Reinventing the First Mile

2024 marks the beginning of a decade of transformation focused on the first mile—on sourcing and procurement.

Leaders feel growing pressure to translate their vision of radically reinvented end-to-end operations into real results—and meet the expectations of the board, their consumers, and the communities within which they operate. Meanwhile, digitalization, AI, and disruptive tech are fundamentally changing “classic” supply chain processes. The nature of spend within the sourcing function, alongside the influence it has across the entire supply chain, means it holds the keys to profitable, responsible, and resilient business growth for the future.

Sourcing’s traditional tenets, cost management and supply assurance, remain as vital as ever. But the profession’s pioneers—those furthest advanced on the journey from transacting to leading—are unlocking new sources of value. They are doing this by cultivating strategic partnerships, both internal and external, and focusing on first-mile excellence as a catalyst for sustainable customer success.

“Where in the past it would have been productivity driven – which is still very important – the customer’s demanding a different kind of product, at a different pace,” says Andrea Albright, Executive Vice President of Sourcing at Walmart. “If you can’t react to that in real-time from a sourcing perspective, you can’t capture customer needs.”

Rising to this challenge means embracing new technologies, a solid data foundation, and top talent. In the full report, we offer practical steps on how to build a winning digital strategy and develop a digitally savvy global talent ecosystem, zeroing in on these three factors.

AI-POWERED SOURCING

In the future, when end-to-end operations are 100% digital, sourcing will be about data ownership, product ownership, and most importantly, relationship management, with 100% of the work assisted, augmented, agent-led, or automated with technology and AI. And as AI develops, there is a huge opportunity for sourcing organizations.

Realizing the opportunity, however, requires focusing on the problem being solved (we share a “jobs to be done” framework, aligned to the sourcing process, in the full report) and also prioritizing where to implement AI (which can be achieved using our proprietary AI Blueprint, a practical roadmap and benchmarking tool.

THE HOW

Moving from idea to action at pace differentiates leaders in the journey to reinvent the first mile. But how? The answer lies in a three-pronged approach: data, tech, and people.

Data

It’s well understood that if the future of sourcing is AI-powered, the quality of input data is paramount to delivering quality outputs. Now, the question is less about the importance of data and more about how to monetize the value of data excellence initiatives and
ensure data strategy is aligned with business objectives. We identified five plays companies are putting into action to build a strong data foundation that delivers results aligned with business goals:

1. Use AI to mine meta master data

2. Leverage the power of process mining

3. Put transactional data to work

4. Use AI to fill data gaps

5. Make data management attractive

Tech

AI is changing the tech stack in two major ways. First, the stack is becoming more integrated across functions, with greater capability to connect and share data across disciplines driving improved decision-making. Second, usability is improving due to new, conversational interfaces that can improve productivity and efficiency, making access to data, information, and insights easy for everyone.

Though IT owns the architecture of the technology stack, your role as a CPO is a “shaper,” in lockstep with your CIO to ensure that the systems and tools are right-sized for the “jobs to be done,” linked back to business outcomes, and allow you to build the foundation required to accelerate a transformation vision. In the full report, we explore the three main approaches companies are taking when evaluating technology solutions.

People

Will AI eliminate jobs? Yes. Will it also create new jobs and evolve others? Yes. A big part of winning the hearts and minds of our teams is sharing this message with transparency and honesty, then casting the vision of what the future job looks like. We delved into that future job, with our data and analysis revealing three key evolutions in domain skills underway right now:

The role of the sourcing professional is broadening. It is reaching into the demand side of the Loop, with a much deeper connection to product lifecycle management.

The future role of sourcing will include the operationalization of sustainability objectives. Material science and regenerative agriculture are becoming critical domain skills.

The role of systems thinking is evident as sourcing leaders are expected to reach upstream and downstream as well as increase collaboration with supplier networks.

Achieving a Zero Percent Carbon, 100% Digital sourcing organization has yet to be done… which means it is up for grabs. It will belong to the team with the audacity to set a bold ambition, embody the connectedness to operate as one team, and commit to the discipline required to prioritize and execute with distinction.

The first mile is yours to reinvent. Now is the moment to use AI and digital capabilities to do so.

To access the full report, visit members.zero100.com.

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