Multi-Tier Collaboration and Risk Management
Supplier collaboration has emerged as a critical factor for operational efficiency, resilience, and innovation in supply chains. Organizations are investing in strategies and technologies to foster collaboration with suppliers across multiple tiers. In this fireside chat, Stephan de Barse and Vivek Luthra discussed the growing importance of supplier collaboration and highlighted strategies, technologies, and best practices for successful collaboration. Here are the top 5 takeaways from the conversation:
1. Supplier Collaboration is Essential for Resilient Supply Chains:
The first key takeaway is that supplier collaboration is crucial for building resilient supply chains. In today's interconnected supply networks, disruptions often occur in the lower tiers of the supply chain. Leaders are investing in digital twin capabilities and end-to-end visibility to proactively manage risks and understand the impact of disruptions. Supply resiliency is directly linked to revenue and profitability, making it a top priority for organizations.
2. Innovation Thrives Through Supplier Ecosystems:
The second takeaway emphasizes that innovation is increasingly driven by supplier ecosystems. Top-performing companies recognize that their suppliers' innovation teams are often much larger than their own. By fostering collaboration and creating an ecosystem of innovation, businesses can tap into the expertise and creativity of their suppliers. This collaborative approach to innovation is a compelling reason for organizations to invest in supplier collaboration.
3. Collaboration is Key for ESG Reporting and Sustainability:
The third takeaway focuses on the growing importance of collaboration for environmental, social, and governance (ESG) reporting and sustainability efforts. As organizations move towards supplier-based emission calculations and better visibility into their supply chains, collaboration with suppliers becomes crucial. By working together, companies can gather accurate data on emissions, improve sustainability practices, and meet ESG goals.
4. Multi-Tier Visibility and Connected Planning are Critical Challenges:
The fourth takeaway highlights the challenges organizations face in achieving multi-tier visibility and connected planning. Many companies struggle with disconnected systems, limited data sharing, and a lack of visibility into lower tiers of their supply chains. To address these challenges, companies are investing in technology solutions that enable collaboration, automate processes, and provide comprehensive visibility into their supply networks. These solutions help bridge the gap between procurement, supply risk management, and supply planning functions.
5. Overcoming Barriers to Supplier Collaboration with Technology and Data:
The fifth takeaway focuses on the barriers to supplier collaboration and the role of technology and data in overcoming them. The current landscape is filled with disconnected systems, manual processes, and data limitations. Organizations are leveraging advanced technologies such as AI, data analytics, and knowledge modeling to streamline collaboration, automate tasks, and gain deeper insights into their supply chains. By removing data crunching work and improving collaboration workflows, companies can enhance productivity, increase visibility, and make better-informed decisions.
So we I think spoke about in the last around visibility. So let's keep building from visibility around a very key theme which we're seeing, you know, businesses invest in around supplier collaboration.
And between Stefan and I, we're gonna kind of play a tag team. We play a tag team and a lot of other engagements where we work together. So this is gonna be a public far side chat.
Indeed. And I I think is what we want to do is sort of set the context like what are we seeing in market and hopefully that will resonate. And then we dive into a couple of practical examples and also address a little bit of the challenges that we are seeing in terms of how do we actually get to upstream visibility. I think a lot of times we get a question like but I don't have the data, you know, my suppliers are not willing to share anything. So what are what are ways and tactics to go beyond that? And, yeah, looking forward to it feedback. Thank you, Stefan.
So let's kind of it won't be right if we don't give you a framework right to me as an accenture. We have to give you a framework The framework this framework talks about eight themes of why supplier collaboration. I'm gonna talk about three things which are very important, which I see across our clients, why they get into supplier collaborations. I think we touched a lot around supply resiliency.
I'm sure you are hearing it in your boardroom discussions, resiliency has become important because we have now supply networks.
And it is no longer enough to have visibility for the top ten, fifteen, twenty percent of your suppliers. Why? Because most probably, a lot of times when there is disruption, it is a disruption because it is most probably your smaller supplier who's supplying to your bigger supplier, which is kind of going into manufacturing of a component, which is most probably linked to sixty, seventy percent of your customers. So, what we are seeing leaders do is invest in building these digital twin capabilities. I know Nico spoke about something like that in a different context.
But really a twin, we are seeing businesses invest in digital twins, which can help in getting you to n tier visibility.
And n tier visibility helps you build scenarios.
So, what part of my supply chain, if disrupted would have what impact. I think Autumn spoke about, you know, something around the supplier contracts, and he said about the site. So, we are seeing leaders invest in being able to, at a site level, be able to say, what could happen with the disruption for, you know, for a smaller supplier in your end to end supply chain. So, resiliency is becoming a very important We've seen that on the demand side, but supply resiliency is where, you know, I think, I, I heard Sean speak about it, inbound, supply resiliency becomes quite important in the largest scheme of things. So, that's point number one, which is around whole proactive risk management.
