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ESSENTIAL METRICSDigital Supply ChainTransformation Guide:The Frontside Flip:Focusing on Customersand RevenueESSENTIAL METRICSThe Center for Global Enterprise“The biggest weapon a company has to outperform its competitors over the next 3 years is the DigitalSupply Chain. The Digital Supply Chain will dramatically improve revenue and reduce costs while delightingcustomers. A true winning play.”S a m P a l m i s a n o , f o r m e r C h a i r m a n a n d C E O ,I B M a n d F o u n d e r, C e n t e r f o r G l o b a l E n t e r p r i s e ( C G E )G LO B A L D I G I TA L S U P P LY C H A I N CO M M U N I T Y*© Copyright 2017, The Center for Global Enterprise, All Rights Reserved.*DSCI Project PartnerD S C Tra n s fo r m at i o n G u i d e : 3 Essential MetricsYou Get What You Measure: Making the DSC RealGuide for ActionI . W H AT I S A D I G I TA L S U P P LY C H A I N ( D S C ) ?Metrics Make It HappenI I . T R A D I T I O N A L S U P P LY C H A I N ( T S C ) M E T R I C SIntroductionTSC MetricsAPQC BenchmarksTSC Metrics: How will Digitalization Drive Improvements?I I I . E S S E N T I A L D I G I TA L S U P P LY C H A I N M E T R I C SWhat are the Essential DSC Metrics?Guidance for Using these Metrics: Getting it DoneThe Essential DSC Metrics: Crucial Choice, Politically Tough, Incredibly EffectivePeople are Coin OperatedI V. D S C I T R A N S F O R M AT I O N M AT U R I T Y A S S E S S M E N T ( T M A )Why a Transformation Maturity Assessment?How TMA fits into the overall DSCI Performance GuideOutside InConsiderations on the Scope of the AssessmentTransformation Maturity Assessment ScaleV. P R I O R I T Y AC T I O N S F O R S E N I O R M A N AG E M E N TGovernanceLeadership and Call to ActionAPPENDIX A: Essential Digital Supply Chain Metrics: Pick ListAPPENDIX B: Transformation Maturity AssessmentAPPENDIX C: Digital Supply Chain Strategy Development WorkshopREFERENCESACKNOWLEDGEMENTS4 6 7 8 9 910121316161720222323242626272830303138434748Digital Supply Chain Transformation Guide:Essential MetricsTable Of ContentsD S C Tra n s fo r m at i o n G u i d e : 4 Essential MetricsThe supply chain is the most significant businessprocess for most companies today. This is a givenfor companies that manufacture and distributeproducts, but it rings true for companies thatdeliver software or financial services as well asother services. Such companies may not use theterm “supply chain,” but they have one and itmust be managed with greater precision thanever. In fact, Our research shows that companieswho successfully implement a Digital SupplyChain will reduce costs by 20% on average whileincreasing revenue by 10%.In 2015, the Center for Global Enterprise (CGE)assembled a group of chief executives inSanya, China to discuss managing globalbusinesses. These CEOs agreed that the topicof the Digital Supply Chain (DSC) was theirhighest research priority.Subsequently, the Center for Global Enterpriserecruited leading supply chain executivesfrom 26 companies around the world. Thisexceptional team of CEOs and supply chainexecutives joined forces to define the gamechanging business strategies, technologies andmarket patterns that make a DSC a must-have intoday’s business world.You Get What You Measure:Making the DSC RealWe don’t want to measure how good we are; we want tomeasure how good our customers think we are.ANDERS KARLBORG, ASSISTANT CEO, ZTEPhoto credit: Li & FungD S C Tra n s fo r m at i o n G u i d e : 5 Essential MetricsCompanies need to focus on four areas tomake the transition to a DSC: Demand, People,Technology, and Risk. The management of theseareas were defined and a comprehensive reviewof the findings can be found in the October 2016white paper Digital Supply Chains: A FrontsideFlip. The key take-away of this research is thatDigital Supply Chains must focus on the customerto drive business growth. Supply chains are nolonger a necessary evil where low cost and ontime delivery wins. They are a tool for marketsuccess and business growth.The CGE established the Digital Supply ChainInstitute (DSCI) to continue its focus on supplychain transformation and to cooperate withthe Global Experts Group of 26 leading supplychain companies representing a cross section ofindustries from around the world.The Global Experts Group determined that threeareas in particular require more attention tohasten the implementation of the Frontside Flip.These research areas were:1. DSC Performance Metrics2. Blockchain Technology3. Driving Demand with the Digital SupplyChain: Using Real-Time Big Data and AI/Machine LearningThe DSCI agreed to execute focused researchprojects in these three areas to expandupon the findings outlined in A FrontsideFlip. Performance Metrics was selected as atop priority and is the focus of this paper: creatingthe right set of measurements to ensure that aDSC is built, that growth is accelerated, marketshare increased and costs dramatically slashed.The DSCI surveyed leading companies – around125 supply chain leaders – on how performancemetrics will change in the next three years. 81%of the respondents said that performance metricswill change significantly while only 1% expect nochange in their performance metrics betweennow and 2020i.When asked how Digital Supply Chainperformance metrics will look in relationto existing supply chain metrics, 79% of therespondents said that performance metrics will bea combination of new DSC metrics and traditionalsupply chain metrics. 10% of the respondentssaid that DSC metrics will feature completely newmetrics and only 6% of the respondents believethat the metrics will resemble existing metrics,albeit better and faster i.0 10 20 30 40 50 60 70 80No ChangeModerate ChangeSignificant ChangeChange in Performance Metrics Over Three YearsD S C Tra n s fo r m at i o n G u i d e : 6 Essential MetricsGuide for ActionThis guide is the result of extensive research andnumerous consultations with our DSCI members,Global Experts Group, industry leaders,practitioners, and academics. The report has fourmajor sections, the first of which covers a reviewof currently used supply chain metrics which arereferred to as “traditional” supply chain (TSC)metrics. These TSC metrics are important as theycomprise 80% of the DSC scorecard. The secondsection outlines a new set of essential metricsfor a Digital Supply Chain which will show howthese metrics account for change in the areasof Demand, People, Technology, and Risk. Thethird section includes an extensive maturityassessment which is designed to help supply chainexecutives determine how much progress hasbeen made in their supply chain transformationwhile providing guidance to companies as towhere they should focus efforts to improve. Thefourth and final section also provides guidance onhow a company should implement the significantchanges required for an effective Digital SupplyChain to grow revenue and reduce costs.We believe the implementation of these newmeasures, combined with certain existingtraditional metrics, will help companies acceleratetheir transition to a Digital Supply Chain.The work is intended for senior supply chainexecutives, but can also serve as an insightfulguide for anyone working on or studying supplychain management and best practices. Part ofthe transition to a Digital Supply Chain involvesre-defining our understanding of supply chainsto include industries that have not traditionallyconsidered themselves supply chain businesses.For this reason, we believe our work is equallyapplicable to executives working in manufacturingand commodities trading, as well as thoseworking in finance, banking, software, and otherservice industries.Implementing a DSC requires supply chainleaders to take conscious steps towards creatinga more demand-driven and customer-focusedsupply chain. In keeping with this principle,this handbook adheres to a customer-drivenapproach. We hope you find our examination oftraditional metrics, our maturity assessment, andour outline for new digital metrics a theoreticaland practical way to understand “how” yourcompany can make the transition andbecome a more profitable, cost efficientDigital Supply Chain.Such a transition requires education and training.The DSCI has developed Leading the DigitalSupply Chain, a 5-week online course combinedwith a one-day, in-person workshop to helpcompanies take advantage of new managementpractices, the expanding universe of data, andemerging technologies to collaborate with theircustomers and suppliers to drive innovativeproducts and services.We have a culture that respects and works towardsperformance metrics. We take them seriously and so doour people.MIKE CORBO, CHIEF SUPPLY CHAIN OFFICER, COLGATE-PALMOLIVEE D S C Tra n s fo r m at i o n G u i d e : 7 Essential Metrics“In Digital Supply Chains: A Frontside Flip”,a Digital Supply Chain (DSC) is defined as acustomer-centric platform model that capturesand maximizes the utilization of real-time datacoming from a variety of sources. It enablesdemand stimulation, matching, sensing andmanagement to optimize performance andminimize risk.There are several key considerations intransforming a supply chain to a Digital SupplyChain. First and foremost is understanding yourcustomer and the end consumer in a moresophisticated way by utilizing data analytics andadvanced technologies.Production will be driven by customer demandand not by manufacturing efficiencies. This willlead to improved inventory management whilebetter meeting customer needs.Instead of being a function that focuses on theless visible aspects of business (everything fromprocurement through delivery), the supply chainwill evolve into an integrated role alongsidesales, marketing and product development.Digital Supply Chain leadership will work acrossall elements of the demand stack includingdemand stimulation, demand management,demand sensing, and demand matching. Thisrequires an increase in internal collaborationand with key supply chain partners – suppliersand customers. Data analytics and advancedtechnologies enable companies to havegreater visibility into supply chain risks andprevent or mitigate negative impacts in animproved fashion.What is a Digital Supply Chain?As defined by the customer, our business is all aboutprecision, accuracy, and quality, and our metrics also haveto be precise, accurate and of high quality.JOHN WAITE, VP GLOBAL SUPPLY CHAIN, MICRONPhoto credit: ZTEChapter oneD S C Tra n s fo r m at i o n G u i d e : 8 Essential MetricsIt is important that a company start by developinga DSC strategy. We will suggest how to developthis strategy later in this document. One pointmust be made clear, if you do not change yourmeasurements you cannot adapt to a newstrategy. Conversely, when changes are made toyour metrics, great things will happen.When communicating what really mattersmost to employees, investors, suppliers andcustomers, there is no better quantifiabletool than a business metric. Remember, youcan’t improve what you don’t measure. Whenimplementing a change, it is important toevaluate the effectiveness and efficiency of thechanges being made. Metrics assess businessundertakings, no matter if these measures involveproduction goals, sales, customer satisfaction,or risk avoidance, as they play a role in assigningaccountability to different departments in areaswhere the company operates and performs.Change Digital Supply Chain metrics and you willchange behavior.Transforming your supply chain to a DigitalSupply Chain means adding new metrics todetermine the success of your efforts to drivechange. The three sections on traditionalsupply chain metrics, Essential Digital SupplyChain metrics, and the Transformation MaturityAssessment provide a step-by-step guide on howto use current and new performance measuresto assist your company in building a successfulDigital Supply Chain.Photo credit: photo(s) by Richard Alcorn: Colgate-PalmoliveMetrics Make It HappenD S C Tra n s fo r m at i o n G u i d e : 9 Essential MetricsTo move forward, it is important to look atthe metrics currently in use in a supply chain.Transformation does not happen overnight, andbusinesses cannot come to a grinding halt whenchanging policies and long-standing practices.Existing measures used to assess supply chainperformance are, therefore, of paramountimportance. For the sake of clarity, we havechosen to describe metrics currently in usetoday as “traditional” supply chain (TSC) metrics.These measures represent