Insight By KPMG

The digital transformation of supply chain engagement

This content is provided by KPMG The supply chain is the backbone of operations for the military and defense agencies. From the initial request for required eq...

This content is provided by KPMG

The supply chain is the backbone of operations for the military and defense agencies. From the initial request for required equipment, to transporting it anywhere in the world, and then actually deploying it in a timely fashion only happens because of a complex set of processes at every stage along the way. Transforming those longstanding, often manual processes into something more agile, accurate and efficient can be a daunting task, and can’t be accomplished by simply adding technology haphazardly to a few links in the chain. Such a monumental task requires a more holistic approach.

“It’s a function of process capability and decision-making capability,” said Chad Jones, the director for Supply Chain Operations in the federal advisory at KPMG. “For process capability you need to have the basic components to do this type of work. It’s easy to apply digital components to a process, but if you do this to an inefficient process, you are basically just speeding up defects. Your Supply Chain should begin with a focus on a ‘process-led transformation,’ and should be primarily concerned with solving the flaws in the system.  Strive for “Frictionless processes” and “Effortless decisions.

And in the case of the military, the new supply chain can’t be a one size fits all kind of solution. Decisions must be made at every step in the chain.

“Decision-making capability is the ability to rapidly receive information and insight from your processes, and be able to improve decision making,” added Jones. “It’s the way in which the information is portrayed to the leadership and decision makers. If there is a need to move 1,500 MRAPs to a different location, I need to know very quickly their Mission Capability to determine which can be moved immediately and best support the need of the Unit.”

Improving the Customer Experience

One goal of this transformation of supply chain focus is to improve customer engagement with the evolution of their requirements. The change in this experience should be noted in two ways.

The first improvement is in visibility. “What we find with most of our clients is that they need better access to the Supply Chain in its entirety,” said Jones. “Starting with demand planning, through Asset Management and ending with reverse logistics – the visibility is limited due to the multiple systems [lacking full integration] and handoffs embedded within the process.’ One of our key components in supply chain focus, especially from a digital aspect, is to create visibility throughout the supply chain. Visibility can be something as menial as transportation stats to enable route optimization, or it can be something more aligned to their output as an organization, such as getting digital feedback from integrated Warehouse Management Systems.”

The second attribute or improvement customers will notice is speed. “Processing speed throughout the supply chain is something we’ve focused on for a couple of decades now, so that tells you how hard it is,” explained Jones. “Most of our clients want to drive delivery as quick as possible to their end customer. In the case of Department of Defense, that end user is someone in uniform downrange that needs the gear or equipment, so the ability to quickly move from requirement to delivery is paramount.”

Keeping an Eye on Technology Trends

While the entire supply chain will be affected by technology improvements, there are three ‘stacks’ on which these trends will have the greatest impact.

The first is additive manufacturing. “What we are seeing are enablers like 3D printing and robotics that make a client more capable in their processing,” said Jones. “Some customers may have platforms that are 20 or 30 years in age but still in use. A good example of this is the Air Force’s C-5. Keeping spare parts aligned for these types of equipment is extremely critical. 3D printing allows clients to make components that they don’t necessarily use on a regular basis. This saves time and resources because they don’t have to keep an assembly line running, or pay a vendor to keep certain molds or processes in place.”

The second vertical is data and analytics. “It’s the ability to go through and analyze large-scale amounts of data, and utilizing multiple analysis techniques to accomplish this task,” said Jones. “So when we think about digital supply chains, there’s a communication aspect around the data itself. There is also the component of being able to process these large amounts of data, with innovations such as machine learning and natural language processing, and even deep learning.”

The third element is in analysis and decision-making. “This is composed of capabilities such as augmented reality, artificial intelligence, and a concept we call digital twins,” explained Jones. “It’s being able to take a manufacturing environment or warehouse, and project it digitally to create replicas on which to diagnose issues and test operational changes. Then you can begin to recreate, model or simulate how you would like transform the operations.”

It is no secret that supply chains are typically hard to manage due to their unpredictability. They are difficult to optimize and coordinate due to their complexity and the sheer amount of data they produce. However, with a holistic approach, focusing on analysis of data and processes, digital transformation is completely achievable, even in extremely challenging and important environments like the military.

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