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Procurement Nirvana with EY

EY discusses supply chain digital transformation

We spoke with EY’s Global Supply Chain Leader Glenn Steinberg to learn how EY is helping companies reinvent their supply chains for a digital future by embracing automation in procurement to achieve reduced inventory and drive increased delivery performance.

Glenn Steinberg believes it’s an amazing time to be a supply chain practitioner enthusing to Supply Chain Digital that “we really are in nirvana” right now. Steinberg has overseen digital development at EY for three years following a variety of consulting roles with the likes of PwC and IBM. “I’ve been in this space a long time - 26 years. It wasn’t even called supply chain back then,” jokes EY’s Global Supply Chain Leader. “It's always been about visibility end-to-end, and making faster and better decisions, maximising customer service levels at the lowest cost and reducing inventories, right? It's just an amazing time right now because the technology is finally here to pull it off.”

Steinberg notes that traditionally, supply chains have been very linear - supplier, manufacturer, distributor, and customer - with systems internally focused on-prem with point-to-point interfaces. But with the rise of digital technologies that model is being disrupted to create a network value chain capable of responding simultaneously, rather than serially. “All the data's in the cloud so when an event occurs in the supply chain it’s near real-time access to that information across the whole value chain,” adds Steinberg, who sees many large international enterprises struggling with change while restricted by legacy asset bases and facing the risk of being marginalised by the next disruptive supply chain innovation from one of their competitors. “They're asking me, ‘Where do we start to build innovation?’ But there really is no silver bullet,” he explains. “You need to focus on solving real problems with the right combination of digital technologies. People often lose sight of that. What's the business problem we're truly trying to solve? It may require a combination of different digital technologies to pull that off, whether it's AI, 3D Printing, Blockchain, or Augmented Reality, you can't just apply them all and risk losing sight of the problem you're trying to solve.”

To that end, EY has put together a framework to deliver a suite of solutions to help companies fundamentally reinvent their supply chain and procurement practices to embrace today's digital world. Steinberg explains that solutions such as Smart Factory, Integrated Digital Planning, Digital Fulfilment and Supply Site optimisation are resonating with clients and booming across the globe. EY Smart Factory is a cloud-based, integrated, standardised and scalable improvement approach that provides speed and collaboration across global operations. Steinberg acknowledge that, in some sense, EY is disrupting itself: “We’ll show you what good looks like and then we'll help clients scale it with EY Catalyst, which is digitising operational excellence. We've digitised the programme and call it an Op Ex coach where it's self-paced and doesn't require a lot of consultants.”

Meanwhile, the other half of the Smart Factory solution is made up of digital execution applications offering real-time, on-demand progress reports visible across the production chain with the capability to refine processes and master production through advanced analytics. “It’s basically a paperless shop floor,” muses Steinberg. “You'd be amazed at how few companies are truly paperless. Workers are digital at home, but then they come to work with a clipboard... We’ve built a suite of apps from the bottom up, from the operator perspective, and they're all integrated to run things like shift changeovers digitally. Everything from that angle all the way through advanced technologies like intelligent process automation where machines adjust automatically, addition-based maintenance and energy management. All of these are embedded in a Smart Factory solution called Integrated and making a tremendous impact on performance.”

Steinberg notes that life sciences, consumer products retail, industrial products and automotive are really grasping the needle when it comes to the implementation of digital technology and supply chain innovations. Elsewhere, in the oil and gas space, he identifies a lack of digital disruption in the wake of the huge downturn in oil prices back in 2014. “We've got a team going after that now,” he confides. “We take these solutions that I mentioned, these assets, and you put an industry wrapper around it. That's the play we're on… Offering this operational excellence programme digitised on EY Catalyst. This is a self-paced, multi-year journey featuring some of the best content, combining our IP with PNG's IP. Clients are buying this because it’s a licensable solution. It's real IP. It's a real asset, not an accelerator.”

