Page 52 - The European Business Review

Supply Chain

The Competitive Advantages of the Digital

Economy Require a Digital Mentality

BY MICHAEL GRAVIER, CHRISTOPHER ROETHLEIN, AND JOHN VISICH

In today’s rapidly changing business Development (OECD) research into direct managerial control that leads to
landscape, supply chain leaders are economic malaise in developed econ- a sub-optimum supply chain. Future
being challenged by the profound omies indicates that a few “frontier” supply chain strategies will need to
effects of digital economy on the ÀUPV DUH GRPLQDWLQJ LQ HDFK LQGXVWU\ concentrate on shared control of
relationship between consumers ² PHDQLQJ WRS ÀYH SHUFHQW LQ WHUPV RI decision making enabled by the appli-
and the supply chain. In this article, labour productivity – their key distin- cation of advanced technologies to
the authors elaborate on three guishing feature being their investment create lasting end-to-end supply chain
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crucial things, particularly connect- in IT. The difference between how competitive advantage.
edness, responsiveness and process, frontier companies and laggards
toward value creation as employed compensate employees may explain What’s Different?
by successful businesses such as most of the wage gap that has appeared This reveals a fundamental truth about
Norsk Titanium, a digital supply in many developed economies. the digital supply chain – our production
chain pioneer. This is no longer a “digital economy WHFKQRORJLHV DUH LQFUHDVLQJ ÁH[LELOLW\ WR
that’s coming” – it has already begun the point that production and upstream
oo many supply chains are stuck and the leaders are delivering exponen- functions will cease to become a reli-
in the 1990’s when it comes to tially more value to their customers. able means of achieving sustainable
T the technology they use leaving Most modern companies have yet to competitive advantage. Both companies
them decades behind the foundations comprehend how the digital economy DQG FRQVXPHUV ÀQG WKHPVHOYHV RYHU-
required for the digital economy. The will profoundly change the relation- whelmed by the possibilities. Market
scale and magnitude of the problem ship between consumers and the supply OHDGHUV DUH WKH FRPSDQLHV WKDW GHÀQH
are hard to over-state. For example, chain. Technology is powerful, yet the what performance means in their
evidence indicates that half of supply principal challenge is for supply chain markets, such as Volvo’s focus on safety.
chain managers have yet to embrace managers to change their strategic 7KHVH FRPSDQLHV ÀQG VXFFHVV E\ 127
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Internet technology. Organisation conviction. Too much current thinking being responsive to customers’ stated
for Economic Co-operation and IRFXVVHV RQ HIÀFLHQFLHV DFKLHYHG E\ preferences, and instead they assertively

52 The European Business Review January - February 2018