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Future supply chain workforceHarnessing the power of intelligent automation

November 2019

read.kpmg.us/futureofsupplychain

As the entire supply chain goes digital and automated, traditional roles will change and new ones will emerge, with a growing emphasis upon decision-making, and a need for people that can straddle both the operational and technology domains. The wider workplace is also transforming into a looser association of as-a-service providers, some internal, some external. Organizations will increasingly access capabilities from a wide range of permanent hire, gig economy workers and partners, and managers must embrace a far more diverse set of individuals. Managing this ecosystem is a critical competency – as is the need to digitize and manage knowledge to retain intellectual property.

© 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.1

Future supply chain workforce

Revolution in the supply chain workplaceAutomation is transforming the supply chain. Factories and warehouses are becoming populated by robots, drones and autonomous vehicles. Sensors are controlling maintenance, inventory, heating, lighting and physical security. Artificial intelligence (AI), machine learning and cognitive algorithms are increasingly carrying out demand planning and ordering. Chatbots and social media apps are taking over customer service.

In this new, digital environment, supply chain professionals require completely new skills, with organizations desperately seeking the right mix of human talent and machine capabilities to augment decision-making.

And because every other area of business is also going digital, supply chains face intense competition for the best talent. Talent shortage is the number one external force impacting organizations, with employee skills gaps a close second.1 KPMG research reveals that two-thirds of CIOs are struggling to find the right talent, in particular within the fields of big data/analytics, cyber security and AI.2

Not surprisingly, CEOs are eager to address this shortfall. Forty-four percent say they intend to upskill more than half of their current workforce in new digital capabilities over the next three years.3

Even when these in-demand individuals are persuaded to join the supply chain organization, they often fail to fit into a traditional manufacturing culture. Today’s teams are less keen on conventional working practices and want the flexibility to choose their own hours, how they work, and where they work.

As organizations set about building their workforces of the future, it is clear that the traditional ‘war for talent’ rule book needs to be thrown into the bin. Instead, in order to attract and retain the best people, they need to think about more than just pay and benefits and instead take a much more holistic approach to the total worker experience. This includes provision of learning beyond immediate job needs; employee lifecycle experience design and a purpose driven culture.”

Robert Bolton Partner, Head of People & Change Center of Excellence, KPMG in the UK

1 Leading the Next-Generation Workforce: A Supply Chain Perspective, Gartner, 29 March 2018.2 Harvey Nash / KPMG CIO Survey 2019: A Changing Perspective, 2019.3 Agile or irrelevant, Redefining resilience: 2019 Global CEO Outlook, 2019, KPMG International.

© 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.

Future supply chain workforce 2Future supply chain workforce

Reimagining the supply chain workforce

Supply chain roles are changing dramatically. We’re seeing a move toward hybrids; people with one foot in the traditional operations and logistics domain, and the other in technology.”

Dave Williams Partner, Head of Operations Advisory, KPMG in the UK

Supply chain and logistics management will shift towards a hybrid role involving digital technology and data science allied to in-depth supply chain understanding. The key characteristics of this new supply chain are as follows:

Digital and human co-existing

Digital centers of excellence

A modern, digital working environment where employees are less burdened with repetitive tasks, but key decision-making remains tied to human experience. Indeed, decision-making is set to become a core capability that is enhanced but not replaced by, automation. For example, traditional planners will look for long-term trends in order to tweak algorithms or better automate processes. Automation liberates the supply chain professional, enabling systems to ‘think’ and people to execute decisions.

These centers spread supply chain learning across every function, building platforms to train their workforces in new technological capabilities – and how to apply them to various business scenarios. The centers also harness and curate the collective learnings and best practices captured across the extended enterprise.

New roles

The supply chain will integrate closely with the rest of the organization, acting as a business partner across functions, to be more responsive to changing needs and maintain a strong focus on customer experience.

Supply chain leaders should expect to create new roles that straddle technology and supply chain expertise, like scenario analyst, robotics and autonomous engineer, customer journey architect, and partner ecosystem manager. These individuals must be able to speak the language of the business while engaging with sophisticated technology solutions, keeping one foot firmly planted in each camp.