EY also boast a key alliance with JDA Software which is helping transform once linear supply chains into highly connected digital ecosystems. Excited by this collaboration, Steinberg sees regional and global supply chain ecosystems increasingly powered by the Internet of Things (IoT) and fuelled by data to create a fully interconnected supply chain. “And, of course, they are run by smart people who understand how to use analytics to optimize processes and predict the future needs of customers and the enterprise itself. And this is exactly where the EY and JDA alliance fits,” he says. “The JDA software platform is used by organizations all over the world for replenishment and fulfilment, warehouse management, demand management, transportation management and more. During a recent visit, along with some of my leaders with experience in Blockchain, Robotics and other emerging technologies, we met JDA’s alliance leaders and engineering team. As part of the alliance, both the organizations have come together to solve some of the most complex issues of EY clients. In particular, EY’s Integrated Digital Planning, Smart Factory, and Digital Fulfilment solutions are asset-backed with our own IP and methods; we think it also makes sense to leverage JDA’s best-in-class software to help organizsations build self-learning supply chains.”

With consumer demand changing, Steinberg notes product life cycles are shorter, the ramp-up and ramp-down periods are more intense, and as result more flexibility is required for the supply chain to respond. He believes more inventory is not the answer and points to the network value chain where the new technologies will come in. He admits “not everyone’s there yet” so where does the industry begin to tackle the skills gap in order to flourish? “That's where outsourcing will happen. You can't obtain and attract all the people you need. You've got to remember what your core competency is as a business and be willing to enter into partnerships and ecosystems, so the people side of this whole digital transformation should not be overlooked. There's the operating model and there's the operating environment. Most people forget about the operating environment and that has to do with purpose. What's the purpose for your organisation? The skills, and attracting the right talent, and training, that's vital to the operating model.”

Steinberg highlights developments in additive manufacturing (3D Printing) and Blockchain as particularly exciting but believes EY shouldn't just be leading with technology. “We need to make sure we're focused on solving real business problems. Clients lose sight of that and they get into all these technology projects and then you come back and say, ‘Where's the ROI?’ So, what's the business problem we're trying to solve? And then look at the right combination of digital technologies to achieve that goal.”

How is EY embracing Blockchain to help clients with procurement? “We've branded our Blockchain Ops Chain,” reveals Steinberg. “We've got projects underway all over the globe. Here in the US, in the Midwest, we’re working with a very large consumer products company. We did a use case in the procurement space, for example. Think of hundreds of contract manufacturers and thousands of suppliers. Lots of complex pricing on each of those, discounts with volume thresholds. Well, this consumer products company has hundreds of people from a controls perspective doing auditing on all of this. Even after all that spend, hundreds of people checking it, they're still missing out millions of dollars on discounts. So, we put the suppliers with this consumer products manufacturer, and the contract manufacturers, and placed all the contracts on the blockchain where smart contracts can be leveraged. It has been wildly successful. We’re also doing this with a major auto manufacturer where we're dealing with global trade on the blockchain and a large trucking carrier to deliver end-to-end visibility on the blockchain where it’s proving to be very disruptive.”

Steinberg predicts that as the network value chain comes to fruition improved customer service levels will be achieved, along with lower inventories, allowing the supply chain to become an asset, rather than a cost of doing business: “Look at Amazon. The supply chain is the differentiator for the whole business. That's where this whole thing's headed.” He pledges that in his corner of EY they will continue on the journey towards developing asset-backed solutions for supply chain and further integrating these capabilities with the rest of the business to take advantage of in-house synergies to help clients with tax and real estate practices as their global footprints grow. It’s this commitment to a turnkey package, which Steinberg believes sets EY apart from other companies in this space. “We purposefully built the practice this way... There are the IT practices, our competitors that focus on system integration, and there are the pure strategy houses that really don't know much about systems integration. However, we’re able to do both by attracting unbelievable talent. It's the reason I came here… You walk in a room at EY and everybody wants you to be successful. We're all in this together. We care about each other. It's an amazing place to be. In my 26 years, I couldn't be happier being in this place.”

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