the role of supplychains centered on facilitating the movementof goods and services, but not necessarily thecustomer-focused or demand-driven ones thatare characteristic of Digital Supply Chains.While we recognize the valuable role, thesetraditional measures continue to play in today’ssupply chain, we firmly believe changes must bemade for a company to undertake a successfultransition to a Digital Supply Chain.To gain a better understanding of the type ofmetrics currently being used across industries,our team carried out extensive academicempirical research, conducted interviews withmany of our Global Expert Group companies,and benchmarked our findings with data fromthe American Productivity & Quality Center(APQC)ii.The guiding research questions used to shapethis investigation were: “What are the supplychain metrics that supply chain leaders careabout the most?”; and “What are the supplychain performance metrics that are ‘universal’in practice across industries and organizations?”In The Hierarchy of Supply Chain Metrics, DebraHofman wrote that “the key is to focus on the fewcritical metrics that really matter – the ones thatprovide the most balanced view of end-to-endsupply chain performance, allowing companiesto see clearly how they’re doing and why, andwhere they’re making tradeoffs” (Hofman D.,2004)iii. The Global Experts Group predicts thatthe scorecard of the future Digital Supply Chainwill still include roughly 80% of these TraditionalIntroductionPhoto credit: Li & FungChapter two: Traditional Supply Chain MetricsD S C Tra n s fo r m at i o n G u i d e : 10 Essential MetricsOur research concludes that key traditionalmetrics for supply chain leaders will continueto be used as strategic tools for managingsupply chain performance. Metrics such asPerfect Order and Demand Forecast Accuracywill not become irrelevant, or less important,as we transition to the Digital Supply Chain.Instead, these metrics will become the bestand most reliable indicators of the efficacyand magnitude of the benefits of emergingdigital strategies, actions, and outcomes. Ofcourse, there are many arguments why supplychain metrics are not “one size fits all.” Somesupply chain strategies are highly focusedon customer service as a firm differentiatorand, as a result, a leader may be comfortablewith higher levels of inventory. Alternatively,a perfectly legitimate strategy may tradeoff some degree of customer satisfactionassociated with higher inventory levels forthe sake of efficiency, cost reduction, and riskmanagement. Our proposal for a key set oftraditional metrics recognizes this strategicsegmentation, and attempts to highlight astandard set of measurements that will helpyou assess your current performance,and importantly, the impacts of any newdigital activities.The following chart illustrates the keyTraditional Supply Chain metrics our researchteam has found to be most useful in terms ofisolating and determining the potential andactual impacts of the Digital Supply Chain.The metrics shown in the chart should lookfamiliar to supply chain leaders. Our researchteam has organized the metrics into OutputMetrics and Process Metrics. We have furtherdivided them so they are aligned with theDigital Supply Chain focus areas of Demand,People, Technology, and Risk. We believe thatthese categories provide needed structureto assess and manage Digital Supply Chaininitiatives and performance.Supply Chain metrics and these metrics will bedeeply impacted by the Digital Supply Chain.It is important to consider how a firm’s digitalactions and initiatives will ultimately improveits performance as measured by these keytraditional metrics.Traditional Supply Chain MetricsPhoto credit: Li & FungTraditional Supply Chain MetricsPERFECT ORDER PERFORMANCE• Orders not delivered on time – stock-outmanufacturing delay, late ship, in-transitdelivery delays• Orders not meeting customer requirements –inaccurate shipments reducedFORECAST ACCURACY: VALUE AS PERCENTSHIPPED IMPROVEMENTS• Difference between forecasted and actualdemand requirements – inaccurate shipmentsreducedSUPPLY CHAINMANAGEMENT PEOPLE COST• Supply chain personnel cost• Transportation cost• Customer service operating costCASH-TO-CASH CYCLE TIME –CUSTOMER SERVICE PROCESSES• Ship to customer delivery• Days payable outstanding (DPO)SUPPLY CHAIN MANAGEMENTTECHOLOGY DRIVEN COST• Inventory holding cost• Warehousing/distribution centeroperating costCASH-TO-CASH CYCLE TIME –TECHNOLOGY DRIVEN SERVICEPROCESSES• Inventory days – average days ofinventory on hand• Days sales outstanding – averagecollection period from invoicing tocash receiptSUPPLY CHAIN RISKS• Better monitoring of supplier quality• Improved risk management andtransparent value chain partners• More effective IP protectionSUPPLY CHAIN RELATED CAPITAL• Future capital expenditure spend avoidance• Enhanced asset utilization• Distribution centers – transportation networkstrategies• Higher yield in manufacturing processesOUTPUTPROCESSD S C Tra n s fo r m at i o n G u i d e : 11 Essential MetricsD S C Tra n s fo r m at i o n G u i d e : 12 Essential MetricsThe DSCI research team recognized the need toacquire and organize relevant benchmarks forthe traditional measures put forth in this guide.How else can we ascertain the relative benefitsof investments and actions in the Digital SupplyChain without reference points for expectedperformance? The challenge we face is the lackof collective data about Digital Supply Chains atthis early stage of companies’ transformation.To overcome this limitation, our team identifiedrelevant open standards benchmarks from ourresearch partner organization, APQC.These examples across industry metrics andtheir accompanying top, median, and bottomperformance values and percentages, giveus baseline data that could be utilized whendeveloping traditional supply chain performancetargets. While there are limitations to theprecise use of these benchmarks, including thechallenge of normalizing data to account fordifferent measurement approaches utilized byAPQC member firms submitting information,there is a conceptually sound argument forcomparing your firm’s current state against theopen standard as a way to highlight strengths andweaknesses in performance. Key performanceindicators calculated to show potentialweaknesses against the APQC benchmarks maybe stronger candidates for prioritizing remedialDigital Supply Chain strategies and actions.The following chart was provided by APQC as astarting point for the key traditional measureswe discuss in this guide.APQC BenchmarksAPQC’s Traditional Supply Chain Management Tune-UpDiagnostic Cross Industry DataB OTTO MP RO C E S S G RO U P M E A S U R E M E N T C AT E RG O RY K E Y P E R F O R M A N C E I N D I C ATO R P E R F O R M E R S TO P M E D I A N P E R F O R M E R SDeliver Products and ServicesDeliver Products and ServicesDeliver Products and ServicesDeliver Products and ServicesProcess EfficiencyCost EffectivnessCycle TimeProcess EfficiencyValue of forecast accuracy as apercentage of value shippedSupply chain management costs per$1,000 revenueCash-to-cash cycle time, in daysPerfect Order Performance80%$107.098081%90%$584590%95%$26.313095%D S C Tra n s fo r m at i o n G u i d e : 13 Essential MetricsThe world is in the midst of a substantial numberof major changes that will force companies tochange the way they lead, manage and operatetheir supply chains. Taking advantage of thesechanges will lead to great success. Improvementsshould occur across most TSC metrics ascompanies respond to change. The game-changerlist includes:Demand Forecast Accuracy (DFA)Perfect OrderCycle TimesDFA is one of the traditional metrics mostcentral to helping us assess the impacts ofdigitalization. DFA improvement strategies, suchas investments in new processes, technologies,and people focused on achieving faster andmore immediately actionable demand forecasts,are ripe candidates for digitalization. Key digitalactions that are likely to impact DFA include:collection, analysis and proper use of demandsensing data such as analytics and real-timealgorithms to augment historical demand datafrom transactional systems.A perfect order is one that is deliveredcompletely, accurately and on time. This measureis often regarded as a proxy for overall supplychain performance and as a leading indicatorof customer satisfaction. Digital Supply Chainstrategies and actions that can influence thismetric include: more accurate and timelyinformation regarding inventory levels and rawmaterials, predictive warnings of transportationnetwork disruptions, and real-time sensing of thequality of materials in manufacturing processes.The classic tradeoff most supply chain leaders faceis how to balance inventory holding costs againstthe ever-rising expectations of outstandingcustomer service. To achieve a perfect On-TimeIn-Full delivery record, it is commonly acceptedthat inventory levels, and working capital costs,must be accordingly high. The added value of theDigital Supply Chain lies in its ability to help supplychain leaders manage these trade-offs moreeffectively, with reduced information latency,more accurate customer sensing data-drivenforecasts, and greater transparency related tocosts. Digitalization strategies effectively targetthe narrowing of margins of error posed bythese trade-offs with a combination of lowlatency demand information and peopleequipped with newly informed analytical andsensing technology.TSC MetricsHow will Digitalization Drive Improvements?This guide is focused on the Digital SupplyChain and how supply chain leaders deal withthe operational performance of their functionalareas. The transformation to a Digital SupplyChain places the supply chain function in thecenter of value creation for the organization.Consequently, a more robust and wider view ofthe impacts of Digital Supply Chain investmentsand actions is needed.Supply Chain Impact on Value Creation D S C Tra n s fo r m at i o n G u i d e : 14 Essential MetricsOur team has found it useful to ask, “How willthis digital strategy or action help improve supplychain performance?” When focusing on thevalue of digital investment, it is important toremain open-minded as you consider processesor technologies that are over-exposed in thepopular literature. Will the deployments oftechnologies like 3-D printing, driverless vehiclesand AI automatically lead to greater supplychain performance? Our research approach fordeveloping this metrics guide was to promote amore data-driven assessment of digital strategiesand actions before implementing them, and toremain optimistic as you carefully select ideasthat have the potential to bring great added valuequickly and efficiently. In addition, you mustincorporate a simple, effective value model forhow metrics are likely to influence a firm’s overallperformance. Performance improvements fromDigital Supply Chain actions will not be limited tothe supply chain function alone, they will influenceshareholder value. Consider the following valuemodel developed by the DSCI based on supplychain literature, such as Enrico Camerinelli’s bookon linking financial performance and supply chaindecisions (Camerinelli E., 2009)iv, and Hofman’swork on traditional supply chain metric hierarchy(Hofman D., 2004)iii.In this model, we illustrate the relationshipsbetween key supply chain performance metricsinfluenced by digital actions, and key firmfinancial value drivers, such as operating marginsand capital efficiency. While these relationshipscan be understood in normal operating terms,we recommend noting how proposed and actualdigital actions impact both internal supply chainperformance, and, ultimately, improve return oninvested capital and total return to shareholders.Supply chain leaders seeking to justify theirselected investments in digital technologies,processes, and people, are advised to projecthow they might also improve the overall financialperformance of the firm.Photo credit: Li & FungD S C Tra n s fo r m at i o n G u i d e : 15 Essential MetricsSupply Chain Impact FrameworkK E Y M ET R I C SREVENUE LIFTPerfect Order Performance – Impacted by• Orders not delivered on time – stock-outmanufacturing delay, late ship, in-transit delivery delays• Orders not meeting customer requirements –inaccurate ship, poor quality of finished goods, goodsdamage in transitForecast Accuracy: Value as percentage shippedimprovements• Difference between forecasted and actual demandREDUCTION OF SUPPLY CHAIN