Supply chain as a business partner

© 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. 3

Future supply chain workforce

Building a fluid supply chain ecosystemA major advance on traditional control towers

Through the use of IoT and mobile connectivity, it’s now possible to create a supply chain that is fully powered by a decentralized ecosystem, based around a network of relationships – some internal and some external. Tomorrow’s market leaders will partner with knowledge providers to give them access to the technical skills and expertise they need to build new digital solutions, iterate their platforms and enhance their capabilities as data streams become more and more complex. These strategic relationships or ‘partnerships’ allow organizations to leverage their partners’ experience and expertise in the short term while engaging in the longer-term process of developing and embedding those same skills and capabilities internally.

This evolution of the supply chain ecosystem will result in the transformation of knowledge management as it currently exists within supply chains. For example, individuals’ experience and skills in planning, procurement, manufacturing and logistics will be codified to create digitized standard processes. This change will take place initially in back office processes, and then extend to the front and middle office, encompassing new product development and supplier management. Known as ‘heuristic modeling’, this process enables human expertise to be put into an algorithm that supports decision-making. At first, professionals will train the machines, but ultimately the machines will learn themselves.

Additionally, more and more supply chain capabilities will be available ‘as-a-service’, with companies able to offer their own services to others, for instance, to use up spare production capacity.

Working with partners – some of whom will be competitors – and freeing the traditional boundaries on intellectual property (IP) will naturally bring challenges. Organizations will need to continually reassess and, if necessary, re-think their core differentiating capabilities.

With internal and external boundaries disappearing, supply chain leaders must find ways to interact and manage people in multiple organizations – including competitors – while preserving IP .“

Andrea Bontempi Partner, KPMG Advisory, KPMG in Italy

© 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. 4

Future supply chain workforce

Future-proofing your supply chain workforceIn seeking the capabilities needed to compete, supply chain leaders will have to look beyond hiring and retention. The supply chain of the future is likely to employ a mix of workers, including core employees, ‘on-demand’ or contract workers and collaborative partners. Most importantly, it will embrace intelligent automation and foster a new generation of people able to curate robots, machines and AI to deliver insights and inform their decision making.

© 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.5

Future supply chain workforce

Here are six actions organizations can take to hasten their shift to such a state:

Monitor trends impacting the workforce by continuously scanning the environment to better understand which skills will make a difference.

Manage current and emerging workforce skills by anticipating competency gaps and advancing both ‘social-creative’ and technical skills. This will include ‘ecosystem management’ to cope with the increasing range of partners and people outside the formal organization, including scanning the market, developing prospects, and engaging, onboarding and managing partners.

Take an ‘outside-in’ approach to hiring by looking to other industries for analysts – including ones you would not previously have considered, like gaming and betting. Highly volatile supply chains employ similar risks to betting games; and in both cases, it is important to understand the odds of various outcomes and the potential payoffs.

Create an environment that is attractive to technical specialists, offering flexible schedules, a diverse and inclusive culture, and opportunities for advanced learning. Such an environment, not currently standard within corporate culture, will improve hiring opportunities.

Encourage supply chain collaboration with academia, third-party logistics (3PL) providers and internal functions.

Establish a global knowledge management model that codifies skills using heuristic modeling, creating blocks of knowledge for use by the next generation of workers.

© 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. 6

Future supply chain workforce

How can KPMG help?KPMG recognizes that today’s business leaders don’t only need solutions, they need reliable partners. Whatever your sector, KPMG can add value at any point in your supply chain transformation journey. Our multidisciplinary teams combine deep industry expertise with an agile approach to help you unlock existing value within the enterprise and enhance your capabilities to achieve sustainable growth in the future.

KPMG can bring to bear a suite of frameworks, methodologies and tools to help you review, design and optimize your supply chain function.

– Drawing on a wealth of insight and experience, KPMG has developed a sophisticated, purpose-built digital analytics platform that your teams can leverage to pinpoint opportunities and cost-drivers faster and more effectively than before.

