The data-driven supply chain - Preparing Australian retail for an emergence of data-driven collaboration - Telstra Labs

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The data-driven supply chain - Preparing Australian retail for an emergence of data-driven collaboration - Telstra Labs
The data-driven
supply chain
Preparing Australian retail for an
emergence of data-driven collaboration.
The data-driven supply chain - Preparing Australian retail for an emergence of data-driven collaboration - Telstra Labs
     1. Executive summary                                                   04
     2. Introduction                                                        06
        Australia Post: Data driving functional capability                  08
     3. Our research                                                        10
        3.1.   Research questions and hypothesis                            10
        3.2.   Sample and method                                            11
        3.3.   Results and discussion                                       12
        3.3.1. Belief in business benefits                                  12
        3.3.2. Technology deployment                                        16
        3.3.3. Relationships with partners                                  17
        3.3.4. Barriers to adoption                                         21
        3.4.   Our research: Conclusions                                    28
        3.4.1. Collaborators need to align                                  28
        3.4.2. Data is the new oil but only when it can be used             28
        3.4.3. Data is a resource that needs securing                       28
        3.4.4. This vehicle needs extra drivers                             29
        3.4.5. Small businesses need allies                                 30
     Otto: Using predictive analytics to place inventory in the network     31
     Target USA: A systems led approach to data-driven retailing            32
     Linfox migrates its fleet to IoT                                       34
     4. New technologies connecting retail supply chains                    36
        4.1.	Instrumenting the data-driven supply chain:
              The Internet of Things and IoT networks                       37
        4.2.	Intelligent data-driven supply chain:
              Artificial Intelligence, Machine Learning and Deep learning   39
        4.3.	Retail supply chain collaboration:
              Blockchain and data exchanges                                 41
     5. Conclusion                                                          44
        5.1.   About the author                                             44
        5.2.   Acknowledgements                                             44
     6. References                                                          46

02                                                                          03
The data-driven supply chain - Preparing Australian retail for an emergence of data-driven collaboration - Telstra Labs
1. Executive summary

Technological advances are
transforming the world of supply
chain management, making data
easier to collect, interpret and
share. As a result, we are about to
see the emergence of supply chains
where data from every web search,
transaction and movement of stock,
trucks, team members and customers
will be captured and combined with
other data to better predict and
manage resources to satisfy customer
demands. The age of the data-driven
supply chain is here.
All those in the retail industry will need
to adapt quickly or risk losing out to
those organisations that are able to
                                             Many are already adopting the key            •	Recognise data as a resource that
leverage data to cut supply chain costs
                                             technologies required for the data-            only has value in use and needs
and compete more effectively. In this
                                             driven supply chain and are enjoying           to be shared
report, we explore the implications of
                                             generally positive relationships with
data-driven supply chains for Australian                                                  •	Assure the security of their data
                                             their supply chain partners. So what’s
businesses. What are the benefits? How
                                             holding them back?                           •	Align incentives between partners
ready are supply chain actors to adopt
                                                                                            so there is mutual benefit
a data-driven approach? And what are         Our research identifies a number
                                                                                            from collaboration.
some of the barriers to adoption?            of barriers that need to be removed
                                             before data-driven supply chains reach       The retail ecosystem as a whole
Our research, conducted in Australia
                                             their full potential. Our respondents        needs to bring in new data science
with a sample of retailers, logistics
                                             reported a reluctance to share data,         skills, and smaller businesses need
companies and manufacturers, shows
                                             the need to properly secure it, skills       to develop strategies to participate
there is a very strong appetite for a
                                             gaps in their businesses, challenges         in the data-driven supply chain or
data-driven approach to supply chain
                                             with technology, organisational issues       risk being relegated to low-value,
management. We discovered that their
                                             and issues relating to the alignment of      transactional relationships.
interest lies not only in the power of
                                             goals and processes as major obstacles
data to transform traditional supply                                                      We end with a look at what’s looming
                                             to deployment. But all these problems
chain KPIs like inventory turnover,                                                       on the technology horizon and
                                             are solvable. In this report, we also
delivery in full on time (DIFOT), defect                                                  how organisations can leverage
                                             feature case studies of businesses that
reduction, responsiveness and network                                                     these developments to realise the
                                             are successfully embracing a data-
optimisation, but also to more general                                                    extraordinary benefits promised
                                             driven approach, including German
business benefits like sustainable                                                        by the data-driven supply chain.
                                             retailer, Otto, Target USA, Australia Post
competitive advantage, improved
                                             and Linfox.
management of risk and loss, improved
margins, better informed business            From these case studies and our
decisions and agility.                       research, we conclude that there are a
                                             number of key issues to be addressed
                                             before data-driven supply chains
                                             can be widely adopted in Australia.
                                             In particular, organisations need to:

04                                                                                                                               05
The data-driven supply chain - Preparing Australian retail for an emergence of data-driven collaboration - Telstra Labs
2. Introduction