COSTSSupply Chain Management Costs• Transportation cost• Warehousing/Distribution center operating cost• Customer service operating cost• Direct purchasing operating cost• Inventory holding cost• Manufacturing operating costREDUCTION IN WORKING CAPITAL REQUIREMENTSCash-to-Cash Cycle Time, in days• Ship to customer delivery – time from shipment offinished goods to customers• Raw material receipt to payment – days payableoutstanding (DPO)• Inventory days – average days of inventory on hand• Days sales outstanding – average collection periodfrom invoicing to cash receiptSUPPLY CHAIN RELATED CAPITAL REDUCTIONS• Future capital expenditure spend avoidance• Enhanced asset utilization• Distribution centers – transportationnetwork strategies• Higher yield in manufacturing processesRevenueIncrease WorkingCapitalReductionCostReductionOperatingMarginFixedCapitalReductionCapitalEfficiencyReturn onInvestedCapitalWACC(WeightedAverageCost ofCapital) Total ReturntoShareholdersSources: Stapleton, Hanna, Yagla, Johnson, & Markussen, 2002CSCMP, Haozhe Chen, C. Clifford Defee, Brian J. Gibson, Joe B. Hanna, 2014D S C Tra n s fo r m at i o n G u i d e : 16 Essential MetricsNew business models and philosophiesrequire new methods of evaluation. Webelieve transitioning to a Digital SupplyChain is the best way forward for anycompany, including companies that have nottraditionally considered themselves as havinga supply chain focus to their business. Newmetrics are needed to drive these changesin order to focus people on performingdifferent sets of activities and to assess theeffectiveness of your overall transformation.The Transformation Maturity Assessmentincluded in this guide provides a powerfulindicator of your current state of change.In this section, we aim to help you performsteps to undertake the “Frontside Flip”successfully. Here we offer a list of Demand,People, Technology and Risk metrics whichare essential for measuring a successfulDSC transformation. The new DSC scorecardwill include essential TSC metrics and alist of dynamic DSC metrics. We believethe adoption of these measures will helpcompanies dedicated to undertaking thistransformation become more demand drivenand customer focused.What are theEssential DSC Metrics?The idea is to automate everything that can be automatedin terms of manufacturing , equipment, and supply chainoperations.ANDRES BEJARANO, DIRECTOR, FACTORY PERFORMANCE ANDRELIABILITY, GLOBAL SUPPLY CHAIN, COLGATE-PALMOLIVEPhoto credit: photo(s) by Richard Alcorn: Colgate-PalmoliveChapter three: Essential Digital Supply Chain MetricsD S C Tra n s fo r m at i o n G u i d e : 17 Essential MetricsThe first step each company should take isto complete the Transformation MaturityAssessment and also distribute the “Outside In”assessment to at least five customers and fivesuppliers, included later in the guide. In manycases, it is ideal to distribute the assessment toa cross section of supply chain, sales/marketing,finance and operations people. It is crucial to havethe results confirmed through benchmarking, oran evaluation by outside experts familiar withthe Digital Supply Chain since self-assessment,without third party verification, is frequentlymisleading.The second step is to analyze assessmentresults and determine where opportunities forimprovement lie. Strive to strategically prioritizeactions and quantify the impact of improvementin each area. For example, how much expensewould be reduced if we opted for driverlessvehicles? How much would sales rise if we did abetter job of demand forecasting? It is importantto estimate the size of the potential benefit sothat the right level of investment can be made.The third step involves developing a DigitalSupply Chain strategy. This strategy should clarifyexpected benefits, the people accountable,and the investment needed. Demand, people,technology, and risk should each be addressed.The strategy should produce at least a 10%revenue increase and a 20% decrease in costs.You may not realize these outcomes until 2020,though some companies will reach the target sooner.The fourth step is to select the DSC performancemeasures that best measure the benefits anddrive the transformation. Each company mustselect at least one essential output metric andone process metric for each of the four areasof change: Demand, People, Technology, Risk.Output metrics directly affect revenue or expense,such as total revenue gained from DSC actions.Process metrics drive needed actions that changesome element of the business process. Hiring atargeted number of data scientists, deploying3D manufacturing or increasing the number ofcompliant suppliers are examples of such processmetrics.Finally, the metrics must be assigned to specificpeople in your company. In some cases, such asDemand Stimulation, the metric might be sharedbetween the Sales and Supply Chain. If so, themetrics should be built into the performancereview process and compensation.Guidance for Using TheseMetrics: Getting it DoneFine Tune TraditionalSupply Chain MetricsCreate a DSC strategy andmigration plan, includinginvestment needs and goals Develop a DSC scorecard withkey metrics for output andtransformationAssess Digital Supply Chainmaturity, customer demandand competitive advantageTSC DSCD S C Tra n s fo r m at i o n G u i d e : 18 Essential MetricsInevitably, the strategy and metrics chosen,have to be embraced by company leadership.We recommend two half-day meetings beconducted in order to develop a DSC strategy.Appendix C shows how the meetings should beorganized. These meetings should be conductedto align people around the new directionand acceleration. The offsite might be called:Achieving the Digital Supply Chain – Benefits,Measures and Accountabilities. Selected sales,marketing and finance people should participatewith the CEO and CFO agreeing to the plan.If you do not measure and carry out what isrequired by the process metrics, you will notachieve the output results that the DSC can deliver.The single most important change for supplychain organizations is to shift the emphasis fromcost reduction and on-time delivery to managingelements of the demand stack actively.The demand stack consists of demand stimulation,demand sensing, demand management, anddemand matching. Each company mustincorporate precise metrics for improvementsmade, or planned to be made, in demand.Including the responsibility for demandstimulation will be a new feature for mostcompanies.Demand StackDigitalSupplyChainCUSTOMERDemandManagementReal-timeData UtilizationReal-timeData UtilizationDemandStimulationDemandSensingDemandMatchingSecurity & ComplianceS U P P L I E R S , C U S TO M E R S , S E N S O R / IoT D ATAPlatform Business ModelD S C Tra n s fo r m at i o n G u i d e : 19 Essential MetricsGuidance for Service CompaniesGuidance for Financial CompaniesGuidance for Product CompaniesService companies deliver resources to theircustomers which means they have to hire, train,and contract for their services’ resources. Theyalso have to deliver these resources to thecustomer when needed. Such companies areremarkably similar to a manufacturing companybut the line item parts that meet required specsare people. Most services companies have tocollect data on employee skills and the skillset required of future employees. In computerservices, these skills pertain to specific codelanguages and all service companies must manageresources with the rigor that a product companyuses. Digital Supply Chain metrics can direct andrecord progress. The service companies in the GEGagree that the Digital Supply Chain will increasecustomer revenue as well as reduce costs.Very few financial companies have a ChiefSupply Chain officer even though some financialinstitutions use the term “supply chain.” Nonethe-less, it is extremely important to invoke DigitalSupply Chain thinking into Financial Services.For example, one major investment managerin India tracks the “total number of financialtransactions without human intervention.” Weexpect that progressive financial institutions willsoon appoint a Digital Supply Chain executiveto transform their own supply chains to givecompanies a focal point for needed changes,some of which cut across business unit lines.Product companies typically have a supply chainleader with some scope of authority. However,in many companies, the scope of authority hasshortcomings that need to be overcome. Whodetermines when factories will be closed oropened? Who contracts out specific parts ofthe supply chain? As a general rule, a DigitalSupply Chain leader should be appointed in suchcompanies. This person should have powerfuldecision-making authority over procurement,manufacturing, delivery and demand, and shouldreport to the CEO. The focused accountability of asenior leader, with broad responsibility for processand results, will augment the implementation of aDigital Supply Chain and get results.Photo credit: photo(s) by Richard Alcorn: Colgate-Palmolive D S C Tra n s fo r m at i o n G u i d e : 20 Essential MetricsSelecting appropriate metrics is cruciallyimportant as they drive the behavior that youget. Failure to identify incorrect metrics couldsend your organization and people into a tailspin.Here we present a recommended process foridentifying a short list of Essential DSC Metrics.A section of this white paper described the fourstep process in creating a new scorecard whichcontained metrics from the TSC and the DSCin each of the four critical areas of Demand,People, Technology and Risk.We strongly recommend every company selectat least one metric from each of these fourcritical areas to drive a successful DSC. Demandis so crucial and so novel to most supply chainorganizations that we recommend at least twometrics. Developing a People Plan, or, as someexperts refer to it, a Talent Resources Strategy,is also essential as it is clear that people requirea variety of skills to attain Digital Supply Chainresults. You must find people capable of capturingand analyzing data to drive better decisions.You will need more people with backgrounds inSales and Marketing and Customer Service todrive more customer-focused growth solutions.Relying on people with procurement engineeringbackgrounds to be responsible for revenuegrowth is a recipe for disaster. Therefore, peoplerequirement measures in this area are a must astechnology is central to going digital and associatedrisks are constantly increasing in this field. Yourmetrics will shape management decisions acrossthese areas.Choosing new metrics, holding peopleaccountable and paying them for results isdifficult. In particular, DSC people may sensethat they cannot drive revenue. The sales teamor engineers may believe that DSC people arepurely operational and underestimate theirefforts. If this occurs, it is a sign that you areon the right track! Navigating through thischallenging process of setting new metrics anddetermining how to collect and use data is anintegral part of the DSC as will be shown later inthis document.As with the Transformation Maturity Assessment,our DSC metrics have been divided into fourareas which are critical when transforminga traditional supply chain into a digital one.Measuring for Demand, People, Technology, andRisk ensures that all sections of the company arefulfilling the required changes to become moredemand driven, customer focused, technologysavvy, and risk compliant.You can access our interactive tool to assist youin selecting the correct Essential DSC Metrics foryour business in Appendix A: Essential DigitalSupply Chain Metrics: Pick List. By clicking oneach metric, you can find an explanation of whatthe metric does, why it is important, and howthe metric should be implemented.The Essential DSC MetricsCrucial Choice, Politically Tough, Incredibly EffectivePhoto credit: Li & FungEssential Digital Supply Chain Metrics• Revenue change from Digital SupplyChain Actions• Revenue Increase from PlatformUtilization• Percentage Growth in Demand dueto DSC Actions• Percentage of Perfect Orders fromAutomation• Number of Days Latency in DemandShaping/Management• Net Promoter Score® for DSC• Total DSC People Cost/ Percentageof Sales• Revenue Balance between Peakand Non – Peak Demand• Revenue Size of DSC EnabledBusiness Models Created• Revenue Increase per SupplyChain Employee due to DSCActions• Total FTEs of Data Scientists/Stewards• Total Headcount withSales/Marketing Expertise• Percentage Increase in Nerds/Snipers• Total DSC TechnologySpending• Percentage of