Gustavo Lopez Ghory, a former supply chain executive at Proctor & Gamble and former Chief Supply Chain Officer at Kimberly-Clark, recently shared his thoughts with aim10x on how technology can be leveraged in supply chain management to anticipate better and solve problems. He also shared his advice for supply chain leaders, encouraging them to be more daring when it comes to embracing technology to better serve the business.
As a supply chain leader, how do you balance managing immense complexity, running a business, and increasing your capabilities?
As supply chain leaders, we are constantly faced with many challenges in our day-to-day operations. The pressure to maintain cost efficiency, improve margins, ensure timely product delivery, and drive innovation and growth opportunities can be overwhelming. Because of these difficulties, we sometimes make decisions at a departmental level that may only occasionally lead to the best outcome for the organization.
One example is the traditional siloed nature of companies' supply chain and manufacturing functions. Very few organizations have truly integrated these functions seamlessly and effectively. This is partly due to the perception of the supply chain and operations as simply a cost center rather than a strategic enabler of the business.
However, we must begin to recognize the importance of elevating supply chain management to a higher level. This means taking a holistic and integrated approach, encompassing logistics planning, manufacturing, and other related functions. Only by doing so can we truly unlock the full potential of the supply chain and drive positive outcomes for our organizations.
What role does technology play in integrating the layers of planning?
As someone who has spent most of my career in the consumer goods industry, I've seen firsthand the evolving importance of technology in supply chain planning. We must take advantage of technology to help orchestrate and manage our supply chain. Planning is at the core of the enterprise.
Technology is crucial in elevating our ability to analyze data, understand business situations, and make informed decisions. By leveraging technology, we have more time and analytical capabilities to connect our business model with our supply chain capabilities. The planning process is the supply chain's brain, and the planning head is the conductor of this orchestration.
Technology should free us up to focus on strategic tasks, such as influencing direction, rather than bogging us down with administrative tasks. When technology is used correctly, it can take much work off our shoulders and allow us to bring real value to the enterprise.
How do you manage high expectations when there isn't a budget for new technology?
It's a difficult question to answer. It varies significantly between organizations. However, I generally see a lack of education as a major barrier. This applies to supply chain and operations leaders and to board and leadership teams in corporations. There is a need for cooperation and understanding between I.T., finance, and supply chain, but it often becomes a competition for control and budget. To overcome these challenges, supply chain leaders must take the lead and connect the technology to the overall business strategy.
Justifying technology based solely on cost savings, such as reducing the workforce, is a limited approach. The goal should be to enhance the delivery of better results. Unfortunately, justifying technology investments is often weak, as the potential benefits are often uncertain and subject to assumptions.
There is a need for a different approach to productivity gains and investment analysis. Today, there are ample valid examples of technology investment's benefits, which should make it easier to justify. However, the decision-making process needs to be better coordinated and requires education and changes to some criteria. The strategic role of the supply chain within a company can also impact the ability to justify investments, as it may vary from reporting to finance, for example. In those cases, the finance leader must clearly understand the benefits of technology investments in supply chain management.
How can technology enhance enterprise planning?
Everyone gets excited about new technology, and it's okay to feel that way. For example, cars today are full of computers, and even a basic model has more chips than ever. This is causing a shortage of chips. Within a week, people will become familiar with all the technology in their new cars. This excitement for technology isn't limited to vehicles. People get excited about learning new things, even with something as simple as a new button on a video game controller. However, many people are still afraid of technology.
If we let children play with technology, they'll quickly learn how to use it and excel. Some people, like myself, may have limitations with technology, but we should try to learn and use it. To successfully adopt new technology, organizations must be ready for it. Unfortunately, nearly 80% of technology projects fail because organizations aren't prepared. The root cause of these failures is not the technology itself but the organization's need for preparation and readiness.
How do you overcome the resistance to technology adoption?
This is a great question. There are two main assessment tools to assess the level of an organization. There's also a skill-based analysis and an elementary analysis to improve operations. Every option requires an assessment and a well-planned strategy to transition to new ways of operating successfully. In general, if you proactively work on the plan, there's no reason why you can't succeed. I've seen it done well and poorly, but with the right approach, it's achievable. However, it's important to remember that new technology can sometimes be delayed due to other priorities or a lack of time and resources.
But when you delay a technology implementation, you may reduce competitiveness in the long term. That's short-term thinking. It's important to remember that your role as a leader is not just to bring a product to the market but to create a structural competitive advantage for your company. If you don't leverage technology, others will, which will only widen the gap between you and your competitors over time. So, I invite listeners to think about technology from a different perspective. Don't just think of it as a means to reduce your planners from 3000 to 2800. Instead, consider the competitive advantage you're bringing to the table.
My advice? Implement sooner rather than later. If you continue waiting, will you wait until the next crisis? I sometimes need help understanding why organizations wait. Affordability issues are understandable. But if you can pay for it, you should go for it. This is not about heads down. It's about heads up and expanding the horizons of people.
How does ESG impact both financial ROI and the responsibility of an organization?
One example is reducing your environmental impact by optimizing your transportation routing using the best data analytics tool to combine inbound and outbound deliveries to multiple stores. By optimizing your bill of materials and operations, you can ensure consistent quality and reduce waste. This is important, but there are also bigger interventions, like moving to renewable energy, that we need to consider to reduce our environmental impact.
The supply chain plays a crucial role in this effort, accounting for 60-70% of a company's spending. We use materials and move things, so there is much room for optimization. The design of our products and operations and the organizational structure also significantly reduce our environmental impact.
Companies are starting to work on this, but I hope this work will continue and be incentivized, as this is an emergency. Look at what happened this summer; people need to understand the importance of this issue.
If you had to give CSCOs one piece of advice, what would you tell them?
First, understand that the supply chain system is a people system. Human beings are the ones that operate, elevate, and improve it. That's why you must proactively identify capability gaps in your organization. You need to play that game, and you need to be strategic about it. Second, don't be afraid of incorporating—and fighting for, if necessary—critical technologies for agility and decision-making to better serve the business. But to do that, you need to start by understanding the business model so you can really connect those capabilities with it.
Following those two pieces of advice would probably have made me a better leader. I could have accomplished more in a shorter time if I had been more daring in moving forward with certain technologies. My advice is to tune your people into the real needs of the business and not be afraid to pursue a project that will make you and your organization more agile. That’s how you stay ahead of the game: by bringing a competitive advantage to it.
You must ask yourself the hard questions: Are you preparing your organization for the coming challenges or not? What are the new skills and values you need to train and instill? Are you leveraging them as an opportunity for you and your team? How are you driving that? That's very, very important.
Finally, most of the leaders of today are gray-haired guys like me. We didn't grow up with a computer from day one. Technology is not the most familiar thing to us as it has become for many. Still, it's a good thing. We need to respect technology and go for it. The earlier you embrace it, the better you'll do.
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About the author
o9 SolutionsThe Digital Brain Platform
o9 Solutions is a leading AI-powered platform for integrated business planning and decision-making for the enterprise. Whether it is driving demand, aligning demand and supply, or optimizing commercial initiatives, any planning process can be made faster and smarter with o9’s AI-powered digital solutions. o9 brings together technology innovations—such as graph-based enterprise modeling, big data analytics, advanced algorithms for scenario planning, collaborative portals, easy-to-use interfaces and cloud-based delivery—into one platform.