It has been said that data is the          Of course, supply chains have existed       Today, technological advances are          Traditional retailers face competitive
new oil because it has the power           since the earliest days of the retail       about to usher us into a new era           disruption from online, digital-native      The 5G Journey                               · Massive machine-to-machine
to transform every industry. In our        industry, but the concept of supply         of supply chain management. The            retailers like Amazon and Alibaba, who                                                      communications: 4G technologies
                                                                                                                                                                              “5G” is actually an umbrella term               are today facilitating IoT sensor
last report, Spacetime Marketing,          chain management (SCM) only emerged         ability to capture supply chain data       are already masters of supply chain         for the next major wave of cellular
we looked at the power of data to          in the 1980s and has been defined as:       will rise exponentially with 5.5 billion   data. Both collect every customer click                                                     networks at scale, but 5G will
                                                                                                                                                                              network technology.                             increase scale to support billions of
transform retail marketing. In this                                                    smartphones and 20 billion IoT (Internet   and use it to predict buying patterns,
report, we look at the power of data       “The management of upstream                 of Things) devices in the market by        optimise the placement of inventory         5G will be a combination of                     devices without human intervention.
to transform an equally important          and downstream relationships                2020.5 This means it will be possible      in the network and maximise both the        transformational technologies                5G will enable the new technologies
part of retail: the supply chain.                                                      to collect data not just on sales and      speed and efficiency of delivery. Scott     that will address specific use
                                           with suppliers and customers                                                                                                       cases. Whilst 1G, 2G, 3G and 4G
                                                                                                                                                                                                                           that improve efficiency, speed
                                                                                       production schedules between retailer      Galloway6 has predicted that in the                                                      and reliability through a number
The supply chain is vital to the retail    in order to deliver superior                and manufacturer (as in the Walmart        future Amazon will send consumers           were primarily about voice and then
industry as it represents both a large                                                                                                                                                                                     of features:
                                           customer value at less cost to              and Proctor & Gamble case), but            two boxes a week: one containing            data, 5G will be about connecting
cost and a source of competitive                                                                                                                                              everything with minimal delay,               ·	A Distributed Cloud Architecture
advantage. Supply chain costs are all      the supply chain as a whole.”2              also on the location and condition         all the goods Amazon thinks you will
                                                                                       of goods throughout the supply chain.      need and the other to return what           faster speeds and at larger scale               means resources can be allocated
the costs associated with warehousing,                                                                                                                                        with billions of devices (via the               from the cloud enabling a better
                                                                                       These devices will also capture data       you don’t require, all based on data
transporting and handling goods                                                                                                                                               Internet of Things).                            user experience
                                           At the core of SCM is the theory of         on everything from consumer and            captured through interactions in the
from the point of manufacture to the
                                           collaborative advantage3 - the idea that    team member movements (both in             supply chain.                                                                            ·	Massive MIMO Antennas that
point of purchase. They have been                                                                                                                                             It’s important to understand that
                                           more value is created by collaboration      and outside stores), stock levels in                                                                                                   can focus the radio signal towards
calculated by the Reserve Bank1 to                                                                                                In this report, we look at how ready        the journey from 4G to 5G will not
                                           than by competition, and that when two      consumers’ fridges and appliances,                                                                                                     multiple users simultaneously,
represent 40% of retail selling prices.                                                                                           the Australian retail industry is to take   be a step change. Rather, many
                                           or more organisations pool resources        the availability of consumers to receive                                                                                               increasing speeds and
As a result, any company in the supply                                                                                            advantage of the potential of such data-    features that will eventually be
                                           and skills, all will benefit.               a delivery, and much more.                                                                                                             reducing interference
chain that controls these costs can                                                                                               driven supply chains and how prepared       collectively standardised as “5G” will
potentially improve profitability. In      One of the earliest examples of             Data storage is already being              they are to compete with data-driven        be incorporated into forthcoming
                                                                                                                                                                                                                           ·	New protocols and frame
other cases, a supply chain can also       supply chain collaboration in action        transformed through the increasing         online competitors. What do retailers       releases of 4G LTE standards and
                                                                                                                                                                                                                              structures, which will reduce
provide a competitive advantage by         was between Walmart and Proctor &           capacity and flexibility, and decreasing   see as the benefits of deploying a          will progressively be deployed by
                                                                                                                                                                                                                              latency for all services and improve
delivering goods to the right place more   Gamble in the mid 1980s.4 Walmart           cost of cloud computing. Wide              data-driven supply chain? And what          carriers such as Telstra alongside
                                                                                                                                                                                                                              reliability for mission-critical
quickly than rivals, thereby serving       agreed to share point of sale data with     adoption of cloud computing – in           are the challenges involved in deploying    5G deployments.
                                                                                                                                                                                                                              IoT services
customers better.                          Proctor & Gamble and, in turn, Proctor      combination with other technologies        a data-driven approach (including for       There will be three major
                                           & Gamble agreed to ensure optimal           like blockchain and data exchanges         the human relationships that make any                                                    ·	Network Slicing, which enables
Organisations that are able to leverage                                                                                                                                       benefits to 5G:
                                           on-shelf inventory at Walmart. This         – will mean information can be             supply chain work)?                                                                         a granular way to segment
data to cut supply chain costs and                                                                                                                                            ·	Ultra-low latency: For mobile                the network, allowing finely
                                           resulted in increased sales, decreased      shared by all parties, not just point-
compete more effectively will gain                                                                                                                                               broadband services, 5G will                  grained performance and cost
                                           inventory in the supply chain, lower        to-point collaborators like retailers
the edge in the market. Today, it                                                                                                                                                approximately halve latency,                 optimisation to be applied to
                                           costs for Walmart and better market         and manufacturers.
increasingly comes down to data – how                                                                                                                                            which will greatly improve the               individual applications, industries
                                           intelligence for Proctor & Gamble. Since
it’s captured, stored and analysed – all                                               Data analysis will also be transformed                                                    responsiveness of internet                   and customers
                                           then, supply chain collaboration (SCC)
of which has been a key factor in the                                                  as autonomous or semi-autonomous                                                          applications. For mission-critical
                                           has become a well-established practice
success of organisations as diverse as                                                 platforms allow businesses to discover                                                                                              ·	Network Function Virtualisation
                                           in parts of the retail industry, with                                                                                                 IoT applications, 5G will provide very
Wal Mart, Inditex, Amazon and Alibaba.                                                 deeper insights, make predictions, or                                                                                                  enables the use of commodity
                                           studies showing that it delivers benefits                                                                                             low latencies at very high reliability,
                                                                                       generate recommendations in virtual                                                                                                    network infrastructure, which can
                                           such as risk reduction, cost reduction,                                                                                               which will enable brand new
                                                                                       real time. Most of all, high-speed data                                                                                                rapidly adapt to the changing needs
                                           access to complementary resources,                                                                                                    industrial automation applications
                                                                                       networks will enable collaboration to                                                                                                  of the network.
                                           improved productivity, increased
                                                                                       take place at a pace that allows timely                                                ·	Increased speeds: 5G will provide
                                           competitive advantage and increased
                                                                                       business decisions.                                                                       significantly faster data speeds
                                           profitability over time.
                                                                                                                                                                                 and greater capacity, eventually
                                                                                                                                                                                 providing ten times the speeds
                                                                                                                                                                                 and capacity of 4G.

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The data-driven supply chain - Preparing Australian retail for an emergence of data-driven collaboration - Telstra Labs
Australia Post: Data driving
functional capability

Australia Post has been around for        As both a retailer through its nationwide   Australia Post’s biggest challenge now
209 years, but the last seven have        network of Post Offices and a delivery      is how best to use data to drive change
seen some of the biggest changes in       organisation, the company is now            and improve collaboration. The recent
its history, with the number of parcels   looking very closely at its supply chain    launch of the Shipster platform is a
they deliver overtaking letters for the   and how it can better leverage data         prime example.
first time. There is no doubt this has    to improve the customer experience.
                                                                                      With Shipster, Australia Post is
been driven by Australia’s growing        It’s all about understanding what
                                                                                      essentially creating an ecosystem
appetite for online shopping – up a       the customer wants and aligning
                                                                                      of merchants and retailers involved in
whopping 19.2%7 last year alone.          their service offering to that.
                                                                                      online shopping. The aim is both to help
For the company, this new                 And the organisation understands
                                                                                      them grow their online businesses and
e-commerce world is presenting            that customers want choice, they
                                                                                      remove one of the biggest barriers to
both enormous opportunities – and         want convenience, and they want
                                                                                      that goal – shipping and shipping costs
challenges – as they move from their      everything now.
                                                                                      – by combining data from merchants,
traditional business model towards
                                          Like many big corporates, their legacy      consumers and logistics providers to
an omnichannel, on-demand future.
                                          systems and infrastructure have             get items where and when people want
                                          required major transformation. Beyond       them. Over a hundred retailers and
                                          that, however, they are now focusing        merchants are already onboard and
                                          on a number of key questions. What          another thousand are on the horizon.
                                          do customers want in-store? How do
                                                                                      So what next for Australia Post? Will
                                          retail systems connect to real-time
                                                                                      drones one day be delivering our mail?
                                          inventory? How does the customer
                                                                                      Nothing is being ruled out of the mix,
                                          want their parcel delivered: click and
                                                                                      it seems. Whether it’s an autonomous
                                          collect, online or physical? How can the
                                                                                      electric vehicle or a drone, the company
                                          customer get visibility of their order?
                                                                                      aims to continue leveraging data, and
                                          And how can the delivery network
                                                                                      evolving its business model to make
                                          be optimised to get a parcel to the
                                                                                      sure they can keep giving customers
                                          customer as quickly and efficiently
                                                                                      what they want, when and where they
                                          as possible?
                                                                                      want it.
                                          Data is the thread that runs through
                                                                                      Find out how another Australian
                                          all this, and the customer’s mobile
                                                                                      company, Linfox, is taking a new
                                          number is one simple data set that is
                                                                                      approach to data on page 34.
                                          proving very powerful, connecting into
                                          all the organisation’s internal data sets
                                          and systems. By having access to that
                                          data and knowing where an item is in
                                          the supply chain, the company allows
                                          their customers to say, ‘I want this item
                                          delivered here now, but in ten minutes
                                          time I want to change my preference,’
                                          and the supply chain has the flexibility
                                          and fluidity to keep up.

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The data-driven supply chain - Preparing Australian retail for an emergence of data-driven collaboration - Telstra Labs
3. Our research

3.1. Research questions                      Data-driven supply                       These are the technologies that are
and hypothesis                               chain framework                          facilitating large-scale data capture                                                           Data-driven supply chain framework
                                                                                      (IoT), automatic analysis (AA) and more
In our research, we sought to explore        We hypothesised that readiness           effective collaboration between supply
the phenomena of data-driven                 to adopt a data-driven supply            chain partners (cloud, blockchain and
                                                                                                                                                                                                                                                                                            1. Belief that data-driven supply chains
                                                                                                                                                                                                                                                                                               will increase sales, margin and
supply chains and investigate three          chain (DDSC) approach consists           data exchanges).                                                                                                                                                                                         business efficiency through
                                                                                                                                    Deployment of key technology
key questions:                               of three conditions.                                                                                                                                                                                                                              improvements in:
                                                                                      Thirdly, we hypothesised that for a                                                                                                                                 Belief in
1.	What are the key readiness factors       First, there must be a belief in the
                                                                                                                                    a. Data capture devices                    Technology                                                                                                   a. Fullfilment (delivery in full,
                                                                                      DDSC approach to be implemented,                 (IoT, video, etc.)                                                                                                 Business                             on time [DIFOT])
    for the successful execution of a        business benefits that DDSC can                                                        b. Automated data analysis tools           Deployment
                                                                                      there must be strong relationships            c. Platforms for collaboration                                                                                        Benefits                          b. Inventory (turnover, days supply,
                                                                                                                                                                                                                                                                                               carrying cost)
    data-driven retail supply chain?         deliver i.e. management must believe     between the supply chain partners.               (cloud, blockchain, etc.)                                                                                                                            c. Responsiveness (lead time, flexibility)
                                             that an investment in DDSC can deliver   The resulting framework builds on a
                                                                                                                                                                                                                                                                                            d. Quality (defects)
2.	What are the current readiness levels                                                                                                                                                                                                                                                   e. Network optimisation
                                             increased sales, margins or business     recent review of academic studies
    across retail, transport/logistics and
                                             efficiency through measurable            into supply chain collaboration by
                                                                                                                                                                                                                                                                                            2. Top management commitment
    manufacturing businesses?
                                             improvements in supply chain KPIs        Ralston et al8 that found the three main
3.	What gaps in readiness exist             like fulfilment rates, inventory         initiators of SCC are internal (belief),
    between supply chain actors              productivity, responsiveness,            technological and relational.
    (retail, transport/logistics and         quality or network optimisation.                                                                                                                                     Relationship
    manufacturing) and between                                                                                                                                                                                      Strength
                                             Secondly, the key technology
    small and large organisations
                                             elements of a DDSC must be adopted.
    in these sectors?