Sales ThroughDirect Channels• Percentage of Revenue facilitated byAdvanced Digital Technologies• Percentage of Time on Manual Tasks• Percentage of Manufacturing andDelivery Handled by Technology• Percentage Change in Value of CounterfeitGoods in the Legitimate Supply Chain• Loss from Supply Chain Disruption as apercentage of a Gross Revenue• Incremental Revenue Generated fromAddressing Risk• Time Lag between Capture of CriticalRisk-related Data and its Inclusion inDecision Making• Percentage of Cyber-Assessed“Connected” Suppliers• Percentage of Suppliers Classifiedin a Comprehensive Overall RiskAssessmentOUTPUTPROCESSD S C Tra n s fo r m at i o n G u i d e : 21 Essential MetricsD S C Tra n s fo r m at i o n G u i d e : 22 Essential MetricsWhen compensation and rewards reinforce theneed for success, people will do what is neededto accomplish the metrics for which they areaccountable.The best measurements do not drivetransformation unless they become part of themanagement culture and the company way forgetting things done. Accountability for each ofthe metrics must be assigned and it is crucial tobalance the need for shared, integrated metricswith line of site accountability for specific results.THE PRINCIPLES FOR COMPENSATION ARESTRAIGHTFORWARD:1. More pay is at risk and the upside is larger, sosupply chain people should be paid like salespeople.2. The bonus pool should be funded based oncompany and supply chain results. The targetsplit could be 50/50 for funding.3. Bonus payouts should be based on supplychain results and individual results. Thetarget split could also be 50/50 for payouts.4. Special incentives must be associated withmanaging the Demand Stack. In Year One,at least 20% of the payout should be forDemand Stack improvements.People are Coin OperatedPhoto credit: Li & FungD S C Tra n s fo r m at i o n G u i d e : 23 Essential MetricsTransforming your supply chain to a DigitalSupply Chain (DSC) is a radical departure formany companies and rare is the company thatcan stop and start from scratch. Consequently,the supply chain must be kept running while youtransform it. Knowing how far along you are inyour transformation to a DSC is necessary; youcannot improve what you do not measure.Ideally, you should start with an evaluation ofwhere your organization stands and decidewhich improvements to prioritize. The DSCTransformation Maturity Assessment (TMA)is designed to help you measure how you areperforming in each of the four foundational pillarsof the DSC: Demand, People, Technology, Risk.The DSC Transformation Maturity Assessment isapplicable to companies in any manufacturingor service industry. It will also assist you indefining a clear path and determining whichsteps will accelerate your transformation to aDSC by helping you allocate resources, makeinvestments and prioritize improvements.Why a TransformationMaturity Assessment?Photo credit: Li & FungChapter four: DSCI Transformation Maturity A ssessmentD S C Tra n s fo r m at i o n G u i d e : 24 Essential MetricsHow TMA fits intothe overall DSCIPerformance GuideTransformation Maturity AssessmentThe Transformation Maturity Assessmentmeasures the underlying foundation thatenables your supply chain performance resultsto be repeated and continually improved tomeet the changing business landscape. It studiesthe maturity of the processes you have in placeto transform to a DSC and to continue thejourney. Together, the Transformation MaturityAssessment and the Essential Performancemetrics provide you with a comprehensive wayto measure progress made toward a DSC and theimpact it is having on your business.Supply chains have always had numerousperformance metrics and, in some cases, thenumber can be overwhelming. The justificationfor using performance metrics has been toprovide accurate information on performancelevels and to measure actual results againstdesired results. This chart looks at the TraditionalSupply Chain metrics, the transformation andthe Essential Digital Supply Chain metrics.The DSC requires you to augment the TSC metricsand ensure that Demand, People, Technology andRisk are being tracked as essential componentsof the DSC. The Transformation MaturityAssessment follows these four essential areas.As your DSC transformation matures, certainperformance metrics will change and othersmay no longer be relevant. TSC metrics arelikely to evolve in two areas in particular. First,the target measurement associated with KPIsmay be increased. For example, the target KPIfor “perfect orders” could rise from 90% to 95%.Second, the KPI itself may evolve to becomemore specific to a DSC. For example, a KPI formeasuring “perfect orders” could be alteredto measuring “perfect orders without humaninvolvement.”Regardless of the metrics you are using today, itis essential for you to use selected DSC metrics.In the following Transformation MaturityAssessment, a series of questions are asked aboutyour progress and, specifically, whether you areusing the new “essential” DSC metrics. Whenused together, the Transformation MaturityAssessment and the essential DSC performancemetrics provide you with a foundation capableof driving continual improvement of your DSC.The Relationship between Transformation Maturityand Essential DSC MetricsDigital Supply Chain Performance Metrics/ Scorecard Research FrameworkE S S E N T I A L M E T R I C S E X A M P L E S* excerpts of full details beginning on page 27 Levels 1, 2, 3 ( 3 = m o s t m at u re )REVENUE INCREASE• Perfect Order Performance• Forecast AccuracyREDUCTION OF SUPPLY CHAIN COSTS• Supply Chain Management Costs• Transportation Cost• Warehousing/Distribution CenterOperating Cost• Customer Service Operating Cost• Direct Purchasing Operating Cost• Inventory Holding Cost• Manufacturing Operating CostWORKING CAPITAL REDUCTION• Cash-to-Cash Cycle Time, in days• Ship to Customer Delivery• Days Payables Outstanding (DPO)• Inventory Days• Days Sales OutstandingFIXED CAPITAL REDUCTION• Future CapEx Spend Avoidance• Enhanced Asset Utilization• Distribution Centers – TransportationNetwork Strategies• Higher Yield in Manufacturing ProcessesRISK• Supplier Quality• Risk Managed and Transparent Value ChainPartners• IP ProtectionWe have not integrateddemand management orstimulation into our supplychain. We are at the earlystages of using real-timedata to forecast demand.Our technologyimplementation plans arenot yet specifically linkedto our DSC strategy. Thetechnology in current useis focused on traditional SCfulfillment functions.The management of oursupply chain businessperformance andcompliance risks has notbegun to take advantage ofDSC capabilities.Our staffing, jobperformance metrics andleadership developmentsplans do not specificallytake DSC transformationinto account.We are implementingprograms to use real-timedata in demand forecastingin some areas. Our SC teamis increasingly involved indemand stimulation, demandshaping and management.DSC is becoming more centralto our corporate technologystrategy and we have startedto implement it with a focuson increased automation.We have begun to usereal-time data and relevantadvanced digital technologiesto measure and monitorsupply chain risk as wellas new DSC risks, such ascybersecurity.DSC and collaboration isintegrated in our staffing,job performance metricsand leadership developmentplans. We have started tofocus more on data-drivendecision making.Our SC program is alignedwith the “Frontside Flip.”Our demand sensing andstimulation program enablesus to generate additionalrevenue through improveddemand visibility and theability to satisfy demand.We strategically utilize digitaltechnology to improve supplychain performance, with afocus on demand stimulationand risk management,leading to revenue growth.We use real-time data toreduce business performanceand compliance risk throughpredictive analytics. Ourrisk program is increasinglyautomated in collaborationwith our suppliers andcustomers.Senior leadership shows clearcommitment to the principlesof DSC and appropriateperformance metrics are fullyintegrated into how we hire,develop and compensatepeople.DEMAND• Revenue Increase from Digital Supply Chain actions• Revenue from Platform Utilizations• Percentage Growth in Demand due to DSC action• Net Promotor Score® for DSCPEOPLE• Total DSC people cost/ Percentage of Sales• Revenue Increase per Supply Chain Employee fromDSC Actions• Total FTEs of data scientists/stewards• Total headcount with Sales/Marketing expertiseTECHNOLOGY• Total DSC Technology Spending• Percentage of Sales Through Direct Channel• Percentage of revenue facilitated by AdvancedDigital Technologies• Percentage of time on Manual TransactionRISK• Percentage Change in Value of Counterfeit Goods inOur Legitimate Supply Chain• Loss from Supply Chain Disruption as a % of GrossRevenue• Percentage of Cyber-Assessed “Connected”Suppliers• Percentage of Suppliers Classified in aComprehensive Overall Risk AssessmentD I G I TA L S U P P LY C H A I N T R A N S F O R M AT I O NPAT H WAYS P RO C E S S M AT U R I T Y *D E M A N DP E O P L ET EC H N O LO GYR I S KLevel 1 Level 2 Level 3D S C Tra n s fo r m at i o n G u i d e : 25 Essential MetricsD S C Tra n s fo r m at i o n G u i d e : 26 Essential MetricsOne of the most fundamental shifts needed totransform to a Digital Supply Chain is re-orientingfrom an internal focus to a customer focus. To dothis effectively means engaging your customersand your suppliers in assessing your supplychain performance. It also means broad internalengagement. We recommend distributing theTransformation Maturity Assessment to all yoursupply chain staff, as well as selected customerfacing sales and marketing, IT and financestaff. In addition, we suggest asking at leastfive customers and five suppliers the questionsbelow. Ideally, responses would be confidentiallycollected by a third party.Outside In1. How well does our company’s supply chainanticipate and match demand?a) One of the very bestb) Better than mostc) About averaged) Worse than most2. How well does our supply chain staffcollaborate with your company for ourmutual benefit?a) One of the very bestb) Better than mostc) About averaged) Worse than most3. How would you assess the state of ourtechnology and its capabilities?a) One of the very bestb) Better than mostc) About averaged) Worse than most4. How well do you think we manage businessperformance and compliance risks?a) One of the very bestb) Better than mostc) About averaged) Worse than mostAs you or others in your organization completethe Transformation Maturity Assessment, itis important to keep scope in mind. Someorganizations may choose to do one enterprisewide assessment, while others choose tocomplete the assessment based on a morelimited scope, such as a certain business unit,product line or geographic location. As previouslymentioned, you may also want to have allsupply chain staff complete the assessment, aswell as staff from sales and marketing, productdevelopment, IT, HR and finance. Getting a broadperspective on your transformation is invaluablein prioritizing actions. We recommend that youdefine the scope prior to beginning and noteif you answer a specific question considering adifferent scope.Considerations on theScope of the AssessmentD S C Tra n s fo r m at i o n G u i d e : 27 Essential Metrics After completing the assessment, the maturity ofyour transformation is measured on a 1 to 3 scale infour categories: Demand, People, Technology, andRisk. A summary description of each maturity level isprovided below. You can use the summary descriptionfor general guidance on your progress, while theresponses to specific questions can be useful indeveloping action plans. Overall, the results of theself-assessment give you a better understandingof your progress transforming for each of the fourareas and provide insight into prioritizing areas forimprovement that will accelerate the transformation. We have not integrateddemand management orstimulation into our supplychain. We are at the earlystages of using real-time datato forecast demand.We are implementingprograms to use real-timedata in demand forecastingin some areas. Our SC teamis increasingly involvedin demand stimulation,demand shaping anddemand management, andperformance metrics reflectthis shift.Our SC program is alignedwith the “Frontside Flip.” Ourdemand sensing and stimulationprogram enables us to generateadditional revenue throughimproved demand visibility andthe ability to satisfy demand.We are integrating