Digitalisation of the supply chain: the return of the Guild?

  • Lucy Prior

Digitalisation of the supply chain: the return of the Guild?

We are more connected than at any point in history and never has it been easier to build networks individually or organisationally, says Lucy Prior

This connectivity is now more relevant than ever to the supply chain not merely as a sales and procurement tool, but in terms of the active relationship between component parts and systems within a larger whole.

Systems-thinking

A conversation I am having increasingly with those at the top of the supply chain is around a desire and a need to engage directly with more SMEs (small to medium enterprises). This strata-eliminating approach could see SMEs deal direct with Tier 1 companies, and thus theoretically negate the need for project management or systems providers.

However, our sector is constructed such that many top tier companies are seeking to rationalise their supplier base, which for many can mean reducing their procurement relationships in order to drive organisational efficiencies.

We as an industry therefore face a paradox. On the one hand a top-of-the-chain company seeks to deal with more SMES, the drivers for which can encompass the drive for innovation with Corporate Social Responsibility. But post-rationalisation the same company cannot appoint more suppliers; the two approaches cannot be married. At least not without systems providers and integrators.

Why digitalization?

Gartner.com defines ‘digitalization’ as ‘a period characterized by deep innovation beyond process optimization, [exploiting] a broader universe of digital technology and information, more integrated business and IT innovation, and a need for much faster and more agile capability.’

In layman’s terms this to me is a perfect reflection of the benefits of trading with smaller companies. An SME is naturally more agile, more often has structures that enable cross-departmental integration and crucially can respond to a market that demands provable innovation.

This is why and how the Internet of Things can and is causing an intense evolution of our supply chain. The widespread use of sensors, remote condition monitoring and information management is actually bringing the top tier closer and closer to its suppliers through interconnected products and services. Essentially, we are seeing ERTMS (The European Rail Traffic Management System) replicated within our systems and supply chains: micro-connectivity supporting a macro-management system. Ultimately pan-European traffic management can trickle down to digitally-tracked component reliability.

TidyCo in Derby is extremely proactive in all things digital and digitalised. At component level each of its manufactured hydraulic braking hoses has a unique QR identifier complete with identity number and online re-ordering functionality. At a larger product-system level the company also offers a climate control service provision consisting of system design, install and planned maintenance.

All climate control equipment is provided with an asset management badge which digitally automates planned maintenance alerts so as to ensure that clients do not risk a fine for failure to comply with legal requirements. Barry Aldridge, TidyCo’s Head of Marketing expands on this, stating that their Hose Doctor division ‘supplies an emergency replacement service so as to increase productivity to its client portfolio. The Tidyco fleet of mobile engineers all benefit from access to the corporate portal whereby reports can be logged electronically and in real-time. Equally important is the vehicle tracking technology whereby a head office-based Administrator can allocate work to the engineer within closest proximity so as to reduce carbon footprint as well as make equipment operational within the fastest possible time.’

This is a great example of where not only the product, but the entire company delivers a digitalised service that essentially emulates facilities management in-line with its clients’ demanding reliability and safety targets.

This provides a perfect parallel to that top-tier desire to work more closely with its sub-suppliers.

Supply chain

ROSCOs are arguably top of the supply chain (this is one instance where I have dropped my passenger-as-client mantra and focus specifically on our industrial clients).

Whilst the leasing company market (i.e. the ROSCOs) has widened over recent years it is still a part of the railway supply chain with comparatively few companies within that category. Porterbrook Leasing Company has always, as far as I recall, shared its six-year plans publically, with Shane Duffy actively and regularly engaging with the Rail Alliance to communicate the ROSCO’s needs of supply chain.

Anvesh Prasad, Porterbrook’s recently appointed Head of Procurement is helping to take the company’s active engagement one step further. Echoing the importance of a facilities-management approach, and the need for a digitalised supply chain he explains that his appointment coincides with an exciting time for the company.

‘I am pleased to join Porterbrook as it re-energises its business model. With a renewed emphasis on asset management and innovative product development Porterbrook will be looking to build strong and long-term relationships with its existing supply chain, as well as identify new entrants who can help us meet the needs of tomorrow’s passengers.’

In a recent meeting he expanded upon this by sharing with me the news that Porterbrook will shortly be announcing the date of its first ever Supplier Conference, enabling Porterbrook to engage with the widest possible range of innovative SMEs from across the supply chain. This will be delivered with the collaborative support of the railway membership bodies (Rail Alliance, Rail Forum East Midlands and RIA; event details will be shared imminently).

There is therefore an undeniable appetite for top tiers to collaborate with suppliers. Doing so can drive innovation, deepen supplier/buyer relations, enhance the overall service and ultimately should generate improved revenues for all involved. Creating an industry within which the upper and lower tiers can learn, innovate and further digitalise hand-in-hand, but to do so requires collaboration.

It is not simply in terms of the product supply chain that we need to develop a collaborative approach. The business services that we all need to access must deliver the same, if not better, levels of digitalisation. Therefore service-side digitalisation must be as innovative as our design, manufacture and maintenance.

Dave Atkinson, UK Head of Manufacturing at Lloyds Bank Commercial Banking discusses this thinking further: ‘The internet of things offers significant opportunities for forward-thinking SMEs and manufacturers as it challenges firms to think about how they can become more productive through automation and digiti[ali]sation. This will include more streamlined processes, better collaboration and fewer forms to manually fill … which will support long-term growth for a digital future. That’s why we support The Future of British Manufacturing Initiative (A collaboration between leading UK industry organisations) to improve manufacturers’ awareness of the fourth industrial revolution.

‘Some board room planning now can make a huge difference to help firms transition into a smart manufacturing era, ready to take advantage of new ventures. When looking at borrowing it is important that firms challenge their lender to put forward tailored finance options to support different circumstances. Together with the right investment and planning we can ensure that the [sector’s] productivity and progression continue to play a crucial role in the UK economy.’

We have all read a myriad of articles on why we need to innovate and to collaborate. For me the digitalised supply chain is the perfect encapsulation of collaborative innovation. The Internet of Things, applied within the rail context, if not within any supply-chain, demands interaction between all manner, and level, of stakeholder. Referring back to Gartner, the diagrams here show an apt visualisation of where we are, and where we as a supply chain need to be.

We need to be fully digitalised to ensure that the rail sector meets its challenges head on, and as such our supply chain needs formally collaborate. This is further perpetuated by the evolution of Collaborative Working from a PAS (publicly accessible standard), through to an international standard. ISO44001 is now widely sought and could be a worthy capability for any company wishing to fully digitalise.

As one speaker asked at a recent event of ours: ‘How can we collaborate in the cloud if we can’t collaborate in person?’ This steers me nicely onto the question in the headline, and one that I often pondered during my management and leadership studies. There are multiple definitions of what a guild is depending on how far back in time you look.

In relation to this article, by guild I refer to the OED definition: ‘an association of people for mutual aid or the pursuit of a common goal.’

Perhaps our coders and cyber experts are fast becoming our master craftspeople, and the Internet of Things is our modern-day Guildhall. If this is the case we do need to collaborate more to ensure that relevant innovations are conceived, that commercially sensitive but supportive relations are nurtured and that ultimately the supply chain is as responsive to the needs of the evolving market as Alexa is to your musical demands!

2018-04-25T12:25:45+00:00April 25th, 2018|Magazine, May 2018|