The supply chain function is an area crying out for a digital platform or utility. In fact, I believe it’s ripe for digital disruption. Digital technologies such as automation, advanced analytics, AI, cloud and the IoT can make a huge contribution to rationalising and managing the supply chain for companies in the North American market and globally, so it’s a prime candidate for transformation.
Companies such as Amazon and Walmart are building logistics and supply chain digital platforms for themselves, but they seek to shape the space and disadvantage other companies. So, several vendors are pushing to provide supply chain platforms. It’s clear that especially Accenture and Genpact, also believe in the coming disruption, as they are making very big plays to compete against Amazon in the supply chain space.
Building a platform is a big lever to pull, but it’s difficult to do. To compete with what Amazon and other large companies are putting in place requires persistent specialised expertise, significant investment in digital technologies and a staggering volume of goods moving daily.
Given the depth of talent, technology and scope of supplies necessary for such a utility or platform, I believe we’ll see only a few in the market. Therefore, it’s a natural place for a multi-tenant supply chain platform or utility to emerge. The race is on, as even multinational companies won’t be able to put the expertise and investment against the supply chain after Amazon transforms the industry.
Accenture and Genpact
One element for determining whether a digital platform is good is whether vendors are committing to invest in that platform to build out their capabilities.
One of two companies committing to making big supply chain transformation plays is Accenture. The firm has a well-developed set of offerings in supply chain and is pushing hard into this space. The firm has an established control tower connecting different supply chain management silos. It’s growing inorganically in such areas as transportation and after-market sales. Accenture’s vision is to deliver supply chain management in an as-a-service model.
In the last couple of years, Accenture acquired Kurt Salmon and Javelin Group to boost its supply chain BPS end-to-end services. I expect Accenture to also double-down on acquisitions with supply chain capabilities. Boutique firms will be hot targets, and their valuations will rise as a result.
Another vendor making a big play is Genpact. Its play started by establishing multiple managed-services contracts in supply chain, which gives Genpact multiple anchor clients on which to build its supply chain digital platform and establish volume. Like Accenture, Genpact is already a player in supply chain services and is committed to investing in both technology and capability. Its latest acquisition is a great example: Genpact is acquiring Barkawi Management Consultants, a leading supply chain management consultancy with operations in North America and Europe, two key nodes in a global supply chain.
What does Barkawi Management Consultants bring to Genpact? Digital supply chain skills are rare, and Barkawi has these skills in significant measure. Consider these capabilities:
Deep skills in supply chain, building digital supply chains, global operations, consulting
Talent base includes more than 1,200 supply chain professionals globally and features former supply chain leaders from 11 Fortune 500 companies
Key solution architect for over 500 supply chain planning system deployments
Barkawi’s Decision Support Platform hosts analytics, visualisation and workflow.
Notably, the acquisition will enable Genpact to deliver global end-to-end supply chain services to its clients. Its expertise marries well with Genpact’s existing managed services offerings. And the two firms recently partnered successfully to enable end-to-end scalable transformation in client engagements.
Genpact will need to add to its war chest to compete successfully with Amazon, but its acquisition of Barkawi is an example of putting together the capabilities to do that. Accenture and Genpact are in a race for industry leadership; consequently, I expect both to double down. With respect to Genpact, I expect them to round out their capabilities on the technology front with further acquisitions especially in the Artificial Intelligence and other digital technologies.
What About Other Competitors?
Clearly, digital supply chain management solutions have a rich value proposition, and there is definite competition among providers of all sizes. We’ll see a race among service providers to build out their capabilities. Given the current big plays by Accenture and Genpact, I believe Infosys and TCS will need to aggressively build their capabilities to stay in this space.
The Impact On Your Company
Supply chain management is an area that needs to be transformed, and huge benefits – hundreds of millions of dollars of potential benefits per year in savings – can flow to companies using supply chain digital platforms.
However, most companies can’t afford to build a platform to compete against Amazon or don’t want to take the risk, and such an effort can compete with perhaps more mission-critical digital platforms they could build to change their competitive position. Therefore, I believe there is a pressing need for a multi-company supply chain digital platform, an opportunity for collaboration across companies. Once Genpact’s utility is built, I think it makes sense for multiple companies to use it.
Supply chain management needs to go multi-tenant because companies like Amazon are building out these platforms for themselves to shape the supply-chain world to their advantage. Unless your company has a competing digital platform, it will be left with a suboptimal supply chain. But your company can share a supply chain digital platform. Many companies already share common supply chain carriers and managers. With a multi-company platform, your company has an opportunity to scale up that sharing to a greater degree and create more savings.
Supply chain management service providers are spurred on to build out their digital capabilities in the space by the reality that Amazon, if left unchecked, will change the game. It’s a case of compete in that game or be disadvantaged.
Sourced from Forbes - written by Peter Bendor - Samuel