The second thing we see supplier collaboration becoming so important is innovation.
If we look at, you know, top quartile leaders, today more than half of new innovations, are coming through supply ecosystems. So if you think about it, you're a two billion dollar company. You have about hundred suppliers.
You put those hundred suppliers together their innovation teams put together are eight to ten times the size of your own teams, for example, for innovation. So the Italian businesses have started understanding that if they can somehow create this whole ecosystem of innovation that could really justify why you need to collaborate in a very different way. So, a lot of new innovations are coming through supplier ecosystem, which is driving why supplier collaboration has become important.
Third, out of those eight is something which is very close to the work. I do, specifically, is around, you know, I think we were talking earlier about how carbon emissions reporting, specifically on scope three, is something which is evolving. Right? What is happening in the industry is that leaders are moving from spend based emissions calculation, which could be very difficult to figure out as to, you know, total would be many times the actual emissions, you know, who is kind of managing what, to supplier based emissions. So if you have to move to a supplier based emission kind of framework, then you obviously have to collaborate with your suppliers quite well.
So, I would put those three reasons at the top reasons as to why supplier collaboration is taking totally a very different theme. So, first one, supply resiliency. I mean, in the volatility, which we face today, it is directly linked to your revenues, to your EBITDA's, and to everything else. Right?
Second, around innovation. So how do you actually innovate with your supplier ecosystem? And third one, you know, is is really around the whole, you know, phenomena which we spoke about in terms of getting that overall network moving. So with that, if I just kind of go to the next one, so really the theme is to move from relationship to strategic partnerships.
Obviously, you need to segment. You can't do this with everyone. Right? So you need to think about which suppliers, why are they important?
How do they fit into the larger end to end? Process, can you actually get visibility? In my mind, one example which we are working right now is fairly cutting edge. So, we're working with this company, which is NTIER collaboration.
Lot of finished components get into the end product, lot of supplier raw materials get into end product. So someone has to kind of think through how this n tier collaboration across multiple levels of planning to work. But the challenge is that, you know, not everyone is ready and willing to cooperate. I mean, your n tier supply does not want to show you what his or her inventories are, what is his or her book positions, for example, much days does he or she have to be able to, you know, kind of produce?
You can think about any industry, and you'll start to see why this is becoming difficult. So you're seeing leaders invest in areas where, you know, we've we're working with the leader which is investing in, you know, distributed ledger technology.
So that you are picking up information in a very secured way from your anterior supply chain.
That information is not really made visible to the actual consumer of that, but they have built AI algorithms, which let you kind of process that and only pass on the and outcomes which this, you know, particular business is using to be able to optimize the supply chain much better. So really you're seeing a lot of technology innovation coming in how, for example, you would collaborate.
The last thing which I wanted to talk about was collaboration and planning kind of sits very close to each other. Think about it, if you're not planning, then how do you kind of order What are the frameworks around which you collaborate and so on and so forth? Because, you know, when you're thinking about a complex network, every node is important and planning becomes very important any changes can only be managed if you have some solid plans. So, if you see, right from where are the areas where suppliers are collaborating, specifically around strategy.
You can think about long term capacity management. We see a lot of our clients make those decisions. As you're rebalancing your networks, you're kind of thinking, what's my long term capacity where do I want to have it? How do I want to have it?
How do I want to transition, for example? So that's becoming very important as an example, long term forecasting. Very important, if you're going to work with your suppliers, the robustness of your long term forecasting is important, but it is very challenging to get long term forecast ride as, you know, all of us would know. I mean, forecasting accuracy are Sohil.
I think you were talking about forecasts earlier on. So, you know, you could imagine that long term forecasting accuracy goes down pretty quickly. So what do you do there? Right?
How do you want to build those skills? From an operational perspective firm, plus rolling forecast. Because if you want to kind of use your suppliers, then you need to be able to collaborate with them on an ongoing basis. Things change.
You can't control everything, but how do you kind of make it? I don't know if you've been hearing. We hear some of our clients now refer to as frictionless supply chains when they're thinking like this. So how do you actually make it frictionless, for example?
And from a visibility perspective in the last session, I think you heard, you know, Michael League's talk about, you know, specific importance of visibility, inventory metrics, quite important. We spoke about, you know, everyone is obviously having control towers as a way to be able to look at having that end to end visibility, to be able to have abilities to intervene when needed and so on and so forth. And then, obviously, you know, I think we spoke about allocation also in the session one before that. So supplier orders versus the location become important.