real-timedata from a wide range ofsources into our demandstimulation and forecasting. Oursupply chain team proactivelycollaborates with marketing/sales and product development,as well as with suppliers andcustomers. We have a programto review and improve ourperformance against DSCmetrics and benchmarks.Transformation MaturityAssessment ScaleAs mentioned above, we have divided our surveyinto four sections with questions focused onassessing your current state of transformation.The questions have been designed to evaluateyou on four critical areas of the DSC: Demand,People, Technology, and Risk. Answer each of thequestions based on what you do today, not whatyou are considering doing in the future.Each answer has a value of 1, 2 or 3, or, the valueis based on the number of items checked in a“check all that apply” question.Point values for each question within the categoryare averaged to generate category maturity inDemand, People, Technology, and Risk.Review your maturity score in Demand, People,Technology, Risk against the TransformationMaturity Summary Scale. A copy of a shortversion of the Transformation MaturityAssessment can be found in Appendix B:Transformation Maturity Assessment. DSCIwill also release the Transformation MaturityAssessment as an Online tool for companiesas well as their suppliers and customers.The comprehensive TMA Assessment is onlyavailable to DSCI members. Please contact us ifyou like to take the comprehensive assessment.The secure, online tool automatically generatesyour score based on your answers to theassessment questions. You can benchmark yourscores against the blinded, aggregated scores ofothers that have completed the assessment. Allinformation collected in the online assessmentwill be kept confidential and used by DSCI forresearch purposes only.Transformation Maturity AssessmentD E M A N DLevel 1 Level 2 Level 3D S C Tra n s fo r m at i o n G u i d e : 28 Essential MetricsOur staffing, job performancemetrics and leadershipdevelopment plans donot specifically take DSCtransformation into account.Our SC department isprimarily reactive to oursales department or overallcorporate strategy.Our technologyimplementation plans are notyet specifically linked to ourDSC strategy. The technologyused in our SC departmentis focused on traditional SCfulfillment functions. Thereis limited automation or useof real-time data. Managingand analyzing available data istime-consuming.The management of oursupply chain businessperformance and compliancerisks has not begun to takeadvantage of DSC capabilities.We have begun to analyze riskmitigation opportunities andnew risks of the DSC, such ascybersecurity.DSC and collaboration isintegrated in our staffing,job performance metricsand leadership developmentplans. We have started tofocus more on data-drivendecision making. The cultureof the SC function hasstarted to shift from beinga fulfillment center to beingpart of a cross-functionalteam that helps to stimulateand match demand better.DSC is becoming more centralto our corporate technologystrategy and we have startedto implement it with a focuson increased automation.Our technology is enablingus to share data with internaldepartments, suppliers andcustomers to stimulate betterand match demand. Weare piloting or using somerelevant advanced digitaltechnologies.We have begun to usereal-time data and relevantadvanced digital technologiesto measure and monitorsupply chain risk. Our riskassessment includes anevaluation of new DSC risks,such as cybersecurity. Wehave started implementingcollaborative programs toreduce risk with companies inour supply chain.Senior leadership shows clearcommitment to the principlesof DSC and appropriateperformance metrics are fullyintegrated into how we hire,develop and compensatepeople. The culture of the SCfunction has shifted to focus ongrowth with an entrepreneurialspirit. The effectiveness of crossfunctional collaboration andcollaboration with suppliers andcustomers partners are measured.Supply chain leadership is heavilyinvolved in corporate strategy andhas appropriate decision-makingauthority.We strategically utilize digitaltechnology to improve supplychain performance, with a focuson demand stimulation andrisk management, leading torevenue growth. We continuallyevaluate the application of newtechnologies and data sources,and integrate as appropriate.We utilize data and analyticsto effectively understand pastperformance and predict futuredemand and risks. The reviewand utilization of relevantadvanced digital technologies ispart of a continual improvementprocess.We use real-time data toreduce business performanceand compliance risk throughpredictive analytics. Ourrisk program is increasinglyautomated in collaborationwith our suppliers andcustomers. We have integratedcybersecurity and the protectionof confidential information intoour supply chain assessmentand monitoring program. Wehave strategically targeted arisk area related to our businessand are now known as a leaderin managing this risk. This hasprovided us with a competitiveadvantage in the market and willlead to revenue growth.P E O P L ETECHNOLOGYR I S KLevel 1 Level 2 Level 3D S C Tra n s fo r m at i o n G u i d e : 29 Essential MetricsHow can we decide the all-important issuesof which metrics to manage when there is noagreement on vision and scope, or the timingof the Digital Supply Chain change? Answer:You cannot. Or, at least, you cannot move aheadquickly unless DSC, Finance, Sales, HR, andoverall leadership agree.HERE IS HOW WE SUGGEST YOU GAINCONSENSUS ACROSS THE C-SUITE ON DSCVISION, OBJECTIVES, SCOPE AND APPROACH:FIRST, BECOME FAMILIAR WITH AVAILABLETECHNOLOGIES, MARKET NEEDS ANDOPPORTUNITIES. ASK QUESTIONS SUCH AS:• Are customers buying more online?• Can we get and use more data on ourcustomer’s customer?• What expectations are associated withcustomer service and speed?• Are there any “digital native” new entrantschallenging your company?• What new technologies exist for capturingcustomer data, delivering with speed andproducing what you deliver?Next, administer the Transformation MaturityAssessment and uncover your current statusand opportunities for improvement with respectto the Digital Supply Chain. Make sure you geta third-party review to help you gauge yourprogress and include customer and supplierassessments. Discover how some companies arefaster and better at approaching their DigitalSupply Chain. It is analogous to taxi companiesassessing their supply chains and discovering thatthe old process of hailing a cab was dissatisfyingand antiquated. Rather than being “Ubered” andnever recovering, outside advisors can alert youto opportunities that insiders do not see.Hosting a Digital Supply Chain TransformationStrategy session is the next logical step. Thissession must include top people from Sales (theDSC will grow revenue), HR (a new digital talentstrategy will be needed), Finance (investmentswill need to be made and costs and returnmanaged) and, of course, people from theSupply Chain. Appendix C is an outline of howthe workshop should be structured and what theDSC Vision, Scope, Timing and Approach shouldlook like.Photo credit: ZTEChapter five: Priority Actions for Senior ManagementD S C Tra n s fo r m at i o n G u i d e : 30 Essential MetricsGovernance is a key element for acceleratingprogress towards the Digital Supply Chainthat will increase your revenues and decreaseyour costs. You must decide who will be incharge and what authority they will have. Ourrecommendations are:The time to start is yesterday and you are alreadyone day behind. This is the right attitude for DSCtransformation. Everyone including suppliers,employees, customers and shareholders arecounting on you to make the DSC happen.Do not fall back on incremental change andmanaging a day-to-day supply chain business.Develop the DSC strategy, place people incharge, manage to a clear set of metrics, makeinvestments in new technologies and reach yourgoals. We hope that this Transformation Guideprovides tools to help you lead the change.The Transformation Maturity Assessment is apowerful tool for getting people’s attention andforcing them to focus on what a company needsmost. The DSC Transformation Workshop willbring clarity to your direction, investments andresults. The Essential DSC Metrics will keep youon course. Demand, People, Technology and Riskare the four areas of focus. Most companies canachieve 10% revenue growth and a 20% drop incosts. Executing the DSC will protect you fromthe Digital Natives and create a supply chain tosatisfy customers for many years to come.GovernanceLeadership and Call to ActionPhoto credit: ZTE1. Place someone in charge of the Digital SupplyChain and assign them the authority to makedecisions, investments and drive change. Thisperson may have to operate across businessunits and the reporting structure of yourcompany may have to change to find the rightfocus on the DSC.2. Appoint a person to run the DSC transformationeffort. This person should have several ofthe skills that the new DSC will require. Theymust be data driven and good at analytics.They must understand customer needs andchanging requirements. And they must sharethe vision of the DSC.3. Create a Steering Committee that includessenior leaders who worked to develop the DSCstrategy. The DSC Steering Committee shouldbe chaired by the DSC leader and managed bythe person in charge of the DSC effort.4. Lock in the accountability and reportingsystem so that DSC progress can be trackedand managed by the CEO. Process and Outputmetrics are to be used; the same metrics thatwere selected in the DSC workshop.D S C Tra n s fo r m at i o n G u i d e : 31 Essential MetricsAppendix AEssential Digital Supply Chain Metrics: Pick ListOutput and Process MetricsDemand – Output MetricsRevenue Change from Digital Supply Chain ActionsWhat Calculate the total dollar value of Digital Supply Chain actions that have increased revenue.These actions can include: using big data to match customer demand better, stimulate salesthrough a “sticky” supply chain that creates advantage, better informed product design basedon DSC knowledge and local 3D manufacturing etc. This metric will be shared (double counted)with Sales and Marketing.Why The DSC must do a frontside flip and face the customer in a way that grows revenue. MeasuringDSC-generated revenue growth is essential to focus on and will support this effort. The DSCstrategy was jointly developed with Sales and Marketing.How Each year DSC leadership must meet with Sales and Marketing to establish the categories of actionsthat the DSC can take to grow revenue. Each action must be built into the budget and measured.Revenue Increase from Platform UtilizationWhat Every supply chain should grow revenue from platform partners. This revenue should beplanned and measured in revenue dollars. These platform partners may be current or newsuppliers, or even customers.Why A Digital Supply Chain platform that connects to customers is an asset. Other companies willwelcome the opportunities to access the Digital Supply Chain, its manufacturing, shipping, logistics,quality and customer intimacy. Technology enabled collaboration makes all of this possible.How Select a specific supply chain process that offers benefits to other vendors. Develop a revenuesharing model that enables your company to keep a percentage of the value. Value could comefrom cost savings or from increased sales.Percentage Growth in Demand due to DSC ActionsWhat Calculate a target percentage increase in demand that comes from specific Digital SupplyChain actions. These actions could include increasing delivery speed, improving availability,offering goods and services through on-line channels, anticipating customer requirements etc.Why This metric is similar to the Revenue Increase metric but is expressed as a percentage whichenables more comfortable comparisons with other companies and previous years.How Percentage growth should total at least 10% of current company revenue by year three.