                                                                                                                                                                                                                 Inter and intra company

                                                                                                                                                                                                                     a. Levels of trust
                                                                                                                                                                                                               b. Risk and reward sharing
                                                                                                                                                                                                             c. Common business language

                                                                                                                                                                         Base: 200 decision makers/influencers responsible for supply chain operations strategies within Australia
                                                                                                                                                                       Source: Forrester Research conducted the fieldwork for the quantitative part of the research on behalf of Telstra.

                                                                                                                                 3.2. Sample and method                                        Forrester Research conducted the                                                An effort was made to ensure we
                                                                                                                                                                                               quantitative part of the research on                                            received responses from all parts
                                                                                                                                 We conducted both quantitative
                                                                                                                                                                                               behalf of Telstra. The data was gathered                                        of the supply chain (retail, transport/
                                                                                                                                 and qualitative research to answer
                                                                                                                                                                                               via an online survey during December                                            logistics and manufacturing) and that
                                                                                                                                 our research questions and test
                                                                                                                                                                                               2017 and January 2018. 200 responses                                            both smaller businesses and larger
                                                                                                                                 our hypotheses.
                                                                                                                                                                                               were received from supply chain                                                 businesses were represented.
                                                                                                                                                                                               professionals from around Australia.

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The data-driven supply chain - Preparing Australian retail for an emergence of data-driven collaboration - Telstra Labs
“To what degree do you believe the following are benefits of your
                                                                                                                                                                                                                               organisation implementing a data-driven supply chain?”
                                                                                                                                                                                                                                                     (Showing percentage of respondents selecting “Strong benefit” or “Benefit”)

                                                                                                                                                                                                                     Accelerated inventory turnover                                                         56%                                                               39%
                                                                                                                                                                                                         (reduced days’ supply, reduced carrying cost, improving
                                                                                                                                                                                                                                   management of risks an loss)

                                                                                                                                                                                                                                     Improved fullfilment                                                  55%                                                                39%
                                                                                                                                                                                                                                              (on time and in full)

                                                                                                                                                                                                                     Reduction in number of defects
                                                                                                                                                                                                               (damage during transport, wrong shipments, etc.)
                                                                                                                                                                                                                                    leading to superior quality
                                                                                                                                                                                                                                                                                                             58%                                                              34%

                                                                                                                                                                                                              Increased responsiveness through
                                                                                                                                                                                                          reduced lead time/increased flexibility                                                            58%                                                              34%
                                                                                                                                                                                              through real-time data sharing within supply chain partner network

                                                                                                                                                                                                                    Improved network optimisation,
                                                                                                                                                                                                                            better placement of physical facilities                                    52%                                                              36%
                                                                                                                                                                                                             (stores, distribution centres) and stock held in them

                                                                        Respondent profile:
                                                                                                                                                                                                                                                                                     Strong Benefit                           Benefit

     Company HQ location                                                                            Company size (in Australia)                                                                                                                      Base: 200 decision makers/influencers responsible for supply chain operations strategies within Australia
                                                                                                                                                                                                                                                   Source: Forrester Research conducted the fieldwork for the quantitative part of the research on behalf of Telstra.

                                                                                                 1,000 or more employees                   14%
        Australia                      N=22
        US                      N=21                                                                 500 to 999 employees                               36%
                                                                                                                                                                                          When asked to rank these benefits, our                                      “15-20% of complaints relate                                                     In general, retailers and transport/
                                                                                                                                                                                          respondents nominated improvements                                                                                                                           logistics companies were in lock-step,
                                                                                                                                                                                          in DIFOT (70%) and better utilisation of
                                                                                                                                                                                                                                                                      to fresh products. Anecdotally                                                   but manufacturers ranked the benefits
                                                                                                     250 to 499 employees                              35%                                assets (including inventory) across the                                     lettuce has a lifespan of                                                        differently. For example, while higher
        Asia Pacific
        excluding Australia
                                                                                                                                                                                          network (62%) as the most important.                                        2-3 days and a lack of visibility                                                margins ranked as the number one
                                                       N=67                                                                                                                                                                                                           leads to participants holding                                                    general business benefit for retailers
        Other (Canada, China,                                                                        100 to 249 employees                   15%                                           The interviews we conducted confirmed
                                                                                                                                                                                                                                                                                                                                                       and transport/logistics companies, it
        Latin America, MEA)                                                                                                                                                               a belief that data-driven supply chains                                     the stock at non-retail                                                          only ranked sixth with manufacturers.
                                                                                                                                                                                          would create positive outcomes in                                           locations for over 24 hours,                                                     Likewise, while better-informed
                                                                                                                                                                                          terms of cost, visibility and agility, as
                                                                                                                                                                                          well as improving work practices in the                                     limiting shelf life.”                                                            business decisions ranked number
                                                                                                                                                                                                                                                                                                                                                       one with manufacturers, it ranked
     Target industries                                                                              Level of decision-making                                                              supply chain.
                                                                                                                                                                                                                                                                      “I suppose, over time, (data has) become                                         only sixth with retailers and transport/
                                                                                                                                                                                          “….often when…something’s                                                   more important because once upon a                                               logistics companies. And while
                                                                                                                                                                                                                                                                                                                                                       increased business agility was seen as
                                                                                                                                                                                          gone wrong or out of service                                                time a logistics transport infrastructure
                                                                                                                                                                                                                                                                                                                                                       an important benefit by 62% of retailers
                                                                                                                                                                                                                                                                      was locked and loaded for life, so it was
                                                                                                                                                                                          or your cost profile’s not right                                            all about inventory. Nowadays, pretty                                            and transport/logistics companies,
         Manufacturing            35%                      35%                                              Decision maker for supply
                                                                                                                                                                       32%                99% of the time, what                                                       much every part of the supply chain                                              less than half of manufacturers shared
                                                                                                            chain operations strategies
                                                                                                                                                                                          underpins that is the right                                                 is flexible… In the eighties, data was                                           this view.
         logistics and                                                                                      Influences decisions related
         warehousing                                                                                                                                                                      information not being in the                                                more about making sure you ordered                                               This disparity in ranking of business
                                                                                                            to supply chain operations                        68%
                                                                                                            strategies                                                                                                                                                the right stock. Nowadays every part                                             benefits is probably a reflection of the
         Retail                                                                                                                                                                           right place.”                                                               of the supply chain is driven by some                                            different planning horizons of retailers,
                                                                                                                                                                                                                                                                      data decision.”                                                                  transport/logistics companies and
                                                                                                                                                                                          “Understocking and overstocking                                                                                                                              manufacturers. Manufacturers like
                                                                                                                                                                                          is costing us a small fortune.”                                             “So the promise of data that is richer,
                                                                                                                                                                                                                                                                      more connected is that we potentially                                            to plan production as far in advance
                                                                                                                                                                                          “We’ve got (thousands of) products                                          could respond in a more agile fit for                                            as possible, to maximise efficiency,
                                          Base: 200 decision makers/influencers responsible for supply chain operations strategies within Australia
                                                                                                                                                                                          that are shipped on the average of the                                      purpose way that would scale both                                                while retailers and transport/logistics
                                        Source: Forrester Research conducted the fieldwork for the quantitative part of the research on behalf of Telstra.
                                                                                                                                                                                          average rather than the optimal of what                                     up and down to match demand (while)                                              companies are more concerned with
                                                                                                                                                                                          we actually could ship. So we see an                                        maintaining service levels.”                                                     maximising demand opportunities as
                                                                                                                                                                                          enormous amount of ability to strip a                                                                                                                        they present themselves. The issue of
The qualitative phase of the research                      3.3. Results and discussion                                                      supply chain deliverables and general         huge amount of cost out of our supply                                       There was also recognition across                                                alignment has always been important
consisted of a number of semi-                                                                                                              business performance.                         chain (using data).”                                                        the supply chain that DDSCs would                                                in supply chain collaboration, and it will
structured interviews with retail supply                   3.3.1. Belief in business benefits                                                                                                                                                                         improve general business performance                                             be important in deploying a data-driven
                                                                                                                                            Traditional deliverables like inventory       “Stock management should take up
chain professionals from Australia.                        Our survey respondents showed                                                                                                                                                                              – delivering sustainable competitive                                             supply chain because both require a
                                                                                                                                            turnover, delivery in full on time (DIFOT),   10% of my time but it’s taking up 95%
The interviews were conducted                              an overwhelming belief that a data-                                                                                                                                                                        advantage, improved management of                                                coalition of the willing.
                                                                                                                                            defect reduction, responsiveness and          of it. It’s like playing catch-up football.”
between November 2017 and                                  driven approach will deliver tangible                                                                                                                                                                      risk and loss, improved margins, better
                                                                                                                                            network optimisation were all seen
February 2018.                                             business benefits in both traditional                                                                                                                                                                      informed business decisions and agility.
                                                                                                                                            as benefits of a data-driven approach.
                                                                                                                                                                                                                                                                      However, the ranking of these benefits
                                                                                                                                                                                                                                                                      was not consistent.