– KPMG has designed a series of proprietary operating model and technology accelerators that can turbo-charge your supply chain function and accelerate return on investment from transformation efforts.

– KPMG has devised and adheres consistently to a systematic methodology that identifies and interrogates costs across the full length of the value chain. We work diagnostically, top to bottom, from the costs associated with your product portfolio through every process in the design, manufacture and distribution of individual products. It’s an approach that enables us to attack costs at their source, retaining value far more effectively than alternatives that focus on mitigating costs once they’re cemented into your proposition.

– At KPMG, we’re obsessed with value. Our teams use a variety of tools and methodologies to target and realize benefits and opportunities for ROI that can offset the costs incurred in transforming your supply chain. We can create a transformation roadmap that means you don’t have to wait to see the value in upgrading your supply chain function.

– KPMG can provide the frameworks and analytics capabilities that enable you to distinguish between ‘value eroding’ and ‘value contributing’ complexity. We’ll help you develop an adaptable operating model with a bias for standard work that strikes an optimum balance between product variety and process complexity.

© 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.

Future supply chain workforce7

Our differentiators Analyst recognition

Additional market recognition

KPMG Powered Supply Chain brings together industry-leading practices and processes, pre-configured, cloud-based technology applications and a next-generation delivery framework to help you jump start your supply chain transformation journey. We can help you to:

– Leverage customer-centric business models, pre-built KPI libraries, data models and reports to align your supply chain to your customer experience.

– Take advantage of best-practice process architectures, a catalogue of robust controls and market-leading service model design to be able to anticipate and quickly resolve supply continuity problems.

– Exploit industry insights and advanced data analytics to organize your logistics capabilities around actual demand rather than sales forecasts.

– Utilize KPMG’s Target Operating Model to drive sustainable transformation and enhance the value of your supply chain.

The result is reduced implementation risk, clear, consistent return on investment with top-decile performance and a solid platform for continuing business evolution.

KPMG Connected Enterprise is our customer-centric and enterprise-wide approach to digital transformation. It focuses every process, function and relationship of the organization on a single purpose, harnessing the power and potential of customers to fuel profitable and sustainable growth. The divisions between front, middle and back offices are collapsing. Future-focused businesses are shaping new operating models in which every part of the organization, from sales to the supply chain, is working with every other element to deliver against the customer promise.

KPMG Ignition Centers are our most innovative spaces. They facilitate new ways of working with one another and our clients, help us to compete for the new types of talent required by 21st Century Enterprises, and serve as the storefront for our most innovative solutions. With locations that span the United States and KPMG International member firms, we invite you to experience the future at one of our KPMG Ignition Centers.

KPMG has been named a leading global service provider for Supply Chain Planning consulting services in a major new report: The ALM Vanguard: Supply Chain Planning Consulting 2019 report. The report notes how “KPMG demonstrates consistent success in elevating and maturing client planning organizations into a truly integrated, high-functioning operation that is capable of delivering real positive results.”

ALM

– Vanguard Leader in Sourcing Strategy Consulting 2018

– Vanguard Leader in Procurement Operations Consulting 2018

– Vanguard Leader in Logistics Management Consulting 2017

Gartner Market Guide for Supply Chain Strategy & Operations Consulting

– 2018, 2017, 2016

© 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. 8

Future supply chain workforce

Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates.

read.kpmg.us/futureofsupplychain

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.

2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.

CREATE. | CRT117325 | November 2019

Contact Us

Chris FosterGlobal Lead Operations Center of Excellence KPMG International T: +61 2 9455 9016 E: cfoster@kpmg.com.au

Andrea BontempiPartner KPMG Advisory KPMG in Italy T: +39 051 439 2611 E: abontempi@kpmg.it

Dale WilliamsPartner KPMG Advisory KPMG in the UK T: +44 207 694 8183 E: dale.williams@kpmg.co.uk

Brian HigginsUS Supply Chain and Operations Practice Leader KPMG in the US T: +1 312 665 8363 E: bhiggins@kpmg.com