How boards are tackling supply chain issues: leveraging technologies to create efficiencies

by | Nov 14 2023

From blockchain to artificial intelligence (AI), no organisation can afford to fall behind the latest technological innovations that are redefining how they connect with their customers, employees, vendors, investors, and other stakeholders via their supply chain. Boards have a critical responsibility in shaping the technological landscape of their company’s supply chain. Their strategic oversight, risk assessment, good judgment, and investment decisions can significantly impact the successful adoption and integration of technology solutions in supply chain management. This is a strategic imperative for all businesses today.

According to Deloitte, “Supply chains are traditionally linear, but today supply chains are transforming into dynamic, interconnected systems. These digital supply networks integrate information from many different sources to drive production and distribution, potentially altering manufacturing’s competitive landscape.”

How Boards can get their approach to supply chains technology right

Foundational to any transformation is getting the right data in the hands of the executive team so they can make informed and effective decisions. Delivering a better customer experience should be front and center for Boards when they are helping the business to transform its supply chain.

With this in mind, it’s the role of the board to conduct in-depth discussions with management to understand how, and whether, the digital supply chain touches business units, employees and customers in meaningful ways. If it doesn’t, it should, and the Board should guide the business to this goal.

The Board can use these in-depth insights to keep the business on track with its supply chain decisions.

Supply chains are now ultra-dynamic and burdened with a myriad of issues, post-Covid, so it can be easy for over-burdened executive teams to fall for the latest shiny tech, rather than the tech that will build long-term supply chain success. The role of the Board here is critical, utilising its own research and insights, contemporary learnings and experience to guide the business to the best possible decisions in a sector navigating multiple challenges as it evolves.

Long-term supply chain success 

As discussed in this Executive Leadership Council article by Shelley Stewart referring to the World Economic Forum Report Kearny, they consider that the key imperatives of long-term success of manufacturing and supply chains needing to be in place moving into the future, are:

  1. Rapid tailoring of manufacturing and supply systems
  2. Agile manufacturing and supply system set-ups enabled by advance technology

iii.         Logistics coordinated across and within global supply chains

  1. Adoption of new ways of working and governing to increase manufacturing resilience
  2. Shared responsibility and collaboration among companies and authorities to address social and environment challenges

Overcoming the challenges 

Like most complex issues, implementing technology in supply chain management comes with its own set of challenges, and some of these are unique to Boards helping their companies to transform their supply chain. Some of the challenges include:

  1. Resistance to change: One challenge Boards and executive teams can face is dealing with resistance from internal stakeholders. It is important to encourage senior management to address concerns, allocate funds and time for training and support as new technologies are adopted.

  1. Integration and compatibility: Integrating new technologies requires careful planning and coordination to ensure smooth data flow and process integration across different platforms. The Board needs oversight on this, having the chance to stress-test new processes and systems.

  1. Data quality and security: Technology relies heavily on accurate and reliable data. Implementing robust data management practices and ensuring data security are critical aspects in supply chains and should be high on the Boards risk register.

  1. Cost and return on investment: There is generally a significant investment. Organisations need to carefully evaluate the potential return on investment (ROI). This involves conducting a thorough cost-benefit analysis, interrogating management until satisfied, and considering long-term benefits beyond immediate cost savings.

  1. Supplier collaboration and standardisation: Achieving effective collaboration with suppliers and other stakeholders can be challenging when each party is using different tech or operating to different standards. Encouraging a standardised approach and promoting collaboration can help overcome this.

  1. Continuous improvement and scalability: Technology is constantly evolving and supply chain processes need to keep pace. It is essential to have a flexible and scalable technology infrastructure in place and to continually evaluate and update systems. Board director agility of thinking, curiosity and consistent self-learning aid our ability to do this.

By being aware of these challenges, Boards and Senior Management can proactively plan and address them to successfully implement technology in their supply chain management processes.

Significant opportunities for Boards

Subsequent to all of these challenges, there are equally exciting opportunities where the Board can play a critical role. Some of these key areas include:

  1. Strategy and Vision: Boards provide strategic direction and vision for the organisation’s supply chain management. They set the goals and objectives related to technology adoption in the supply chain and ensure alignment with overall organisational strategy.

  1. Risk assessment and mitigation: This includes considering potential cybersecurity threats, data breaches, system failures, and disruptions in supply chain operations.

  1. Investment and Budgeting: Boards make decisions regarding investment in supply chain technology initiatives and allocate resources accordingly. This may, at times, require explanation to investors and shareholders in the context of long-term business sustainability.

  1. Oversight and Governance: Boards provide oversight to ensure that proper governance and controls are in place for supply chain technology management. They review policies and procedures related to technology adoption and monitor compliance.

  1. Talent and Leadership: Boards ensure that the organisation has skilled leaders and teams to drive technology adoption, manage vendor relationships, and oversee implementation processes.

  1. Performance Measurement: Boards review performance reports, metrics, and progress towards goals, and provide guidance to drive continuous improvement.

The path forward

There may be some debate on how deeply a board should be involved in the specifics of supply chain management, however, in today’s environment, the board must understand the supply chain dynamics well enough to challenge and provide guidance to management. This includes understanding how the supply chain is performing overall and the key risks that can materialise. Transparency is paramount and the board must require it of the executive team.

For some Boards, digital supply chain transformation will require building or evolving the company culture to embrace a new view of what an exceptional customer experience means. Such a change in the company’s core may be challenging, but it’s necessary to move up the digital maturity curve with competitive advantage.