12                                                                                                                                                                                                                                                                                                                                                                                             13
The data-driven supply chain - Preparing Australian retail for an emergence of data-driven collaboration - Telstra Labs
“Which of the following could be/are benefits of your organisation                                                                                                                       “Which of the following could be/are benefits of your organisation
                                         implementing data-driven decisions?”                                                                                                                                                     implementing data-driven decisions?”
                                                                        (Showing aggregate percentages of ranks)                                                                                                                                                 (Showing aggregate percentages of ranks)

                                              All                                 Manufacturing                                 Transport/logistics                Retail                                                               All                                                       Midsize (100 to 499)                                      Enterprise (500+)
                                                                                                                                and warehousing
                                                                                                                                                                                                             Creating a sustainable
                                                                                                                                                                                                                                                          65%                                                         71%                                                61%
                   Creating a sustainable                                                                                                                                                                    competitive advantage
                                                          65%                               59%                                                78%                              78%
                   competitive advantage
                                                                                                                                                                                                            Improved management
                   Improved management                    65%                                   77%                                          70%                             70%                                                                          65%                                                      64%                                         25%
                          of risk and loss                                                                                                                                                                         of risk and loss

                        Improved margins                  64%                           42%                                                     82%                             82%                              Improved margins                        64%                                                        65%                                       24%
          Make better-informed business                   60%                                     81%                               30%                              30%
     decisions using insights from big data                                                                                                                                                         Make better-informed business
                                                                                                                                                                                                                                                        60%                                                       60%                                             36%
                                                                                                                                                                                              decisions using insights from big data
                            Reduced costs             46%                                 49%                                            50%                              50%

                        Growth in revenue                                                                                                                                                                            Reduced costs                   46%                                                       46%                                                       60%
                                                      40%                              38%                                          30%                              30%

                    More efficient scaling           37%                                  51%                                      28%                              28%
                     through automation                                                                                                                                                                          Growth in revenue                   40%                                                     39%                                                   40%

                Increased business agility           36%                             30%                                                   62%                              62%
                                                                                                                                                                                                              More efficient scaling
                                                                                                                                                                                                                                                  37%                                                      34%                                              16%
                    Improved data quality                                                                                                                                                                      through automation
                                                    27%                                33%                                         22%                              22%
                         and consistency
                                                                                                                                                                                                         Increased business agility               36%                                                      36%                                               21%
             Increased business efficiency          26%                             19%                                           18%                               18%

                  Strengthened channels/                                                                                                                                                                      Improved data quality
                                                18%                               9%                                              18%                               18%                                                                        27%                                                        28%                                                             66%
                         partner network                                                                                                                                                                           and consistency
                   Access to valuable data     16%                                 12%                                           12%                               12%
                  that was not used before                                                                                                                                                            Increased business efficiency           26%                                                       27%                                                        46%

                                                                                                                                                                                                           Strengthened channels/
                                                Base: 200 decision makers/influencers responsible for supply chain operations strategies within Australia                                                                                     18%                                                    14%                                                                 64%
                                              Source: Forrester Research conducted the fieldwork for the quantitative part of the research on behalf of Telstra.                                                  partner network

                                                                                                                                                                                                            Access to valuable data
                                                                                                                                                                                                                                            16%                                                      15%                                                           41%
                                                                                                                                                                                                           that was not used before

                                                                                                                                                                                                                                         Base: 200 decision makers/influencers responsible for supply chain operations strategies within Australia
                                                                                                                                                                                                                                       Source: Forrester Research conducted the fieldwork for the quantitative part of the research on behalf of Telstra.

As well as recognition of the benefits,                          more advanced in their analysis of data                                          large and smaller businesses.
there is both aspiration and action                              and 57% say that they already gather                                             Smaller businesses are generally
among supply chain businesses                                    more data and apply the learnings more                                           less aspirational and have taken less
to actually implement a data-                                    quickly than their competitors.                                                  action towards becoming data-driven      This could be a reflection of both the                         supply chain negotiations. SMEs know                                             general agreement that data-driven
driven approach in their operation.                                                                                                               than large businesses, even though       resources required to deploy a data-                           that data-driven supply chains will                                              supply chains will deliver substantial
                                                                 Retailers, transport/logistics and
For instance, 65% of our survey                                                                                                                   our research shows they have a bigger    driven approach and the relative lack                          deliver tangible business benefits, but                                          benefits, smaller businesses need to
                                                                 manufacturers are broadly aligned
respondents aspire to become more                                                                                                                 belief in some of the core business      of power enjoyed by small businesses                           don’t expect and are not preparing to                                            find the resources to compete.
                                                                 here. However, there is – perhaps
data-driven, 57% aspire to become                                                                                                                 benefits of becoming more data-driven.   compared with large enterprises in                             be part of the ecosystem. If there is
                                                                 unsurprisingly – a divergence between

14                                                                                                                                                                                                                                                                                                                                                                                  15
The data-driven supply chain - Preparing Australian retail for an emergence of data-driven collaboration - Telstra Labs
“Thinking about your company’s operations, how much do you                                                                                                                                                              “What is your firm’s timeline for implementing t he
                                       agree/disagree with the following statements?”                                                                                                                                                                       following Internet of Things applications?”
                                                    (Showing percentage of respondents selecting “Strongly agree” or “Agree”)                                                                                                                                                               (Not all responses shown)

                                             All                                                            Midsize (100 to 499)                                  Enterprise (500+)
              We want to become more                                                                                                                                                                                                Inventory management or warehouse
     data-driven in our decision making
                                                   24%                        41%                               24%                    26%                             23%                    56%                                 management – tracking inventory levels                         32%                             24%                                   28%
                                                                                                                                                                                                                                    and managing warehouse operations