In terms of how your demand and supply is matching. So, really, I think I wanted to give three key messages. We spoke about three capabilities, which is why everyone is thinking about collaboration, then we kind of spoke out what was important, how technology is at the center of kind of being able to enable that. And last but not the least, how planning kind of sits adjacent to collaboration.
Hence, you know, when you're thinking about a thing in the morning session, we had about procurement, but really inbound supplies become so closely knit with, you know, procurement today, for example.
Last, this is an example. I think we've been kind of working together on this example for a while. But this is an example of n tier collaboration between suppliers.
What is very unique about this is there are about you know, at different levels, there are about five hundred fifty plant factories in eighteen countries for this particular retailer, where we've been working on how do you seamlessly exchange capacities, like we spoke about long term capacity, inventories, order status. So, how do you really do this production shipment planning? And then, obviously, this management The key thing is ability to be able to pull through orders at different levels and be able to see the impact at a network level rather than at a component level. So with that, Stefan.
Awesome. Thanks. Thanks, Vivek. And thanks also for for sharing that example. But I think in Fivec, I'll touch upon that joint client of ours.
Initially, we were in a market for core supply chain planning, but then three, four years ago, one of our clients, you know, actually, Nike, they obviously, they don't own any manufacturing. Everything is outsourced to China Bangladesh, other Saudi Asia countries, and they said, hey, really the issue for me is upstream visibility. Right? I have contract manufacturers and there's Tier one, Tier two, Tier three. So how can you help me provide visibility as well as then we would actually like to create a production plan you know, that I can distribute among my peers. And that's where we said, look, actually, you know, more and more clients are asking that questions so why don't we actually develop a capability on the same platform that can do supplier collaboration and supplier risk management. So that's where we started.
That project was pretty successful. And then we started to look into other industries as well, where we're now working from fashion retail telco to oil and gas to automobile.
So it's pretty interesting that it's taking off. And really, why is it taking off? Because we see a couple of trends and vivek touched upon some as well that truly require, you know, better visibility stream and better collaboration. I think the first one is that multi tier visibility.
We have seen that that's the main challenge that organizations are facing. If you're supply chain breaks, it's in the tier two or tier three. But very often, you don't have the visibility.
And actually, when we had are a big event we talked about this with the Chairman of Phillips and former CEO of Unilever, and they both said, look, every time when the CFO got surprised and when it relates to supply chain, it's often not in the Tier one, but in the Tier two, there's a supplier that's not able to deliver that impact important custom orders, and now, right, we we are in trouble. So, how do we how do we solve for that? So, that's number one. Number two is what we see in organizations is the procurement function, the supply risk management function, and the supply planning function are often sort of disconnected and not even reporting to the same head, which is an issue as well because, you know, procurement teams have much better visibility to where the issues are, while the supply chain teams are trying to, you know, come up with different scenarios for demand supply and so forth.
But you know, there is this latency between them that's not really working out. Then I think connected to SNOP is not just the SNOP or IBP in the four walls of your organization, but how do we involve, you know, contract manufacturers and suppliers?
They do not only benefit from that, but you also tremendously benefit from that. They all obviously work with other suppliers and customers as well. So it gives you a broader perspective of what's going on. Then on the risk side of the house, I'll talk about that as well.
It's not so much about predicting when the next hurricane will hit or, you know, what the geopolitical situation will be. It's much more about simulating those risks and then giving your supply chain a risk score so that you actually understand you know, where the weakness is and what you can do about it. And last board and and feedback mentioned that. Right?
It's Now, we especially when we think about ESG, you know, scope one, scope two are, you know, in your control. But if we want to get better visibility on the scope three side, you know, it's obviously inevitable that we need to work with our suppliers and contract manufacturers not only on, you know, forecast capacity orders inventory but on ESG metrics as well. So, those are a couple of the big trends that we are seeing, and that led us to sort of build out our capability.
Now, why is this so difficult? Right? Because supplier collaboration not something new. We're talking about it for thirty, forty years.
But what we are seeing is, one is systems so there are completely disconnect I tried on the supplier side. There's EDIs. There's web portals. There's email.
There's Excel spreadsheets. There's you name it. Then there is different supply planning solutions, there is different visibility solutions and so forth and so forth. So, this is sort of spaghetti of different systems, but if there is a decrement from your supplier, today it's very very difficult for you to say, how does that impact my production plan?
How does that impact my abilities to support the demand? You know, the other way around, if there is a certain surge in demand, you immediately want to understand can my tier two supplier support, you know, yes or no at which incremental cost, you simply, you know, don't have that today. So I think that that's number one. Then I think there is an issue in modeling the multi tiers, right?
