January 9th , 2024

 Digital Transformation- the seminal buzzword of our times. I can now claim to be in the middle of it, below it and finally above it. In my current role, the supply chain function is undergoing digital transformation so to speak. What does this mean I wonder? Because so many companies are at different stages of transformation. I want to conduct a thought experiment, in the most simplistic terms of what can be called a digital transformation, is it really possible and does it really work. Anyone using an ERP system for running a concern can claim to be somewhat digital. Thereafter, it is  matter of building processes above the ERP that are also automatic, autonomous or semi- autonomous. The sky is the limit of what is possible. But one can go too far. While at Shell, I had the unique advantage of visualizing both extremes. While working a JV in Iraq, I witnessed a palpably manual operation. SAP was implemented but the functionality being used was minimal. Excel sheets were flying around everywhere. Wet signatures on Purchase Orders and Contracts- as per antiquated Iraqi Law for government and semi-private entities. Even the port clearing procedures, the application of customs duties and so on were done manually, line by line. This meant that we used hold very high inventory because getting any material into the country was painful and arduous. On the other hand, we knew what we were dealing with. The processes, though cumbersome, were decipherable. It just meant we had an army of Iraqi staff process purchase orders, invoices, service entries, payments, and mountains of interim paperwork from and to various stakeholder sets. It was impossible to know where a piece of work was sitting without assigning someone to follow up paper trails and emails. One by one, several of these processes were "Workflowed" - which avoided back and forth emails. This also meant a digital pipeline was now available to offers some much needed transparency on where something was held up.  However, while I was there there was a need to be on top of materials deliveries as part of new capital projects that were in construction phase. These would be in the money if they were commissioned on time, but would lose a lot of money in the event of delays. As is the case staffing is always lesser in some departments than what is required to make this happen. So we wanted to find a third party who could help create transparency and follow up. The party chosen was our 3PL forwarder with whom we had just minted a new contract for our inbound deliveries. These are generally speaking sophisticated companies with a lot of systematic tools for track and trace.  However, their trackable unit was a shipment.  The countless processing steps of creating and moving a shipment meant they would have to manually tick off stage gates in the system ascribed to a shipment.  This would be fraught with latency and human error. Bar coding was an option but came with other problems. Also, a shipment did not correspond to a Purchase Order- One PO could have one or multiple shipments.  So one would need to get in to the line item level detail on PO to figure out what was going on. Then again the Purchase Order did not always correspond with a Work Order- which could well be tied to a specific construction work pack. This is because it could be economically more viable to club multiple similar items from mulitple work packs under one Purchase Order. If you are able to follow the spaghetti I am trying weave rather simply, you will know that Materials Management is these type of Construction Project environments is a massively complex affair. The process of designing pirces of work, converting them into work packs, identifying bill of materials, placing orders through a transparent and fair commercial process,  ensuring the right level of detail resides in each order - from a material description standpoint, transferring orders to vendors and forwarders and letting forwarders and buyers conduct an expediting process all he way  until the item ( say a widget ) is received and accounted for. Even if you have the technology to track, you still need to have the discipline to create the accurate level of material detail at the line level. And this takes a lot of manual time- and for the person creating it, it feels like a load that is not adding any value ( to him anyway). So one has to force them to be more disciplined to enable digital behaviour- but they then start to unravel. Either becasue they need to be retrained on the information management side of things or because the specification of more detailed information takes too much time from their normal work so they fall behind overall. So one has to throw in additional resources- a lot of it- just to get the automation to provide value. This is counterintuitive in a fundamental sense. Automation is supposed to reduce staff ( which it will do) but actually you will not reduce the staff probably just redeploy them further upstream in creating more detail on the work. And in most cases this wont be enough, you will need even more staff. Try selling that to an organisation that is trying to improve efficiency. In the end, we get back to managing spreadsheets and controlling data on these spreadsheets like a hawk. This type of skill is rare- no one has the will to perform clerical work of this kind, not least because they have been fed the apocryphal hypothesis that clerical work shall be relegated to AI or machines or what have you. A proper struggle in Iraq- two steps forward and three steps behind with respect to Materials Management

On the other hand, when I was later based in Manila trying to run Supply Chain remotely for our Canadian manufacturing operations, I was armed with the best technology Shell had. We had adopted the Ariba E-procurement module. And this was a monster. A world in an unto itself which had such a vast plethora of screens, attachments, workflows, databases to manage, traverse, maintain and control- that all my buyers were rooting for the good old days where they could just issue a tender to 6 companies by a simple secured email. Similarly model contracts for a thousand different contracting archetype were already available in Ariba- so theoretically this would cut down the time it took to frame a contract each time. What I learnt was that this was useful in the rest of the world but scarcely in the Americas. In the rest of the world, vendors signed contracts 99% of the time without paying any heed to the Terms and Conditions.  But in a severely litigated jurisdiction like North America, every mom and pop shop had lawyers coming out their ears. These folks would over analyse every legal term in every one of the 1000 model contract archetypes and want to change language all the time. Changing language in an archetype is a manual process- no different than if you did not have a model contract at all. Finally, Ariba offers an electronic catalog for buying MRO type of items and we as Shell were sold on it. It was a ridiculous idea.  Manufacturing firms mainly buy spare parts and consumables - mostly of a technical and highly bespoke nature. And even when they are not really bespoke, vendors pretend to us that they are- this gives them a reason to price them at some arbitrary premium. In this landscape, trying to create a e-catalog entry for all these engineering spare parts was nigh impossible. Also because we already had the Material Master in SAP - which already could act as the catalog.  Even if one was able to create this chimerical catalog, maintaining the price currency, delivery lead time , unit of measure and so many attributes would be another task. And this would need to be maintained in multiple places simultaneously. The ERP material master, the Outline Agreement ( contract in ERP ) and the Ariba Catalog. Incredible complexity that too in triplicate, for no real benefit. The buying experience of a maintenance practitioner is not likely to be improved by an amazon-like shopping cart experience. He is not buying neckties.

What is my point of this ramble you might ask.

Just that reality always lies in the vestiges between slogans. Slogans are man-made, agenda-laden, and digestibly bite-sized. Reality is anything but.