     We want to become more advanced                                                                                                                                                                                                   Facility, smart building, and energy
      in our ability to perform analytics
                                                 17%                     40%                                  12%                 28%                                  22%                    52%
                                                                                                                                                                                                                   management – monitoring and remote management of                          29%                                 36%                                     24%
                                                                                                                                                                                                                    building security, communication and HVAC systems
            We gather more data, learn,
      and optimise in a changing market            29%                      28%                                   29%                   22%                            28%                    34%                         Fleet management – monitoring and managing
            faster than our competitors
                                                                                                                                                                                                                   the condition and location, and usage of vehicle fleets                  28%                            21%                                   30%
      We measure process and decision                                                                                                                                                                                             (e.g. airplanes, taxis, buses and trucks)
     outcomes so as to quickly refine our        18%                     37%                                  14%                  34%                                 22%                39%
       analytics based on what we learn                                                                                                                                                                                    Supply chain management – managing supply
                                                                                                                                                                                                                        chain relationships including payment processing
                                                                                                                                                                                                                                                                                           19%                            34%                                     31%
                    We want to get more
                     value from big data
                                                 15%                   40%                                   13%                 27%                                  16%                52%
                                                                                                                                                                                                                           Industrial asset management – monitoring and
                We are good at ensuring                                                                                                                                                                                     managing the location, condition, and usage of            8%                           38%                                       35%
               analytic insights actually        18%                      36%                                 14%                22%                                   22%                    49%                                     industrial equipment and machinery
                create effective actions
        Operational efficiency has been                                                                                                                                                                                                   Upgrading chain of responsibility
                                                                                                                                                                                                                                                                                      7%                     25%                                      43%
      the greatest benefit from our data         18%                     32%                                   16%                    34%                             20%              29%                                            to comply with Australian legislation
              and analytics investments
                                                                                                                                                                                                                        Customer order and shipment/delivery tracking –
                                                                                                                                                                                                                              monitoring, managing and reporting status
                                                                                                                                                                                                                                                                                      6%                        38%                                        37%
                                                                                         Strongly agree                  Agree                                                                                               of order enabling customer visibility into the
                                                                                                                                                                                                                                           status of orders and deliveries
                                                   Base: 200 decision makers/influencers responsible for supply chain operations strategies within Australia                                                                  Smart, connected products – incorporating
                                                 Source: Forrester Research conducted the fieldwork for the quantitative part of the research on behalf of Telstra.                                              connectivity and intelligence into products, in industrial,     2%                    35%                                     38%
                                                                                                                                                                                                                                       commercial and consumer markets

                                                                                                                                                                                                                                                                                                  Planning to implement
                                                                                                                                                                                                                                                          Implemented/expanding                                                        Interested but no plans
                                                                                                                                                                                                                                                                                                  within 12-24 months
3.3.2. Technology deployment                                         1.	Technologies to collect data                                                The good news from our study is that
                                                                         at scale (IoT).                                                             these technologies are being adopted
The second part of our hypothesis was
                                                                                                                                                     across the supply chain and there are
that some key technologies need to be                                2.	Technologies to analyse it automatically
                                                                                                                                                     plans to increase adoption over the next                 In our interviews, we found a number                             There is also enthusiasm for a test-and-                    3.3.3. Relationship with partners
deployed for an organisation to be ready                                 or semi-automatically (AI).
                                                                                                                                                     12-24 months. Very few of our survey                     of IoT applications are being deployed                           learn approach to adopting technology.
for a data-driven supply chain. These                                                                                                                                                                                                                                                                                                      The third part of our hypothesis was
                                                                     3.	Platforms on which to collaborate                                           respondents were not interested in                       in the transport/logistics sector.
technologies come in three categories:                                                                                                                                                                                                                                         “We’ve been trialling autonomous                            that relationships need to be strong
                                                                         with the data.                                                              deploying these technologies.
                                                                                                                                                                                                              “We’re doing lots of trials at the                               forklifts. The business case doesn’t                        for an organisation to be ready for
                                                                                                                                                                                                                                                                               particularly stack up at this point, but                    data-driven supply chain. In this
                                                                                                                                                                                                              moment with vision picking, to                                   we know it’s coming … so we’re learning                     case, 63% of our survey respondents
                                                                                                                                                                                                              capture a lot more information                                   now what the implications (are) from                        reported having good or exceptional
                                                                                                                                                                                                              via cameras – things like serial                                 a safety point of view, what happens if                     relationships with their suppliers and
                          “What are your firm’s plans for the following technology concepts?”                                                                                                                 numbers and bar codes.                                           the batteries die, how do you overrule                      customers. This would seem to be a
                                                                                                                                                                                                                                                                               it, all those types of things – that’s                      solid platform on which to build supply
                                                                                       (Not all responses shown)                                                                                              One of our big sectors is                                        the way that we sort of approach                            chain collaboration technology.
                                                                                                                                                                                                              service logistics. So you might                                  this technology.”
                                                                                                                                                                                                              have the technician out fixing
                            Internet of Things                                           56%                                                                 26%                              16%        3%   something and (with vision
                                                                                                                                                                                                              picking) be able to log in to the
     Public and hybrid cloud big data services
        (e.g. AWS, Azure) and data warehouse                                 35%                                                       35%                                         24%              7%
                                                                                                                                                                                                              DC, say this is the part that I
                  automation (e.g. Snowflake)                                                                                                                                                                 need, to be able to see what
            Large-scale predictive modelling,
                                                                                                                                                                                                              they’re looking at and confirm
     data mining, or other advanced analytics                            33%                                                         35%                                         24%                9%
                                                                                                                                                                                                              it before shipping it out there.”

                                                                            Planning to implement
                              Implemented/expanding                                                                          Interested but no plans                         Not interested
                                                                            within 12-24 months

                                                   Base: 200 decision makers/influencers responsible for supply chain operations strategies within Australia
                                                 Source: Forrester Research conducted the fieldwork for the quantitative part of the research on behalf of Telstra.

When we asked what type of                                           that it is mainly IoT technology for
deployments were in place or under                                   the collection of data for supply
consideration, the responses show                                    chain management.

16                                                                                                                                                                                                                                                                                                                                                                               17
The data-driven supply chain - Preparing Australian retail for an emergence of data-driven collaboration - Telstra Labs
“Which of the following factors do you see as key operational improvement 
                                                                                                                                                                                                   of collaborating between your company and your supply chain partners?”
                                                                                                                                                                                                                                                                      (Showing top three ranks)

                                                                                                                                                                                                         Alignment on common goals
                                                                                                                                                                                                     and shared (transparent) metrics                             22%                                          16%                                         28%

                                                                                                                                                                                                               Ability to share granular
                                                                                                                                                                                                           transaction data frequently                            22%                                             21%                                 14%

                                                                                                                                                                                                                 Ability to synchronise
                                                                                                                                                                                                                            master data                       15%                                          22%                                       19%

                                                                                                                                                                                                              Use of common business
                                                                                                                                                                                                           language or semantic terms                         15%                                    13%                                     15%

                                                                                                                                                                                         Transparency across the network of inventory
                                                                                                                                                                                          balances by location, labour, warehouse, and
                                                                                                                                                                                     transportation capacity, transparency of purchase                  8%                                 19%                                     13%
                                                                                                                                                                                         and PO call offs to an agreed planning horizon

                                                                                                                                                                                                      Transport order status and (final)
                                                                                                                                                                                                                 customer satisfaction                        18%                                  9%                             11%

                                                                                                                                                                                                                                                           Rank 1                      Rank 2                       Rank 3

                                                                                                                                                                                                                                  Base: 165 decision makers/influencers responsible for supply chain operations strategies within Australia
                                                                                                                                                                                                                                Source: Forrester Research conducted the fieldwork for the quantitative part of the research on behalf of Telstra.

                                                                                                                                                                                  In our interviews, collaborative                                  “I think (collaboration) means having a                                         When we asked what data was
                  “How would you rate the strength of relationships between your company                                                                                          relationships were consistently                                   long-term goal and both being focused                                           currently being shared with suppliers
                                                                                                                                                                                  characterised as being founded                                    on what you’re trying to achieve and                                            and customers, a different picture
                    and your supply chain partners related to collaborative technology?”
                                                                                                                                                                                  on mutual benefit.                                                there being benefit in that for both                                            emerged. Data is indeed being shared,
                                                                                                                                                                                                                                                    of you versus each being year by year,                                          but this mainly relates to having a
                                                                                                                                                                                  “When I meet with those                                           hit a number and it’s all focused on                                            delivery accepted or an invoice paid.
                                                                                                                                                                                  (collaborative) suppliers, I do                                   what we need to achieve… Just that                                              Strategically important data that could
           Exceptional                                                    27%                                                                                                                                                                       ability to accept there’s two sides of the                                      make the supply chain work more
                                                                                                                                                                                  get a sense, it was a genuine
                                                                                                                                                                                                                                                    story and we’re both here being willing                                         efficiently – like sales information from
                                                                                                                                                                                  desire, for our businesses                                        to share and learn from each other.                                             retail point of sale systems or item
                 Good                                                                                 36%                                                                         to be successful and more                                         And being open for us to try new things                                         master data – are among the least likely
                                                                                                                                                                                  successful. And what that                                         that might mean sometimes we actually                                           to be shared. This implies an inherent
                                                                                                                                                                                                                                                    fail even if that might mean that we                                            lack of trust between supply chain
     Moderate strength                                    20%
                                                                                                                                                                                  looks like to me is they
                                                                                                                                                                                                                                                    don’t hit a result.”                                                            partners when it comes to sharing
                                                                                                                                                                                  understand what our strategy                                                                                                                      strategically valuable information.
                                                                                                                                                                                  is – they’re trying to present to
                 Weak                    14%
                                                                                                                                                                                  us products that align to what
                                                                                                                                                                                  that forward strategy and
                 Poor           4%                                                                                                                                                customer aspiration is.
                                                                                                                                                                                  So that, to me, says they’re
                                                                                                                                                                                  truly trying to make our
                                    Base: 200 decision makers/influencers responsible for supply chain operations strategies within Australia
                                  Source: Forrester Research conducted the fieldwork for the quantitative part of the research on behalf of Telstra.                              business successful.”