→ Go back to Essential DSC Metrics FrameworkD S C Tra n s fo r m at i o n G u i d e : 32 Essential MetricsDemand – Process MetricsPeople – Output MetricsPercentage of Perfect Orders from AutomationWhat Measure the total number of perfect orders achieved through automation. Compare to totalorders and to total perfect orders.Why Automation, done correctly, will create more perfect orders. Perfect orders create customersatisfaction. This creates more orders and revenue.How Count total orders, total perfect orders, and total perfect orders through automation. Integratecustomer knowledge into automated systems.Total DSC People Cost/ Percentage of SalesWhat Total salary and benefits costs of current and planned DSC. Calculate average pay now andcompare to planned average pay.Why A DSC will require substantially lower people costs but average pay should increase.How Decide how outsourced people costs will be tracked. Include this in the calculation. Align goals forthis metric with DSC Talent Strategy. DSC people costs (the total cost of people working the supplychain) divided into total sales.Number of Days Latency in Demand Shaping/ManagementWhat Measure the lag time between a demand requirement and the date of fulfillment.Why Speed is often the biggest factor driving customer choice. Win business because of speed. Thismetric is increasingly important in many industries. DSC strategy will determine if this is importantfor your company.How Develop a measure of latency, track quarterly and move towards real-time tracking.Net Promoter Score® for DSCWhat Measure the number of customers willing to recommend you as their supplier. A high score (9or 10) is good, a low score needs to be improved.Why Digital Supply Chains should create customer loyalty. Customer loyalty means more revenuefrom existing and new customers. Net Promoter Score has been tracked by many companiesbut will be applied by the DSC because the DSC is focused on customer retention and growth.How Administer the Net Promoter Score survey to all customers and suppliers. Set the target for ascore of 9 or 10. You may use the Net Promoter Score method or create your own version.→ Go back to Essential DSC Metrics FrameworkD S C Tra n s fo r m at i o n G u i d e : 33 Essential MetricsRevenue Balance between Peak and Non-Peak DemandWhat Most companies have periods of high and low demand. The DSC will shift demand from peakperiods to low periods. Acquire new people with skills in sales and big data analytics (e.g.,data scientists) who can anticipate and shape demand through changes in availability, pricing,customization etc.Why Shifting demand enables factories to operate efficiently and potentially eliminates the needfor specific factories and excess inventory. Inventory can be reduced.How Create joint DSC/Marketing peak team to create a view of customer behavior and factoryperformance. Integrate big data for demand analytics.Revenue Size of DSC Enabled Business Models CreatedWhat Calculate the annual revenue of a new business model created by the DSC. The single mostimportant factor when developing new business models is to bring digital natives, marketingexperts, and data scientists on board.• A new business model could:a) Sell DSC services to other companies that need distribution or warehousingb) Be a “go direct” business that exists because the DSC includes sensors in productsthat trigger ordersc) Give products away and sell content or servicesd) otherWhy Collecting new data from sensors, IoT, social media and other sources will create new businessopportunities for those who do it well. High-performing DSCs could become the most valuableasset of certain companies.How Bring people on board who can envision new ways of doing business. Invest in them and measurethe results.Revenue Increase per Supply Chain Employee due to DSC ActionsWhat Measure the revenue increase per supply chain employee from DSC actions such asimplementing new digital platforms, training of current employees, etc.Why To measure the actual impact and progress of these DSC actions into the transformation to theDigital Supply Chain. To measure the productivity per employee due to DSC transformation.How Make a list of all ongoing DSC actions which went through DSC transformation. Calculate therevenue increase due to the implementation of these DSC actions. Divide revenue increase byNumber of employees.→ Go back to Essential DSC Metrics FrameworkD S C Tra n s fo r m at i o n G u i d e : 34 Essential MetricsPeople – Process MetricsTotal FTEs of Data Scientists/StewardsWhat Calculate the total number of data scientists and data stewards in the DSC.Why Data scientists and data steward skills are in great demand as they are necessary for aneffective DSC. The DSC Talent Strategy will spell out the number and skill set needed. Averagedata and systems literacy should also increase.How Calculate the number of data scientists and data stewards. Set a target for the number needed aswell as for the overall skill base.Total Headcount with Sales/Marketing ExpertiseWhat Count the people in the supply chain with at least 3 years of experience in sales, marketing orcustomer service.Why Front end, sales drive skills and mind set are needed to achieve the DSC. These new people willdrive a mindset/culture change.How Quarterly survey with targets. Comparison with DSC Talent Strategy with performance targets.Percentage Increase in Nerds/SnipersWhat Classify people as Snipers or Nerds. Snipers are good at doing something. Nerds are goodat collecting and analyzing data. They are never the same person. Measure the percentrelationship between the two types. Most organizations will have many more snipers thannerds. Set a target for managing this differently given the explosion of new data available.Why Nerds can make snipers much more effective. They have to be valued to attract and retainthem. Nerds will make the Snipers more effective.How Periodic headcount survey. Create a culture that recognizes the value of being a Nerd or a Sniper.Technology – Output MetricsTotal DSC Technology SpendingWhat Add up the annual capital and expense for IT (Enterprise Software, Blockchain) and specialtechnologies (e.g., 3D or driverless vehicles or sensors). Some judgement will be required todetermine what spend is DSC spend. Building that spend baseline is important.Why Technology spending will go up because of the increasing amount of data, new methods ofmanufacturing and production, IoT, sensors, etc. Measuring and managing this spending isimportant. We must spend more but we must get more for what we spend.How Capture all the spend on technology. Include phantom servers run by the engineering department,include cloud spend that is sometimes called by the name of the internal customer. Make sure thatreturn expectations are clear and audited.→ Go back to Essential DSC Metrics FrameworkD S C Tra n s fo r m at i o n G u i d e : 35 Essential MetricsPercentage of Sales Through Direct ChannelsWhat Measure the percentage of business that goes directly to the customer. Not through a channel partneror re-seller. This applies to B2B as well as B2C. Decide if revenue or bookings will be measured.Why Direct channels will deliver higher margins and more customer intimacy. This will lead tomarket share growth, more revenue and higher earnings.How Set up a web presence that lets your customers purchase directly from you. Maintain currentchannels but build your own.Technology – Process MetricsPercentage of Revenue Facilitated by Advanced Digital TechnologiesWhat Measure the exact percentage of business revenue that is, or has at least some part, producedwith advanced digital technologies like AI, 3D, Blockchain, IoT, etc. Measure the percentageof business revenue that is delivered by driverless cars/drones. Measure other sources ofrevenue that have been enabled by DSC technology.Why We know that 3D, driverless, and other technologies can transform the DSC. Importance ofmeasuring, managing and incentivizing development.How Collect data from factories, delivery systems, and sales or bookings. Consolidate incrementalrevenue and calculate percentage of total revenue.Percentage of Time on Manual TasksWhat Calculate the total amount of time within a certain segment of the supply chain (e.g., order to cash).Calculate the percentage of that time that requires people work as opposed to machine work.Why Automation is the key to reducing costs, speeding delivery of value, and improving quality.DSC automation is important.How Form a work team to map out existing and to-be processes. This team can also do the calculations.Be sure to employ baseline and improvement metrics so that the percentage reduction in manualwork can be calculated.Percentage of Manufacturing and Delivery Handled by TechnologyWhat Measure the percentage of your factory and delivery work that is automated and is nottouched by human hands.Why The DSC will harness the power of software and machines to drive higher levels of customersatisfaction and efficiency.How Calculate the total number of delivery transactions made per week. Determine the percentageof those that are delivered by driverless vehicles. Determine the percent of manufacturingsteps that are performed by software/machines.→ Go back to Essential DSC Metrics FrameworkD S C Tra n s fo r m at i o n G u i d e : 36 Essential MetricsRisk – Output MetricsPercentage Change in Value of Counterfeit Goods inthe Legitimate Supply ChainWhat Measure the number of counterfeits in your legitimate supply chain (legitimate defined asauthorized suppliers, distributors and retailers).Why Counterfeit goods are commonly found in authorized supply chains. It could be from overproduction by an authorized factory, or an authorized distributor that purchases counterfeitsknowingly or unknowingly.How Monitor the total production emerging from an authorized factory by studying raw material/component purchases, working hours and shipments of finished goods. Establish a mechanismfor auditing distributors and retailers to establish if they have controls in place to verify that allincoming product is authentic. Sample, test, measure and control.Loss from Supply Chain Disruption as a percentage of Gross RevenueWhat Calculate the dollar amount of negative supply chain events as a percentage of gross revenueand track reduction against this baseline. Negative events will be defined in the DSC strategy.Why Business performance and compliance risks impact revenue and expenses through supplychain disruptions and losses. Measuring the reduction of risk will focus managers on reducingthese problems.How Baseline revenue lost or expenses incurred due to negative events in the supply chain whethercaused by business performance or compliance issues. Measure tangible losses such as lost salesdue to supply chain disruptions.Incremental Revenue Generated from Addressing RiskWhat Companies that excel at reducing a specific risk area can turn it into a competitive advantageto generate value for the company through increased sales, higher margins, higher valuations,increased ability to raise capital, longer-term contracts, etc.Why Reducing risk and converting this into more sales creates financial value. Measuring this valueis essential.How Identify a risk area that is central to the customer. Establish a value baseline financial measurement.Track changes to this baseline.