Timmermans on Excellence: Agility and the digital supply network

Agility may not be a new business priority, but it couldn’t be more important in today’s era of digital disruption. The threat comes in all forms—from individual players that force you to remake your entire business to thousands of start-ups that gradually carve up your entire value chain bit by bit. Consequently, agility has again become a priority topic in many boardrooms.

The growing importance of agility is clear among conclusions drawn from an Accenture study titled Traits of Truly Agile Businesses. The study confirmed that most executives are worried that they have not yet achieved the world-class levels of agility required to successfully compete. The study then explored the role agility plays in distinguishing business leaders—companies reporting year-on-year sales increases of 10 percent or more—from business laggards—companies that experienced decreasing sales in the past fiscal year.

It’s clear that the supply chain is critical to unlocking agility. Today’s traditional supply chain is no longer fit for purpose. Linear and slow, it doesn’t have the scalability, speed, visibility, and intelligence that companies need. Leading companies are tackling the problem by restructuring their supply chains as networks and equipping them with new capabilities that are enabled by digital technologies. Following are three critical agility-related traits that business leaders possess—traits to which these new “digital supply networks” can contribute.

Accelerate decision making
Executives at many companies don’t feel fully prepared to deal with uncertainty. Slow decision making can be a primary impediment, but laggards rarely recognize the gap in their operations. Leaders are twice as likely as laggards to actively work to accelerate the decision-making process.

Digital supply networks that are highly connected help support and accelerate decision making as they collect and analyze information from across the supply chain—data that can be analyzed to inform management decisions, deliver early warnings, and help management identify cause and effect patterns. 

For instance, GT Nexus, a cloud-based platform provider that helps companies identify trends in trade migration, uses predictive analytics to determine whether or not bottlenecks in the supply chain will make it more difficult to do business in specific locations. Kurt Cavano, the company’s founder, vice chairman, and chief strategy officer, explained that when GT Nexus systems detected evidence that manufacturers were beginning to move their operations from some areas of China to Bangladesh, the company was able to tell its users: “We’re going to have problems in Dhaka and Chittagong because we’re going to have more trade than those ports can handle and there are going to be delays or increases in dwell times.”

Promote greater collaboration
Executives among the business leaders view their operations in the context of a broader ecosystem—the suppliers, customers, and third-party partners with which they interact. They work to actively prepare their ecosystem by making the resources, information, and tools available to support decisive, well-orchestrated actions.

Business leaders emphasize cross-organizational collaboration, planning, and execution to help them reduce time to market. They’re also far more likely than laggards to build growth plans in concert with strategic partners.

The networked design of digital supply networks facilitates collaboration as it enables greater interaction across the supply chain ecosystem. The design also simplifies the process of adding or shedding partners from supply chains as business requirements change while allowing the ecosystem to effectively collaborate around customer needs no matter how far an individual company is removed from the customer.

Make better use of analytics
Few companies would disagree that having accurate and actionable information is important. But respondents to Accenture’s survey view this mandate dissimilarly: Business leaders were almost twice as likely as laggards to say that investing in analytics and advanced data management is vital. It’s not surprising, therefore, that leaders are far more likely to use analytical tools to generate business insights and to plan for investments in the future.

Digital supply networks play a vital role by helping companies leverage analytics to draw actionable conclusions such as identifying profitable customers; “right-pricing” products; accelerating innovation; identifying the principal drivers of financial success; and predicting where new growth opportunities may arise. 

So, even if the call for agility has gotten louder, the reality is still undeniable: Well into the future, superior agility will remain a hallmark of business leaders. You could say that agile companies have 40-20 vision: They see the big and small pictures better than most. They also excel at rapid decision making and continually seek out the best analytical tools with which to make decisions.