Where collaboration is being practised,               respondents ranked the benefits “soft”                                          actually “seeing the data that will help
a number of specific business benefits                to “hard” i.e. they see the most benefit                                        drive the supply chain more efficiently”.
occur. It was interesting that our survey             in “aligning objectives” followed by

18                                                                                                                                                                                                                                                                                                                                                                         19
“To what degree do you share data with your
                                                        partners across the supply chain?”
                                                                                       (Not all responses shown)

                                                                                                                                                                                                Find out how Otto is using predictive
                                                                                                                                                                                                customer analytics in the supply chain.
                                  Sharing data about                                                                                                                                            See the case study on page 31.
                          shipment; for example, ASNs                                        57%                                                          29%                  15%

               Sharing purchase order, purchase order
            acknowledgement, or goods receiving data
                                                                                         54%                                                               39%                          8%      3.3.4. Barriers to adoption
                                                                                                                                                                                                We have seen that actors in the retail
                  Sharing data about quality deliveries                               49%                                                             39%                           13%         supply chain understand the benefits
                                                                                                                                                                                                of a data-driven approach, have begun
                                                                                                                                                                                                deploying the necessary technology
     Sharing inventory data with supply chain partners                                43%                                                         43%                             14%
                                                                                                                                                                                                and claim good relationships with their
                                                                                                                                                                                                supply chain partners. According to our
     Sharing customer data with supply chain partners                                40%                                                            47%                             13%         hypothesis, this would suggest there
                                                                                                                                                                                                is a degree of readiness to adopt the
                                                                                                                                                                                                data-driven supply chain, so what are
                 Sharing location master data like GLN                            35%                                                        52%                                  14%           the barriers to deployment?

                               Sharing a perfect order
                                                                                                                                                                                                “How do we bridge that gap
                                                                               30%                                                        46%                                 25%
                            perfect delivery score card
                                                                                                                                                                                                between us seeming so
                       Sharing point-of-sale scan data
                                                                                                                                                                                                futuristic to people that they
                                                                               30%                                                   37%                                    34%
                            with supply chain partners                                                                                                                                          don’t even know where to
                                                                                                                                                                                                start? You know, how do
           Sharing data about yard slots for deliveries            10%                                              56%                                                 35%
                                                                                                                                                                                                we bridge that gap, that
             Sharing master data, for example, weight
                                                                                                                                                                                                practical reality of taking
                                                               5%                                         56%                                                         40%
          and cube for GTIN at unit, case or pallet level                                                                                                                                       the next step to execution
                                                                                                                                                                                                (that) seems real?”
                                                      Shared with partners                          Share with selected                              Not shared
                                                      collaboratively                               partners, but not widely

                                                   Base: 200 decision makers/influencers responsible for supply chain operations strategies within Australia
                                                                            Note: Percentage may not total 100 because of rounding
                                                 Source: Forrester Research conducted the fieldwork for the quantitative part of the research on behalf of Telstra.

The reluctance to share strategic                                   Some retailers guard information                                                 Some in the third party logistics (3PL)
information was a theme of our                                      jealously and infer in it a sense                                                world challenged the retailer view
interviews. Some saw it as a deeply                                 of competitive advantage.                                                        that data has intrinsic value. They
embedded cultural phenomenon                                                                                                                         were especially opposed to the idea
                                                                    “We actually had a request from a big
that will be hard to break.                                                                                                                          that supply chain partners should be
                                                                    (manufacturer) the other day where
                                                                                                                                                     charged a fee for access to it. They
“Our entire commercial and                                          they want us to give them all our store
                                                                                                                                                     instead argued that, like many other
                                                                    data and store sales so they can
legal system in Australia, New                                      predict (demand). We don’t actually
                                                                                                                                                     resources, supply chain data really only
Zealand and probably other                                                                                                                           has value in use.
                                                                    give that information, we hold that
parts of the Commonwealth                                           pretty tight because, for us, it’s a                                             “My view is that the value
are adversarial. Resolving                                          competitive advantage.”
                                                                                                                                                     in the currency of data has
an issue, it’s not inquisitorial,                                   Ironically, some retailers are still                                             something to answer for. I think
it’s not data-driven … it’s all                                     prepared to blame the manufacturer
                                                                    or wholesaler when out of stocks occur
                                                                                                                                                     that we’re now realising that
adversarial. So the buying and                                      during promotional periods.                                                      what the data can tell you is
selling relationship, whenever                                                                                                                       the real value, and by sharing
                                                                    “One of the biggest problems was we
there’s two parties where                                           would never get a proper forecast from                                           it you’re going to maximise
one is providing a service                                          the (retailer) and then there’d be the                                           the value. And I think that
to another, you always get                                          age-old ‘well, you should have had
                                                                                                                                                     ownership of data is the
                                                                    the stock, we’ve had lost sales, etc.’”
to this adversarial position,                                                                                                                        biggest inhibitor too, not only
which is hard to break.”                                                                                                                             collaboration of course, but a
                                                                                                                                                     truly data-driven supply chain.”

20                                                                                                                                                                                                                                        21
“What are the biggest challenges your firm faces in implementing
                                          a data-driven supply chain strategy”
                           (Showing percentage of respondents selecting “ Very significant challenge,” “Significant challenge,” or “Challenge”)

                      Data security/data privacy                            30%                                                       36%                                         24%

     Lack of capability to enable us to transform
               data insights into business action
                                                                    16%                                                    46%                                              22%

                           Complexity of vendor
                        application installations
                                                                             31%                                                25%                                    26%

                                  Lack of budget                      22%                                                  38%                                        21%

                               Poor data quality                        26%                                                  32%                                      21%

                          Inadequate or missing
                          relevant internal skills
                                                              10%                              20%                                         26%

                                Lack of business
                       C-level executive support
                                                                   15%                                  19%                                  20%

                                                     Very significant challenge                         Significant challenge                         Challenging

                                                   Base: 200 decision makers/influencers responsible for supply chain operations strategies within Australia
                                                 Source: Forrester Research conducted the fieldwork for the quantitative part of the research on behalf of Telstra.

                                                                                                                                                                                                   “Looking at the technical implementation of data capture and analysis tolls and technology,
                                                                                                                                                                                                         how challenging is each element for its implementation in your organisation?”
                                                                                                                                                                                                                            (Showing percentage of respondents electing“ Very significant challenge,” “Significant challenge,” or “Challenge”)
Data security                                                       There are also concerns about the size                                           Complexity of
                                                                    of the ecosystem that could potentially                                          technology deployments
The number one barrier seen by our
                                                                    be sharing data. Many SMEs, in
survey respondents to adopting a DDSC                                                                                                                Our survey respondents also saw
                                                                    particular, may not have the security
approach was security of data. This                                                                                                                  practical problems in deploying                            Managing data capture
                                                                                                                                                                                                                                                                 34%                                                            27%                                             21%
                                                                    measures in place to ensure a retail                                                                                                               and movement
is not surprising given that we have                                                                                                                 a data-driven approach that related
                                                                    ERP system is safe if made available
seen how importantly our respondents                                                                                                                 to the complexity of the technology.
                                                                    for collaboration.
regarded data.                                                                                                                                       When we asked specifically                                  Analytics competency                        26%                                                       30%                                                  26%

