Gartner Keynote: Algorithms Rule the World (and the Supply Chain)

Gartner Bimodal Supply ChainAlgorithms impact our daily lives from the ads we see online to the price and availability of goods we want at the store. As supply chain professionals, algorithms are transforming the way we do business, the way we optimize our supply chains. David Willis, chief of research at Gartner, kicked off this week’s 2016 Gartner Supply Chain Executive Conference with a focus on how algorithms impact how the world works and how we must balance agility and stability to take advantage of the new opportunities and stay ahead of the competition.Willis went on to describe how companies must have bi-model supply chain capabilities. Mode 1 is all about operating efficiently and in a stable manner to provide repeatable high levels of customer service. The second mode is where supply chain organization seeks out new and differentiating capabilities through analyzing “What-if” scenarios and mainstreaming the best options.

Risk is a constant we can count on to be right around the corner. How we handle that risk, how we plan and optimize our networks around risk is the key to success. According to Willis, to be ready for disruptions supply chain leaders need to invest in the technology that will transform (utilize advanced algorithms) the vast amounts of data available to us.

At the same time, business is rapidly changing as consumers demand products when and where they want them. They are also changing their behaviors in not just how they shop but where. According to Gartner, 65 percent of consumers review a retailer’s return policy before making a purchase. This expectation of a return is an action we have to plan for, we have to optimize based on algorithms that will help us understand demand, shape that demand and plan for returns to be placed back into retail channels. Willis spoke about the importance to sense change, but also the necessity to optimally respond and quickly act and communicate.

More than half of supply chain executives, according to Gartner, are increasing their investment in analytics. As the cost of collecting and storing data approaches zero, data ownership is no longer a differentiator, instead it is how the data is used that sets one company apart from the next.

Innovation, just as much as algorithms, is what will drive business moving forward. How do you use the technology available to you? How do you hire and retain the right talent to propel you to the next level? These are questions innovative companies ask themselves and keep asking. While algorithms underpin much of our world today, we are all judged on how we use the mathematical wizardry to drive innovation in how we serve our customers.