→ Go back to Essential DSC Metrics FrameworkD S C Tra n s fo r m at i o n G u i d e : 37 Essential MetricsTime Lag between Capture of Critical Risk-related Dataand its Inclusion in Decision MakingWhat Count days between risk discovery and inclusion. Some judgement is required to determinewhen things are discovered and when things are decided. At the end of the performanceperiod you should be able to calculate the average time between discovery and decision.Why Speed is all-important. Taking action on data that is as close to real time as possible is essential.This risk metric will help focus people on speed of execution.How Identify current supply chain data sources and determine the time span between when the datafirst existed and when it is integrated into your risk assessment. Allocate resources to reduce thetime span as needed. Measure the change reduction in days from discovery and inclusion.Percentage of Cyber-Assessed “Connected” SuppliersWhat Calculate the total number of suppliers as a denominator. Calculate the total number thathave undergone a thorough assessment of cybersecurity controls and confidential informationprotection programs. Divide the denominator by the number of assessments. It is important todecide what an acceptable cybersecurity assessment is and what an acceptable level of risk is.Why Cybersecurity and the protection of confidential information, including trade secrets, isa growing risk in the Digital Supply Chain. Your supplier assessment program and ongoingmonitoring must cover these escalating issues. Measuring the percentage of suppliers thathave been assessed is important.How Start by mapping all of your suppliers that are connected to any of your networks or those thatreceive confidential information or trade secrets from your company. Conduct assessments. As aprogram matures, consider weighing the percentage based on the dollar value of the supplier.Percentage of Suppliers Classified in a Comprehensive Overall Risk AssessmentWhat This examines the existence and utilization of a comprehensive risk assessment programthat includes a tiered – low, medium and high – risk rating system. Beyond that, it studiesthe percentage of suppliers at each risk level. Companies have traditionally done this. TheDSC approach is to incorporate new sources of data, prescriptive analytics, unstructured andstructured data.Why There is a trend in many industries towards supplier consolidation with a focus on having asmaller base of “strategic suppliers.” One factor driving consolidation is that it provides moreleverage and control over the supplier, thus reducing risk. Coupled with this, is the trendtowards companies doing a more comprehensive and “holistic” supplier assessment of thebroad range of business performance and compliance issues they face. Continuing increasesin regulations will accelerate the need for comprehensive risk assessments to be conducted,with results being analyzed and implemented.How Establish your risk tolerance in the relevant business performance and compliance risk areas.Develop a tiered risk rating assessment and classification system of at least three levels in each ofthe risk areas. You may wish to aggregate this into an overall risk score. Many companies will haveexisting programs that can be utilized and modified as necessary to cover the enhanced risks of theDigital Supply Chain. Initiate the comprehensive assessment program with strategic suppliers orwith those in known high-risk areas.Risk – Process Metrics→ Go back to Essential DSC Metrics FrameworkD S C Tra n s fo r m at i o n G u i d e : 38 Essential MetricsAppendix BTransformation Maturity AssessmentDemandThis section will help you assess:• The quality and degree of latency in the data your firm utilizes to make demand decisions• How deeply your supply chain function is involved in stimulating customer demand• Your Supply Chain function’s ability to create and act upon forecast information• How well your function reacts to rapidly changing market demandsThe assessment questions will help you develop a better understanding of how your supply chaincurrently interacts with and reacts to customer demand information. These are key capabilitiesenabling a real-time Digital Supply Chain – and the successful execution of the “Frontside Flip.” Asupply chain that demonstrates a high level of performance in these categories will facilitate improvedrevenue generation and improved customer satisfaction while managing operating costs and workingcapital investments.1. The following best describes the role our supply chain function has in stimulating and shapingdemand. (Select one)a. Supply chain responds to demand forecasts and orders. (1 Point)b. Supply chain is involved in consensus demand forecasting for some areas of the business,but not integrated into demand stimulation activities. (2 Points)c. Supply chain is fully integrated into a cross-functional demand stimulation program, withproduct development and marketing/sales. (3 Points)2. The following describes supply chain’s involvement in the evaluation and adjustment of ourbusiness model based on understanding our customer. (Select one)a. Supply chain is reactive to any changes in business models. (1 Point)b. Supply chain is consulted in the development of new business models. (2 Points)c. Supply chain leaders are actively involved in creating new business models to better meetcustomer needs. (3 Points)Here we provide you with the print versionof a short version of Transformation MaturityAssessment and a means for you to manuallycalculate score. DSCI is also making this availableas an online tool that automatically calcuates yourscore and enables you to compare and aggregatemultiple assessments. Use this link to get access toonline assessment tool: dsc.institute/DemoTMAD S C Tra n s fo r m at i o n G u i d e : 39 Essential MetricsPeopleThis section will help you assess:• The degree your talent development efforts address new digital skills• Alignment of your job performance and compensation metrics with your DSC strategy• The degree of cross-functional collaboration between the SC and other departments• How well your supply chain culture demonstrates integration behaviors• The extent to which your supply chain associates are data oriented in their decision makingThe assessment questions help you develop a better understanding of how your supply chain functionmotivates, engages, and guides the performance and commitment of your talent. The peoplecomponent of the Digital Supply Chain transformation is a key enabler to realizing investments intechnologies and processes.A supply chain that demonstrates a high level of performance in these People categories driveimproved revenue generation and customer satisfaction while more effectively managing operatingcosts and working capital investments.1. Our current personnel recruiting and development program supports our transformation to aDigital Supply Chain in the following way. (Select one)a. We are not currently recruiting positions specific to the needs of the Digital Supply Chain,nor are we developing employees for those needs. (1 Point)b. We have identified the personnel capabilities needed to execute our Digital Supply Chainplan and have started a program to recruit and develop the needed talent. (2 Points)c. We have a fully operational program for recruiting and developing the capabilities neededfor a Digital Supply Chain, and our program is reviewed and revised to meet evolvingneeds. (3 Points)2. The following best describes today’s status of cross-functional collaboration between supplychain and other departments in our company (such as marketing, sales, product development,human resources, finance, etc.). (Select one)a. Cross-functional collaboration, if it occurs, is sporadic, and typically facilitated in responseto a specific issue. (1 Point)b. We have cross-functional working groups that meet on a routine basis, however theytend to be project specific and not linked to a broader strategic agenda. (2 Points)c. Supply chain is fully integrated into a cross-functional working group whose purpose is todrive corporate strategy and Digital Supply Chain performance. (3 Points)D S C Tra n s fo r m at i o n G u i d e : 40 Essential MetricsTechnologyThis section will help you assess:• Your supply chain’s current use of technology speed and data latency• The degree to which your supply chain is utilizing emerging relevant technologies• How well your measurement of technology investments is aligned to digital transformation• Your supply chain’s relative sophistication in its cultivation of and use of data to support its digitaltransformation• How well your supply chain collaborates with value partners through technologyThe assessment questions help you develop a better understanding of how your supply chain functionutilizes and maximizes its investments in technology to support improved demand-driven performanceand risk reduction. Digital Supply Chain technology investments should be aligned to strategy, supportedby high-quality, low-latency data, and measured based on their performance impact.A supply chain that demonstrates a high level of performance in its use of critical technologies drivesimproved revenue generation and customer satisfaction while more effectively managing operatingcosts and working capital investments.1. The following best describes how we evaluate the acquisition and implementation of technologyspecifically used to support our transformation to a Digital Supply Chain. (Select one)a. We do not have a way to track technology investments related to our DSC transformation.(1 Point)b. We have pilots underway to establish baseline data to identify those technologyinvestments that will best support our transformation to a DSC. (2 Points)c. We have a rigorous review process that analyzes the ROI on technology investments andscales those that effectively support our DSC transformation. (3 Points)2. In our supply chain program, our current strategic data utilization is best described in the followingway: (Select one)a. Our challenge is to use the data we already have effectively. (1 Point)b. We have projects underway to integrate data sources, turn unstructured data intostructured data and improve data utilization. (2 Points)c. We have established programs that evaluate the use of our existing data to improvebusiness performance directly and are continuously seeking to find and integrate newdata sources. (3 Points)D S C Tra n s fo r m at i o n G u i d e : 41 Essential MetricsRiskThis section will help you assess:• The degree to which your supply chain has implemented updated digital risk assessment andmanagement processes• The relative maturity of your supply chain’s use of data analytics to better manage risk• The degree to which your supply chain is managing risk in an integrated and predictive manner• How well you believe your supply chain organization manages and minimizes cyber security andconfidential data breachesThe assessment questions will help you develop a better understanding of how your supply chainmanages, assesses, and mitigates risks due to the shift to digital. Digital Supply Chain risk managementpractices should be updated to manage business performance and compliance risks better. You cangauge if technology and data are being used to shift from a reactive to a preventative control of risks.A supply chain that demonstrates a high level of performance in its management of digital risk drivesimproved revenue generation and customer satisfaction while more effectively managing operatingcosts and working capital investments.1. The following best describes how we manage supply chain risks. (Select one)a. We are primarily reactive and address problems in our supply chain as they arise. (1 Point)b. We have established programs that address the risks that we most commonly face andwe our starting to utilize data and technology to improve efficiency. (2 Points)c. We use data analytics to seek patterns in supply chain risks and related negative impactsand adjust our risk management program to reduce or prevent recurrence. (3 Points)2. The following best describes how we interact with our suppliers and customers to gain bettervisibility into supply chain risks. (Select one)a. We share some risk information as part of our normal business interaction, but do notproactively focus on sharing risk information. (1 point)b. We share the results of our risk monitoring with customers and suppliers and collaborateon needed remediation. (2 points)c. We collaborate with our suppliers and customers to utilize new technologies to share riskdata to predict and address potential business and compliance risks. (3 points)D S C Tra n s fo r m at i o n G u i d e : 42 Essential MetricsDSCI Transformational Maturity Assessment ScorecardInstruction:1. Enter points from each of the above questions Q U E ST I O N #DEMANDPEOPLETECHNOLOGYRISKTOTA L P O I N TSTra n s fo r m at i o n M at u r i t yS co re ( Tot a l Po i nt s /N o . of Q u e s t i o n s ) 1 2P O I N TSNote:1. Only DSCI member has access to comprehensive Transformation Maturity Assessment.2. These scores do not represent your final scores in each category (Demand, People, Technology, and Risk)as this is the short version of the comprehensive assessment. Please contact us at [email protected] totake the comprehensive Transformation Maturity Assessment.D S C Tra n s fo r m at i o n G u i d e : 43 Essential MetricsAppendix CDigital Supply Chain StrategyDevelopment WorkshopDeveloping a Digital Supply Chain (DSC)may be the most important organizationaltransformation initiative executives will faceover the next five years. By performing aFrontside Flip, you are essentially flipping thetraditional focus of cost control, procurement,manufacturing and logistics to focus on thecustomer. Using the DSC will increase revenueby 10% and costs will decrease by 20%. Ofcourse, traditional supply chain performance isstill important, but the new customer