In our interviews, we also found                                    “We’re very protective of                                                        about deploying data capture and
                                                                    making sure that there’s no                                                      analysis tools, respondents cited
businesses conscious of a duty of care                                                                                                                                                                   Analytics technology maturity                        28%                                                        28%                                               24%
                                                                                                                                                     major challenges as including
around data on behalf of their customers.                           way they can bring our systems                                                   the management of data capture
“The technology’s moving faster than                                down or that they can create                                                     and movement, the maturity of AI                    Complexity of integrating data,
                                                                                                                                                                                                            analytics, and IoT software
                                                                                                                                                                                                                                                      19%                                                        38%                                                      22%
the social implications or the security                             viruses within our system by                                                     technology, integrating applications,
implications. We’re probably one of those                                                                                                            governance of management and
sorts of organisations that need to make
                                                                    giving them the access.”                                                         sharing of data, as well as the
                                                                                                                                                                                                     Integrating enterprise and IoT data               21%                                                    33%                                                   21%

sure everything is protected. And we’re                                                                                                              previously mentioned skills gaps.
quite conservative in our approach – if                             Skills gaps                                                                                                                        Data ownership and governance               16%                                                33%                                                     22%
                                                                                                                                                     In our interviews, we heard that even
we don’t think that we can do it properly
                                                                    The next most important barrier to                                               when a retailer has the intention to
then we tend not to do it.”
                                                                    adoption of DDSCs is a skills gap within                                         collaborate, sometimes they simply do                     Data and insight sharing           15%                                  16%                                      21%
                                                                    supply chain organisations. Supply                                               not have the technological tools to do so.
                                                                    chain organisations feel they simply do
                                                                    not have the skills available to execute                                         “I don’t think we’ve got the                                    Basic network and
                                                                                                                                                                                                     infrastructure data protocol issues
                                                                                                                                                                                                                                              10%                             15%                             10%
                                                                    on a data-driven approach. As we will                                            tools to give our suppliers the
                                                                    see later in the report, this is an issue
                                                                                                                                                     real transactional information
                                                                    already being addressed by some
                                                                    overseas retailers.                                                              and right forecast to                                                                       Very significant challenge                         Significant challenge                         Challenging

                                                                                                                                                     collaborate properly.”                                                                    Base: 200 decision makers/influencers responsible for supply chain operations strategies within Australia
                                                                                                                                                                                                                                             Source: Forrester Research conducted the fieldwork for the quantitative part of the research on behalf of Telstra.

                                                                                                                                                                                                  When we asked specifically about cloud                        of issues relating to operating across                                           network design latency and the skills
                                                                                                                                                                                                  deployment as a collaboration platform,                       multiple platforms, including managing                                           gap previously noted.
                                                                                                                                                                                                  our survey respondents cited a number                         compliance, security, support for apps,

22                                                                                                                                                                                                                                                                                                                                                                                       23
“Looking at the technical implementation of cloud collaboration technology,
               how challenging is each element for its implementation in your organisation?”
                            (Showing percentage of respondents electing“ Very significant challenge,” “Significant challenge,” or “Challenge”)

                                                                                                                                                                                                “It’s a complex web of legacy stuff
                                                                                                                                                                                                that you’re trying to unravel while
                         Managing compliance levels across
                                                                                                                                                                                                you’re trying to bolt on the new.
                                                                                           35%                                                     40%                           20%
                          environments in the supply chain                                                                                                                                      And, for me, I feel that’s the hardest
                                                                                                                                                                                                thing to work through.”
                                  Privacy (e.g. unauthorised
                                access/data breaches/theft)
                                                                                      28%                                           30%                                    23%                  One of things our respondents
                                                                                                                                                                                                admired about Amazon was the
                       Application support issues (e.g. apps
                                                                         13%                                   41%                                             21%
                                                                                                                                                                                                way innovation is baked in to their
              not supported or badly supported in particular)
                                                                                                                                                                                                organisational process.

         Network design – architecting hybrid cloud networks,
                                                                            18%                                  31%                                         25%                                “What they do is implement
     virtual private networking across different environments
                                                                                                                                                                                                straightaway and they then
                                    Monitoring is a challenge              16%                                 32%                                          25%
                                                                                                                                                                                                assess the customer
                                                                                                                                                                                                experience. And if the
                           Security (e.g. app/data protection)                        28%                                           31%                              14%
                                                                                                                                                                                                customer experience is of
                                                                                                                                                                                                value and resonates and it is
                    Managing network performance/latency                                                                                                                                        the right customer experience,
                                                                       10%                         26%                                         31%
                between clouds and to/from cloud platforms
                                                                                                                                                                                                then they will quickly find
                               Lack of skilled employees to
                                                                                                                                                                                                the efficient (way to deploy it)
                                                                            18%                            21%                                 20%
                       manage collaborative cloud platforms
                                                                                                                                                                                                in the supply chain.”

                                                    Very significant challenge                         Significant challenge                         Challenging
                                                                                                                                                                                                Relational barriers
                                                                                                                                                                                                to collaboration
                                                  Base: 118 decision makers/influencers responsible for supply chain operations strategies within Australia
                                                Source: Forrester Research conducted the fieldwork for the quantitative part of the research on behalf of Telstra.                              When we asked about barriers to
                                                                                                                                                                                                collaborating more with partners, a
                                                                                                                                                                                                non-technological factor was ranked
                                                                                                                                                                                                highest i.e. alignment on common goals.
                                                                                                                                                                                                This was closely followed by the lack
Some CEOs are simply philosophically                               “If there was a technology platform                                              “It’s hard to compete (for) the             of a common business language or data
opposed to holding data outside the                                that you could exchange information
building, which makes any kind of                                  on, that you could collaborate on in
                                                                                                                                                    CEO’s attention when you’ve                 standards to facilitate data exchange.
data-based collaboration difficult.                                an easy way, then that would enable                                              got Sales and Marketing                     It’s interesting that for this question,
                                                                   you to, I think, manage a bigger pool                                            promising the world and                     security was ranked lowest among the
“I’ve heard people come into                                       of partners. But I don’t see that                                                increasing sales by 10% is                  responses. This suggests there are
the business and say, ‘You’ve                                      anywhere at the moment.”
                                                                                                                                                    going to deliver (more benefit)
                                                                                                                                                                                                major strategic alignment and data
                                                                                                                                                                                                harmonisation issues to be addressed
spent so much on servers and                                       Organisational barriers                                                          than a 50% improvement                      before the issue of security can even
there’s other ways of doing                                        Our interviews also uncovered a number                                           in the supply chain.”                       be considered.
things now,’ but (the CEO is)                                      of familiar organisational barriers in the
very protective of our                                             way of innovation. Attracting funds for                                          In the retail world, supply chain
infrastructure and that                                            supply chain investments, especially                                             managers are not used to building
                                                                   when competing with other projects                                               investment cases for transformative
probably can be a bit of                                           that are seen to have a direct impact                                            investments yet they need to assume
a barrier when you’re                                              on revenue, was seen to be a problem.                                            that role in the future.
sharing information.”                                              “I suppose a lot of our time and                                                 “Supply chain managers are often in
                                                                   attention is growing our store                                                   an influencer role and it’s quite new for
Others are looking forward beyond pure                             network. So therefore, the priority                                              us to be seen as bringing value to the
cloud to data exchanges, which promise                             is market growth.”                                                               business other than the lens of lowest
the ability to share harmonised data                                                                                                                cost to move. The concept of data
sets between partners.                                                                                                                              connectivity creating enterprise value
                                                                                                                                                    coming from a supply chain professional
                                                                                                                                                    would be foreign for most I suspect!”
                                                                                                                                                    There is also the problem of maintaining
                                                                                                                                                    legacy systems and investments while
                                                                                                                                                    simultaneously trying to transform.

24                                                                                                                                                                                                                                         25
“Which of the following factors are barriers to collaboration
                                    between your company and your supply chain partners?”
                 (Showing percentage of respondents electing “ Very significant challenge,” “Significant challenge,” or “Challenging, but manageable”)

     Lack of alignment to common business goals, including risk
             and reward sharing, for all parties in the value chain
                                                                                                29%                                             23%                                26%

                            Lack of a common business language
                            or set of standards for data exchange
                                                                                                29%                                           20%                        17%

                  Inability to share event or transaction data at a
                sufficiently granular level, sufficiently frequently
                                                                                           23%                                        23%                                    23%

                               Lack of transparency of inventory,
                       transportation, storage, or labour capacity
                                                                                             26%                                        20%                            17%

                                           Lack of connectivity or
                                          other technology issues
                                                                              11%                                29%                                   14%

                                   Inability to synchronise master
                           data (for example GTIN and attributes)
                                                                                  17%                                23%                            11%

                                             Concerns about data
                                    integrity, security and privacy
                                                                                 14%                9%                         23%

                                            Very significant challenge                        Significant challenge                         Challenging, but manageable

                                                     Base: 35 decision makers/influencers responsible for supply chain operations strategies within Australia
                                                  Source: Forrester Research conducted the fieldwork for the quantitative part of the research on behalf of Telstra.