And that's mostly related to one, again, systems limitations, but also second, there is data limitations. Right? And I talked about that over lunch with someone. Think there are a couple of techniques to get a better sense of what's happening in the tier two, tier three.
First, it's your efforts to make collaboration work. Then second is you can accomplish quite a lot with different surveys, questionnaires, and so forth. Then the third component is there's a lot of data sources out there that we can use, and I mentioned that in my introduction notes, you know, there are companies out there like Everstream that for instance give you full visibility of all the the shipments. So now when you have all the data, you can then build a knowledge model of what's happening, you know, which Tier two supplier is delivering to which Tier one and so forth.
So, there's new ways of sort of building out what we call the knowledge model of your supply base. And the moment you have that, you can then start leveraging that from a planning perspective.
Automation support, another big issue. Right? A lot of times, you send something your forecast, and then the supplier needs to go and manually add back their commits. There's obviously a lot of historical data right around that supplier and around your demand.
So there are, you know, smarter ways to sort of auto populate what the predicted commit has to be, and then you can just work on different exceptions. And then the other thing is that it takes an enormous amount of time, right, to actually onboard a couple of suppliers. So in our perspective, you know, you should actually be able to onboard your most critical suppliers in a matter of months and then sort of sort of roll that out to your entire supplier base. So Those are the the issues that we are seeing.
Then to Vivec's point, right, if we look at that canvas that he presented with so many different things that you can do, and this is a a different presentation of that. In essence, what we said, we want to focus on three capabilities first as we believe that's where most pain is. We see supplier collaboration, right, on the ASN order side is the first one. It's more execution oriented.
Then obviously we want to collaborate on forecasts on inventory on capacities.
But then if you go further upstream, it's all about the supplier risk visibility. And if you combine those three, that then gives you the understanding of what's happening in the supplier base, where the risks are in sort of start using the capabilities that we are so sort of well known to in planning scenario planning and what if what if scenarios here as well.
So then, you know, on the basis of that initial work that we did with Nike, we said, okay, where do we want to play in the space? And in essence, Now, we're already a known entity in planning. Then we said, we really want to focus on sort of that supplier risk management and collaboration, forecast, inventory, and so forth, but there is a third component to that. And that's the whole sort of next gen data and AI capabilities.
It's all about how do we sort of make it easier to enable collaboration by actually removing all the sort of data crunching work. Right? So can we use a smart populate algorithm to sort of predict what a commit has to be? Can we actually have better visibility to what the true lead times are? Right? Can we actually suggest what the inventory holding should be at the different nodes in the supply chain? So there's a lot of sort of data analytics that you can now apply to sort of make the workflows easier and to actually get to a true reflection of the supply chain.
That brings me to the next point where we sort of see a couple of use cases and also where you've seen sort of tangible business value. And here you can see, you know, there is, you know, from forecast collaboration to capacity collaboration, order collaboration, inventory collaboration. You know, obviously, you need to package them all together. But in general, what we've seen is that it's so much easier now to sort of work together with suppliers. So the productivity gain is pretty substantial, but also that increased visibility comes with making the right choices from a supply resilience point of view. And then lastly, we simply see that the material availability in the cases that we're working on is is improving.
So, where have we done this, right?
Again, a couple of industries and obviously there are different industries here in the in the room. So I think on footwear and apparel, you know, we started with Nike. Now there are others.
It's all about sort of connecting the tiers but then also sort of creating a and plan for, you know, the tier one's, the tier two's, and the tier three's is a key use case there. Then in automotive, we've recently started to work with Toyota, which is pretty interesting. And what they did, they did an extensive pilot where they also invited a couple of their suppliers to sort of test out the capabilities.
And that led to some interesting sort co innovation, one of the things they can back with and said, look, if there is a shortage of a certain component, what happens today, right? There is a war room created and there's ten different excel spreadsheets and there are fifty people trying to work together and figure it out. So then they said, how can we actually create a virtual version of the ballroom? Where we can actually give, you know, the right people access to that, collaborate virtually and actually solve that. And that's now something you know that we're actively working on to think about, you know, how do we solve those cases much much faster.
Food and beverage, you know, hi tech also a bunch of different examples now, where we are, you know, enabling this this capability and supporting organizations in in this journey.
Lastly, and this was also pretty interesting is that the forester recently did an overview of sort of the collaborative network capabilities and they picked us up there as well so they put us in that leader's spot, and I think that's a that's a great validation of sort of the innovation that we have brought to the market. So Definitely, if there are any questions when it comes to a supplier collaboration, you know, multi tier visibility, let us know we have three minutes left.
Okay? Then thanks everyone and Scott. Back to you. Thank you.
Sustainable Supply Chains: Driving Actionable Insights
Accelerate your sustainability journey with the APA Framework