focus willdrive competitive advantage.The research conducted by the Digital SupplyChain Institute and the global collection ofcompany supply chain leaders, our “GlobalExperts Group,” has concluded that thetransformation to the Digital Supply Chain isnot a minor, isolated, transactional shift to newtechnologies. Instead, for many firms, the DigitalSupply Chain is a strategic transformation,requiring high degrees of alignment acrossfunctions, insights into firm resources, andchoices about business models. Our DSCI researchteam believes that a focused workshop, bringingtogether key top decision makers from a crosssection of organizational functions is necessary tounderstand and identify digital opportunities, andto decide on initial Digital Supply Chain actions.To help accelerate this process for our memberfirms, the DSCI team has developed an approachfor an Executive Workshop designed to quicklyalign your C-Suite team to the Digital SupplyChain transformation challenge.The DSCI team has accumulated decades ofexperience in designing and facilitating executivelevel strategy workshops. This workshop guide isdesigned to help shape an intervention that willjump-start your firm’s own digital transformation.Utilizing the DSCI “Frontside Flip,” demanddriven research and guides as a framework, theworkshop blueprint will lead your senior teamthrough a series of structured dialogs, with thegoal of developing implementable strategiesand actions. The content portion of the programintroduces key concepts of the demand-drivenDigital Supply Chain, highlights new strategies,and measures for the performance domains ofDemand, People, Technology, and Risk.Digital Supply Chain Strategy Development Workshop:Taking Transformational ActionWorkshop OverviewD S C Tra n s fo r m at i o n G u i d e : 44 Essential MetricsStrategic transformation in organizations cannotbe accomplished in one swift stroke. The crossfunctional interdependences, shifts in mindsets,and decisions about processes and investmentsrequire a thoughtful selection of principals,starting with a senior level executive sponsor,and cascading to senior functional leaders andtheir delegates. The executive sponsor of thetransformation should, at the very least, be thesenior supply chain leader of the organization.This sponsor may then delegate a DSCtransformation leader to manage process andbe accountable for strategy implementation. Forthe proposed transformation workshop to beeffective, we recommend the recruitment of aDSC transformation steering team that includessenior-level representation from firm-levelfunctions, such as finance, sales, marketing,product development, IT, HR and supply chain.The members of this steering team, led by theexecutive sponsor, are the best participants ina transformation workshop. Having key crossfunctional leaders present in the workshopallows for the creation of consensus-builtactionable strategies.The workshop team will facilitate anintroductory dialog utilizing the TransformationMaturity Assessment, a strategic surveyinstrument designed to align participants tocritical opportunities for performance gains.Once a baseline understanding of the currentperformance levels of your firm has beenestablished, each key Digital Supply Chain areais rapidly mined for strategies and actions thatcan be pressure-tested and deployed in thenear term. The workshop outcome will be adeployable Digital Supply Chain action plantailored to your firm with alignment and supportfrom your key organizational stakeholders.• Understand your firm’s current-state DigitalSupply Chain maturity• Develop a process of evaluating performancegaps and improvement opportunities inDigital Supply Chain• Understand and develop cross-functionalactions to overcome the issues, challengesand potential barriers inherent in DigitalSupply Chain transformation• Improve your firm’s speed in implementingcritical Digital Supply Chain strategiesand actions that will provide immediateperformance returns• Appoint a project manager to make sure it allhappens!Who Should Participate?Workshop Business ObjectivesD S C Tra n s fo r m at i o n G u i d e : 45 Essential MetricsWe recommend two half-day on-site workshopswith an optional 1-2-hour virtual intersessionmodule.Prior to the on-site workshop, participants willcomplete the DSCI Transformation MaturityAssessment instrument. The first half-dayworkshop will introduce the participants to thevalue of the Digital Supply Chain and providethem with some experience working with awell-researched Digital Supply Chain demandfocused transformation model. Participantswill look at digital native organizations in theirown or adjacent industries, and will reviewrelevant performance benchmarks. The sessionwill conclude with a module on the talenttransformations needed to implement andrealize performance gains from new DigitalSupply Chain actions.The workshop design should include an onlineinter-session where organizational opportunitiesin Digital Supply Chain will surface while allowingthe participant group to explore and pressuretest new ideas in a collaborative setting.The second half-day on-site workshop willfocus on technologies, risks before comingto actionable conclusions going forward.Participants will have an opportunity to selectrelevant DSC performance metrics and establishbaseline commitments for review. The wrap-upsession will collaboratively socialize the DigitalSupply Chain action plans amongst your executiveparticipants, surfacing potential barriers, andbuilding organizational commitment to them.Workshop Design ApproachDigital Supply Chain Transformation Executive WorkshopF I R ST H A L F – DAY WO R K S H O P S ECO N D H A L F – DAY WO R K S H O PI N T E R- S E S S I O N O N L I N E M O D U L E ; S U R FAC I N G D I G I TA L S U P P LY C H A I N O P P O RT U N I T I E SIntroduction:What is a Digital Supply Chain?2. DEMAND: StimulatingCustomer DemandYour Digital Supply Chain Strategy5. RISK: Managing Digital SupplyChain Risk1. The DSC TransformationMaturity Assessment3. PEOPLE: Digital Talent Strategies4. TECHNOLOGY: Digital SupplyChain TechnologiesYour Digital Supply Chain Action PlanD S C Tra n s fo r m at i o n G u i d e : 46 Essential MetricsTopics and Design by DayF I R ST H A L F – DAY O N – S I T E WO R K S H O P CO N T E N T ( A P P ROX . 4 H R S . )S ECO N D H A L F – DAY O N – S I T E WO R K S H O P CO N T E N T ( A P P ROX . 4 H R S . )I N T E R- S E S S I O N O N L I N E M O D U L E ( 1 – 2 H R S . )Introduction: What is a Digital Supply Chain? An introduction to the “Frontside Flip”Virtual Module: Surfacing Digital Supply Chain OpportunitiesModule 1: The Digital Supply Chain (DSC) Transformation Maturity Assessment – Where does yourorganization stand? This module should include a review of your current SC strategy, comparativebenchmark data, and expert assessments of your organization’s digital SC transformation maturityModule 4: TECHNOLOGY: Digital Supply Chain Technologies• Assess your SC’s current use of technology speed and data latency• Strategies for how to improve the degree to which your SC is utilizing emerging relevant technologies• Develop a plan for how your measurement of technology investments are aligned to digitaltransformation• Evaluate and plan ways to improve your SC’s relative sophistication in its cultivation of and useof data to support its digital transformation• Develop plans for improving how your SC collaborates with value partners through technologyModule 3: PEOPLE: Digital Talent Strategies• How to transform your talent development efforts to address new digital skills• Build alignment of your job performance and compensation metrics with your DSC strategy• Develop strategies to build cross-functional collaboration between the SC and other departments• Strategies to build a SC culture of integration behaviors• Considerations in developing your SC associates data-driven decision making capabilitiesModule 5: RISK: Managing Digital Supply Chain Risk• Evaluate the degree to which your SC has implemented updated digital risk assessment andmanagement processes• Understand the relative maturity of your SC’s use of data analytics to better manage risk• Evaluate and plan ways to improve the degree to which your SC is managing risk in anintegrated and predictive manner• Understand and plan improvements to how well your SC organization manages and minimizescyber security and confidential data breachesACTION PLANNING: Connect DSC back to Supply Chain Strategy, Select DSC metrics and baselines,assign accountability and timeframes for execution and resultsModule 2: DEMAND: Stimulating Customer Demand• Addressing the quality and degree of latency in the data your firm utilizes to make demand decisions• Deepen your supply chain function’s involvement in stimulating customer demand• Improve your supply chain function’s ability to create and act on forecast information• Develop faster reactions to rapidly changing market demandsD S C Tra n s fo r m at i o n G u i d e : 47 Essential Metricsi. DSCI Survey on Performance Metrics Scorecard.ii. APQC (2013). Open Standards Benchmarking.iii. Hofman, D. (2004). The hierarchy of supply chain metrics: Diagnosing your supply chain health. AMR Research Report.iv. Camerinelli, E. (2009). Measuring the value of the supply chain: Linking financial performance and supply chaindecisions. Routledge.ReferencesD S C Tra n s fo r m at i o n G u i d e : 48 Essential MetricsAuthorsGeorge BaileyManaging Director,DSCI+1 917 207 2401[email protected]Dave KurzResearch Fellow,DSCIClinical Professor,Drexel University+1 215 459 0994[email protected]Craig MossDirector,DSCI+1 203 246 3800[email protected]We would like to recognize the contributions made by Vivek Ghelani for his research and analyticalskills; Toby McCarroll for his project management skills; Monica Consiglio for her project and financialmanagement skills; and Kristen Palmisano for her publishing and media relations support. Mostimportantly, we would like to thank the many contributions of the member companies of the DigitalSupply Chain Institute and the Global Experts Group. These executives run important supply chainsfor some of the world’s leading companies that joined our Executive Leadership Forums in Hong Kongand Zurich. Their contributions were significant. We would like to thank APQC for providing access totheir Open Standard Benchmarking Resources.AcknowledgementsD S C Tra n s fo r m at i o n G u i d e : 49 Essential MetricsDSCI Global Experts GroupTiffany HuangAcerMitch KingDOWJeffrey TazelaarDOWGaurav SaxenaAmerican ExpressMichael CroweColgate-PalmoliveSuresh SenoyAlyx TechnologiesPhanindranathKakarlaEdelweiss FinanceSuddhir RedyAricentKeith MiearsDellScott RogersGoodyearRajya VardhanKanoriaKanoria ChemicalsUrs DogwilerChainIQMike CorboColgate-PalmoliveKenji MizunoFujitsuGuan YuGeelyAndres ValdiviesoAnastasiaD S C Tra n s fo r m at i o n G u i d e : 50 Essential MetricsDSCI Global Experts GroupBimal JindalSoft Bank EnergyKyle HammSchneider ElectricRubik BabakanianWestern DigitalAnders KarlborgZTEJim HardyUnder ArmourPallab ChatterjeeSymphonyTechnologyKurt RavenfeldLockheed MartinZahid HaiSodexoSudheerPamidighantamTech MahindraRichard HowellsSAPManoj KohliSoft Bank EnergyJohn WaiteMicronMichael MaguireSAPColin BrowneUnder ArmourLeonard LaneLi & FungAnnette ClaytonSchneider ElectricD S C Tra n s fo r m at i o n G u i d e : 51 Essential MetricsThe Center for Global Enterprise (CGE) is a private, nonprofit, nonpartisan research institutiondevoted to the study of the contemporary corporation, globalization, economic trends, and theirimpact on society.thecge.netThe CGE’s Digital Supply Chain Institute (DSCI) is a leading-edge research institute focused on theevolution of enterprise supply chains in the digital economy and the creation and practical applicationof supply chain management best practices.The DSCI’s work is fielded by CGE and the Global Experts Group (GEG), a team comprised of top supplychain executives from companies around the world. The GEG acts as the DSCI’s principle mechanismin developing the research and applied management learning.dscinstitute.orgVivek GhelaniResearch Associate+1 202 220 3177[email protected]Photo credit: Li & FungAbout the Center for Global Enterprise (CGE)About the Digital Supply Chain Institute (DSCI)Contact UsD S C Tra n s fo r m at i o n G u i d e : 52 Essential MetricsDigital Supply Chain Transformation Guide:Essential MetricsThe Center for Global Enterprise