many as a period of increased complexity.

Are there aspects of our Nordic style that could be beneficial in this rapidly changing and evolving world? Can they provide answers to a new leadership paradigm? What methods and techniques long-established in the Nordics can prove to be of relevance and practicable when working on a global level?

In this blogpost we will take a closer look at how the unique Nordic competences trust, care, openness, transparency, and responsiveness could support the change in global companies.

The Nordic history
The history of the Nordic region is one characterized by adventure, curiosity, and a dependency on the outside world. The Nordic nations understand that their own survival has been reliant upon looking outwards, participating in international communities rather than on insularity and isolation.

The history of the region is one of exploration and discovery, constant adaptation to complex environments, networked communities dispersed over a large area, innovation within creative constraints, continuous learning, facilitated from childhood and on through adult education, the celebration of the collective alongside the individual and a willingness to experiment over and over again.

The outlook of the Nordic people is phlegmatic. We are accustomed to circumstances changing at short notice, requiring responding to whatever new context emerges. Nordic people are also aware of the small size of their nations and of the disproportionate but significant role they play on the world stage.

This also means that Nordic people provide a creative, simplified and unbureaucratic perspective on what is going on, and about how to take advantage of opportunities and resolve issues. Nordic people speak their mind and are raised to do so. Access to and openness of Nordic Business leadership is unique and makes people meet each other as equals. In other words, it is the low power distance, clarity and straightforwardness and the flat organizational structures in which Nordic Business Leaders can be approached easily that makes the leadership style unique.

Leadership occurs when other people respond to someone’s authenticity and choose to follow them, not through the assertion of rank and status. Authority exists to provide help, guidance, and structure. It is not to be feared but to be engaged with, questioned, and constructively challenged.

Trust plays a special role
Trust plays a special role in the Nordics as it is the foundation stone for how the Nordic society works. It informs how we interact with each other; it explains our approach to leadership, and it is an enabler for many other aspects of our leadership style. Without trust our emphasis on openness, transparency, delegation, self-direction, teamwork, and equality would be undermined. Trust enables people to move swiftly from introduction to decision to action. Trust results in efficiency and effectiveness, helping to save time and money in the long-term.

Trust is the societal glue that is there by default rather than having to be earned, as is the case in many other cultures. In the Nordic region trust is granted unconditionally and with it comes an expectation that they will do it right. It oils the decision-making process, enabling people to bypass small talk and move straight on to what is important, and it allows young kids to climb trees without supervision.

Trust stems from respectful human connections that disregard otherness and highlights what we have in common. Many Nordic Business Leaders conclude that: “In essence we are all the same. We are all humans, driven by the same need for love, belonging to a community and contributing something meaningful in our lives”.

In a global context it is often the case that the Nordic leader is responsible for overseeing change. It is imperative that the foreign leader recognizes that it is they who are the embodiment of change for their colleagues when they work with other cultures. How quickly they can move from fear of the unknown that they represent to trust of their leader is usually indicative of future success.

Care
In the Nordics, part of our leadership philosophy is reflected by the phrase “freedom with responsibility”. This captures the notion that people enjoy personal freedom but assume responsibility in a communal context.

A Nordic Business Leaders role is therefore to create a nurturing environment where people feel engaged and can flourish, where they feel safe and free to speak their mind, experiment and make mistakes and are empowered to move things forward by making their own decisions. Such a supportive environment, and the sense that an individual’s personal purpose is somehow aligned with that of the organization they work for, creates happiness at work.

Simon Sinek has suggested that the “the real job of a leader is not about being in charge, it is about taking care of the people in your charge”. Coming back to Nordic Business Leaders, they typically have a strong sense of responsibility for those who work alongside them. In other words, the Nordic way of trusting people and caring for people and putting responsibility out in the open helps build people up.

A popular metaphor is looking at the leader as a gardener. You cannot make a plant grow by commanding it to do so. You must create the right environment where it can flourish, watering it, ensuring there is enough sunlight and air. Only then will the plant grow. As opposed to seeing the leadership style as a game of chess.

Nordic Business Leaders are great at connecting with their colleagues on a personal level. This makes them establish strong trust-based relationships. People come first. A Nordic style of leadership can be mistaken for softness. Hence it is important to be clear about objectives and responsibilities.

Openness
Nordic Business Leaders are typically very open. They have a willingness to share information. They are aware of the fact that if you want people to do their best, to really question everything that they do and see how they can improve it, then it really does not fit with a very closed an authoritarian style.

The solution to complex problems is rarely found in the board room and often require seeking beyond the bounds of your own company. Looking outward and tapping into networked knowledge is necessary in order, to retain relevance in an ever-shifting, ever-adapting world. The ability to remain openminded as we immerse ourselves with other cultures enables us to challenge our own preconceptions, attitudes, and behaviors. Leading us to question what we believe in and why. If we remain closed-minded, dependent on the habitual and indifferent to other ways, we become blinded to the potential for change and the opportunities that offer.

Transparency
As also mentioned in the introduction, the notion of low power distance is a significant factor in how Nordics lead. The flat organizational structures they favor have the effect of making themselves more accessible and approachable. To maintain visibility as a leader it is important that you put yourself at the same level as your team. In doing so you make communication, explanation, contextualization, delegation, coaching and problem-solving much easier to accomplish.

It is good to speak openly about what you do, why you do it, what information you base your decisions on, why you ask for input and why you think it is important to draw on the knowledge and experience of others. In other words, help people understand how you lead and why these methods can be effective. It is about remaining open and willing to show your vulnerability.

Responsiveness
Nordic Business Leaders are good at adapting and providing the flexibility needed to move forward. It is called Nordic pragmatism. If you have plans and procedures that do not seem to work, you change them. If you have plans to go fishing and the weather deteriorates you adapt and make another plan. This is simply part of the Nordic way of life. Experimentation, supplemented by review, learning and adaptation are all part of the responsive sensibility advocated by Nordic Business Leaders.

“If you do not dare you will not win”. In the Nordics we have a more open attitude towards change and experimentation. Courage is a crucial factor behind the willingness to experiment. Continuous experimentation is needed if organizations are to innovate and find solutions for complex problems.

In other words, make plans, dream, imagine and draft multiple scenarios. The more scenarios you must hand the more you will be able to react and respond to the problems and opportunities. Be ready and willing to pivot, to abandon one plan and switch to another.

Alis Sindbjerg Hinrichsen works for Optilon and is especially passionate about everything that connects the Supply Chain strategy with the business strategy. She is also interested in what makes people and companies more change ready.

With inspiration from Pernille Hippe Bruns book: On the move, lessons for the future.

Buy the book here: https://www.saxo.com/dk/on-the-move_pernille-hippe-brun_haeftet_9788770362382

From Amazon: https://www.amazon.com/Move-Lessons-Future-Nordic-Leaders-ebook/dp/B07N2JXX4C/ref=sr_1_1?dchild=1&keywords=on+the+move+pernille+hippe+brun&qid=1605004124&sr=8-1

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