In our interviews, the idea of having                                In the upstream world of transport/                                              “I think gain share works
fewer but deeper relationships was                                   logistics and manufacturing, there
seen as a way to facilitate collaboration.                           is also the issue of incentives to
                                                                                                                                                      if you have an honest cultural
                                                                     collaborate. If supply contracts                                                 environment that says
“I very much favour a model                                          are based on fixed fees for delivery                                             ‘I respect the fact that both
where you’ve got a really core                                       of KPIs, then there is often no                                                  of us have to make money
group that you’re building deep                                      commercial reward for a partner who
                                                                     may see opportunities to improve a
                                                                                                                                                      and that’s just the reality.’
relationships with and then                                          process. Some of our respondents                                                 If you walk into every meeting
you’re topping up with anything                                      said that sharing the rewards from                                               and the first part of the
that they can’t service you on.                                      improvements in the supply chain                                                 conversation is, ‘You guys are
                                                                     is a way to change this.
Because I think it’s difficult for                                                                                                                    making a fortune,’ you sit there
them to get deep understanding                                       “Sometimes you sit there and you go,
                                                                                                                                                      and think, ‘I don’t need to hear
                                                                     ‘I’d love to do all this work, but you
of your business and vice versa                                      know what, I get no value if I do find                                           this again. I have a right to
if you don’t have a smaller                                          improvements.’ I think it will change                                            make money and my job is
pool that you can grow over                                          when you start the commercial                                                    to help you make money.’”
time with.”                                                          arrangement and say, ‘You know what,
                                                                     if we could improve the supply chain
                                                                     we’d both get a dollar each out of it.’”

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3.4. Our research: Conclusions
3.4.1. Collaborators need to align            3.4.2. Data is the new oil but only         3.4.3. Data is a resource that
Collaboration requires a coalition of
                                              when it can be used                         needs securing
the willing. Our research shows that          Oil, generally thought to be the product    Resources can be tangible (operand)
there appears to be no problem with           of decaying organic material held in        or intangible (operant). Vargo and
willingness to collaborate in the retail      sedimentary rocks, has been with us         Lusch introduced the idea that value
supply chain. The major barrier appears       for millions of years. However, oil only    is created when ‘operant’ resources
to be one of execution i.e. alignment         became useful when we gained the            are applied to ‘operand’ resources
between the parties on business               ability to refine it in the nineteenth      to create value. They used the
objectives. This is not surprising in the     century. It was then that oil did indeed    microprocessor as an example of
sense that supply chain organisations         transform every industry especially         an operand resource (silica) turned
have inherently different business            by facilitating the development of the      into something valuable through the
drivers e.g. a manufacturer generally         motor car and the aeroplane.                application of an operant resource
benefits from scale and would like as                                                     (knowledge). Data is an intangible or
much time as possible to respond to           Likewise, data has been with us since
                                                                                          operant resource, but when deployed
changes in demand, whereas a retailer         retail began. If we could take a time
                                                                                          in the supply chain it can be used to
generally benefits from its ability to        machine back to the great markets
                                                                                          replace inventory, fixed assets, labour
respond to demand in the short term           of ancient history, we would see
                                                                                          even physical locations through better
and therefore prefers short lead times        transactions being made, customers
                                                                                          sensing of and responding to demand.
and flexible order quantities.                being served, supplies being ordered
                                                                                          Data is therefore potentially as
                                              and delivered, and invoices being paid
                                                                                          valuable as any of the tangible assets
As we saw in our interviews, alignment        – all generating data. What’s changed
                                                                                          on a balance sheet and needs to be
on objectives can also be an issue            in recent years is our ability to capture
                                                                                          protected accordingly.
internally with different departments         and store data, analyse it and share it
within the same company often having          with others – in other words, to make       Overseas there have been a number
different and contradictory drivers           it useful.                                  of high profile attacks on retailers,
underlying their work.                                                                    mainly targeting consumers’ personal
                                              Our ability to turn data in to a usable
                                                                                          information. The retail supply chain is
Even though business drivers and              resource mirrors the breakthrough in
                                                                                          arguably even more vulnerable because
objectives may be different, the              oil refining in the nineteenth century.
                                                                                          of its interaction with large numbers of
competencies of an organisation and           Unfortunately, our research shows that
                                                                                          SMEs who are less likely to have their
a supply chain are complementary.             data may not yet be as usable as we
                                                                                          data protected.
Manufacturers, transport/logistics            would like to think. Our respondents
companies and retailers are in the            said: data is easy to collect but hard to   The Australian government
business of combining to get goods and        manage, there are problems making it        conservatively estimated the cost of
information from point of production to       compatible across different apps, the       ransomware to the Australian economy
point of consumption and sometimes            tools to analyse it are in some cases       to be approximately A$1 billion per
back again. When competencies are             immature, and the problems multiply         year. It’s therefore not surprising that
complementary, the conditions exist           when we attempt to share it across          supply chain actors cite security as
for organisations to create something         multiple platforms in the cloud. It         their number one barrier to adopting
bigger than the sum of their individual       seems we are not quite at the point of      a data-driven supply chain. To remove
parts. This is the promise of the theory      being able to use data to fuel our supply   this barrier, supply chain businesses
of collaborative advantage9, which            chain in the same way we can use            should consult a trusted partner in
differs from the Porter’s theory of           refined oil to fuel our cars.               cyber security to ensure shared data
competitive advantage10 in attributing                                                    is protected and the benefits of data-
value creation to a network rather than       Data needs to be accessible and useable.
                                                                                          driven collaboration are not lost.
an individual entity.                         Overseas we are seeing retail enterprise
                                              systems being rewritten from the                                                       3.4.4. This vehicle needs                    Likewise, the transition to data-driven   long recognised the benefit of PhD
Aligning business objectives can              ground up with exposed APIs to facilitate
                                                                                                                                     extra drivers                                supply chains requires the traditional    data scientists in their businesses.
be achieved through old-fashioned             easy and quick access internally and                                                                                                skills of supply chain professionals,     Traditional retail companies now also
talking or through facilitated design         externally. We are also seeing the                                                     The Apollo space programme took men          but it also needs mathematicians. It      need to fill this skills gap. Forming
thinking sessions, but for it to be           emergence of data exchanges that                                                       to the moon for the first time. Many of      is mathematicians or data scientists      closer ties with universities who have
operationalised incentives need to be         facilitate the sharing of data between                                                 the men selected to be astronauts had        who will interrogate the data and         pipelines of PhD students and have
aligned. The coalition will not remain        multiple supply chain players, as well as                                              been fighter pilots or test pilots so were   build the algorithms that turn supply     post-doctoral students as potential
willing if one party takes the lion’s share   the use of blockchain technology that                                                  highly skilled in flying. Unfortunately,     chain data into useful business           project resources may be a logical
of the spoils. For data-driven supply         helps verify hands-offs between supply                                                 getting to the moon needed more              information. Our research showed that     first step.
chains to be adopted, it’s important the      chain actors. These developments hold                                                  than just flying skills and today it         these skills are in short supply in the
benefits of collaboration are shared          the promise of overcoming current                                                      is acknowledged that without the                                                       Find out more about how
                                                                                                                                                                                  retail supply chain. Data science is
equitably11 and not just realised by one      concerns with technology, making data                                                  contribution of mathematicians (many                                                   PhD-accredited data scientists
                                                                                                                                                                                  predominantly the domain of PhDs, an
party (usually the retailer).                 useful and assisting in the adoption of                                                female), the journey to the moon could                                                 are transforming Target USA.
                                                                                                                                                                                  academic credential not traditionally
                                              data-driven supply chains.                                                             not have been made.                          associated with the retail ecosystem.     See the case study on page 32.
                                                                                                                                                                                  Online retailers like Amazon have

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