Maslow’s Hierarchy of Supply Chain Needs: Digital Transformation Strategy

Posted by Peter Nilsson on Jun 11, 2019 11:16:10 AM

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We recently discussed how Maslow’s Hierarchy of Needs (the psychological stages of human growth) applied to the supply chain (business growth within the industry). This evolution is closely linked with a digital transformation, which itself can be mapped according to a similar journey of fulfillment.

The guiding principles are the same: growth requires building one fundamental layer at a time in order to achieve full potential. Just as businesses must build their capabilities and networks one stage at a time, so too does a digital transformation strategy require various upgrades in technology and innovation to enable new business models through previously unimaginable functionality.

Spreadsheets (Fundamental Setup)

Spreadsheets are easy and familiar tools that many businesses enjoy when managing their data. They are the entry point to the Maslow journey as a convenient and reliable solution for tracking information and collaborating within an enterprise.

maslow-supply-chain-leader-triangle2However, companies that are trying to scale and expand their multi-party networks or go global will need to find an alternate solution. While spreadsheets are handy tools for personal use or within a small team, they are not as efficient between multi-party networks. As the number of users for these documents increase, so do the errors. They also become more difficult to maintain with greater operational complexity.

If your company is becoming a network, you’ll need more efficient and sophisticated tools for storing and sharing higher volumes of data and monitoring accountability. When multiple companies rely on their own spreadsheets, you risk creating functional silos within the network wherein each party maintains their own version of the truth.

In essence, spreadsheets continue to fill some basic needs, but if your goal is to scale, reduce costs, and innovate to reach your full business potential, you’ll need to expand your arsenal.

Digitizing Data & Descriptive Analytics (Basic Business Prosperity)

If you think about the Maslowian hierarchy, the journey begins with pure survival, but every step thereafter is about growth and development. Digitizing data and employing descriptive analytics is the natural progression in this transformative process, as it’s quite difficult to improve when you aren’t adequately measuring and critically analyzing your performance.

KPI dashboards help businesses set goals and monitor performance and progress across suppliers, carriers, partners, and customers. Similarly, these dashboards analyze and report on financial performance across order flows, incorporating both internal and external costs, so companies can spot and address inefficiencies.

Much like Maslow’s second tier “safety” accommodations, these are essentially the most basic provisions for doing better than merely surviving. For those who ultimately want to become leaders, the evolving supply chain is far too competitive, networked, and demanding to effectively subsist on digitized data and descriptions alone.

Cloud, SaaS (Multi-Enterprise Business Networks)

Digital-transformation strategy-cloud-saasSurveys seem to consistently show that surprisingly few companies appreciate the importance of supply chains in managing their business. Companies that make it to Maslow’s midway mark recognize that the supply chain has far outgrown a simplistic procurement and logistics approach, and that the end-to-end initiative is complex and integral to customer service and profitability.

At this stage, businesses are also forging strong allies to help meet customer demands and improve service, and they are beginning to focus on optimizing their end-to-end processes and partnerships. A major part of this involves ERP integration, so all parties collaborate off an agreed upon version of the data, from orders and inventories to bills of material.

A cloud-based software-as-a-service connects multiple organizational groups, both internally and externally, and helps streamline operations and communication on a global scale. It is also more cost-effective to outsource these solutions than shoulder a comparable IT staff with equivalent skill, freeing up investment capital. End-to-end visibility and control are also paramount to effective multi-party management, and SaaS solutions are a crucial launch point for effectively enabling these capabilities.

Dynamic, Prescriptive & Predictive analytics (Competitive in Industry)

Surprisingly few companies are also planning for the future, even for immediate risks, like those posed by current events, from the tariff tug of war to the Brexit saga. These significantly impact shareholder value and can devastate partner relationships. Brands who rise to this penultimate stage will be keen on staying ahead of their competitors and priming their businesses to adapt through establishing a more agile and flexible supply chain.

To compete and ultimately become an industry leader, your digital transformation strategy must do more than push back against the current: You have to identify unexpected issues in real-time today and intelligently plan for tomorrow. While descriptive analytics improves efficiency by informing the decision-making processes, prescriptive and predictive analytics take businesses from reactive to proactive, empowering them to identify new market trends, as well as new business and revenue opportunities to be more strategic.

Automation refines operational efficiency by identifying unforeseen constraints as they occur and leveraging timely warnings to communicate and immediately resolve problems. However, determining your next best move but being unable to optimally act is equally stultifying. A strong network is an asset, but if the partners you currently rely on can no longer sustain your needs, you need a system able to dynamically model after your new goals.

Fully Digitized Supply Chain (Industry Leader)

Up until now, we’ve made our slow and fruitful climb by digitizing and automating various components of the supply chain. But to what aim? The culmination of all these efforts is the complete digitization of the supply chain itself; the ultimate realization of its full potential, efficiency, and robust infrastructure.

Part of this involves redefining the supply chain – a direction thought leaders have already begun taking by sketching aspirational models of the future supply chain, critically rethinking frameworks we take for granted, and pushing the bounds of how we define a familiar and established approach. It reflects a growing trend in which business processes are increasingly shaped by emergent technologies.

All of these endeavors are underlined by a common aim: to eliminate the silos that fracture us, to knock down the walls that diminish collaborations, and to slacken structures that hamper flexibility and accelerated evolution. The utopian future is a holistic and integrated ecosystem that flourishes in full transparency and abates its reliance on physical structures and processes.

Digital-transformation-strategy-industry-leaderTechnology is advancing at an accelerated pace, and the most successful executives employ a digital transformation strategy that works toward the future, integrated supply chain. Though going digital usually falls within the top priorities of CSCOs, not everyone is actively planning and implementing a robust and sustainable transformation. What will separate the actualized leaders from the rest will be that extra, results-driven ambition to start laying down an entirely new foundation for the future of their brand, favoring overhauls over patch-jobs.

 

Earlier, we spoke about success as demanding more than simply pushing back against the current, how businesses must strategically position themselves to anticipate the tides and flow harmoniously into the future. However, there is one step beyond that. Reaching the pyramid’s summit requires a crucial shift: Brands must go from managing the current, to keeping swift pace, to at last being the one to make waves. Setting the trend, creating the current, disrupting.

If you’re awaiting the future with bated breath, postponing action until someone else dips their toes in first, and espousing the latest ‘best-practices,’ then you’re not actualizing your transformation as a leader. At the end of the day, those who sit back to see how the future unfolds will be ill-prepared for its enigmatic arrival. The true leaders among us, meanwhile, will carry a kind of omniscient insight and be natively prepared, because they’ll be the ones carving the future in their own image.

 

The supply chain evolution introduces many challenges, but today’s technology makes it easier than ever for businesses to differentiate themselves from their competitors and become industry leaders.  Access the Guide

 

Topics: Supply Chain Orchestration, Supply Chain Transformation, Multi-Enterprise Business Networks, Digital Transformation

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