Designing for Supply Chain Agility
Strategic design helps keep supply chains upright even as the earth shifts beneath them
By Andrea Waisgluss
Between a global pandemic, war, inflation, and climate catastrophes, the last few years have shown just how increasingly turbulent supply chains can be. As the environmental, regulatory, and geopolitical atmosphere continues to present challenges, designing for supply resilience has become a market differentiator for global firms. In this interview, Hong Xu, Chief Product Expert, and Jason Kirst, Lead User Experience Designer, discuss how SAP Category Management can help customers evolve their category strategies.
We talk about supply chain volatility. What factors have been affecting the way organizations approach procurement?
Hong Xu: There are multiple factors at play, which is what makes supply chain planning so challenging. There’s the war in Europe that has forced countries and organizations to rethink the source of their goods and services due to sanctions and blacklisting. There is also, especially since Covid-19, a growing trend towards deglobalization. And then there is supply chain dislocation. We’ve seen this in the automotive industry, where a shortage of computer chips has led to massive shutdowns for assembly lines. Moreover, we’ve had an inflationary environment in the US and Europe, which for the last one to two years has also forced category managers to take a second look at their supply strategies. In the past, they might have managed this by sourcing low-cost products from China, but with fallout from the Zero-COVID policies, this has also changed. All these factors are interrelated and have brought with them a growing realization by organizations that their supply chains are a strategic asset to be managed with as much care as the products and services they provide.
How is SAP designing for supply chain resilience?
Jason Kirst: First of all, it’s important to contextualize who our users are. When we talk about procurement professionals — in this case category managers — these are the people who frequently find themselves creating strategies and making decisions in situations which would make most people’s head spin. They’ve got stakeholders from all around the company making conflicting demands, combined with layers of constraints in the form or regulations, budgets, time, and headspace, and they need to make consequential decisions based on a mixture of industry experience, tribal knowledge, and a mountain of data coming from several sources both internal and external stored in multiple IT systems.
HX: And the wild thing we’ve seen is that most of this work — which is highly data-intensive — is still very much manual and disconnected. We’re talking about category managers having to aggregate data from several disparate systems and place them into spreadsheets and slide decks to be able to put a coherent strategy together.
JK: Absolutely. All of that leads to cognitive overload, which — while being a well understood phenomenon in human-computer interaction — can be very tricky to solve, to say the least. And this is a problem for users because when we talk about designing for resilience, procurement professionals need to think creatively and act decisively in the face of volatility. Overwhelmed users can do neither of these things. So, a lot of the work on the designer’s side is to empathize with and understand the mental model of the users so that the design can provide just the right amount of information at just the right time so they can make a good decision. And this remains true regardless of the source of that information — whether it’s from a classical system or from an intelligent system. The designers at SAP follow an iterative, multi-step process to make sure that we get this right. It’s called SAP Design Thinking and borrows extensively from the teachings of Stanford’s celebrated Hasso Plattner Institute of Design.
Speaking of intelligence, how will AI impact procurement?
HX: We want to empower users to make better decisions and be more responsive to market signals, and artificial intelligence can really support us here. It’s not about stripping away the users’ agency to make decisions, but rather about arming them with the relevant information on whether, for example, the strategy needs to be adapted or whether an emerging risk may need be to remediated. This means having a system proactively pre-populate content, prompt best practices, monitor and alert users to market changes, and finally make informed recommendations based on real-time data. As the intelligence around procurement continues to evolve, category management will also become more impactful and strategically important for organizations. Procurement professionals will see their roles transition from back-office operations into more strategic engagement and value creation, requiring new skillsets and capabilities — such as supplier market analysis, project management, risk management, and value engineering — to harness the power of supply markets for competitive advantage. But to really take advantage of this, companies have to digitalize their procurement strategies and integrate them with their digital procurement infrastructure. That’s essentially what we’ve done with our new SAP Category Management solution.
How will SAP Category Management enable businesses to navigate through supply chain uncertainty?
HX: What we’ve learned in the last three years is that we need to design for more resilient digital supply chain models to enable businesses to have more agility, flexibility, visibility, and control. According to 2022 a global survey of 430 C-level executives, user experience is rated as the top driver for digital transformation, followed by category management. Yet organizations continue to face challenges in enabling scalable category management, and there are a few reasons for that, many relating to UX. For many, it’s hard to get facts and in-depth insights together. And, as we mentioned before, many organizations are still dealing with manual, complex and inconsistent processes. With SAP Category Management, we want to automate and streamline data and insight , digitize category strategy development and planning, integrate with source-to pay processes, track benefits, and monitor performance. This will help scale the category management discipline to achieve better business outcomes.
JK: And all this is naturally supportive of a positive user experience. The more we can reduce the amount of time category managers have to sink into monitoring the market, aggregating data, and digging for insights, the more we can free them up to focus on core value-driving activities such as creating strategy and driving innovation. Our job as designers is not only to streamline insight delivery and consumability, but also to support the user in evaluating the quality of those data and insights so that they can move forward to the next, vital step of deciding on the correct course of action. Then, once that course of action has been identified, we help ensure that its execution is always contextualized within the greater strategy. This means, for example, giving the professional buyer enough background to perform the task in a way that’s faithful to the deeper intention of the team who produced the strategy. A common pain-point we’ve heard from customers is that after completing a strategy, it just sits on the proverbial shelf and gathers dust. One of the ways we want to mitigate that problem in SAP Category Management is by including relevant elements of a broader strategy right in the same UI in which the user executing the related tasks is working. To accomplish this, we are looking to use an SAP technology called UI Integration Cards, which is a great way to provide a window from one part of the system into another.
How do you see supply chains evolving in the next 5–10 years?
HX: I think we’ll continue to experience disruption in the long term. In this inflationary environment, the end of easy money, the war in Ukraine, and the tendency towards deglobalization and near-shoring, there are plenty of factors that will continue to bring instability to supply chains.
JK: We’ll see continued recognition of the procurement organization as a bona-fide strategic asset. I predict a greater emphasis will be placed on designing for agility and responsiveness to supply chain shocks and regulatory changes — and that AI will be a key enabler of this. Ease of use will become more widely recognized as a driver of compliance and adoption, and we’ll find users placing greater value than ever before in factors such as sustainability and supply chain ethics.
Hong Xu is Chief Product Expert for SAP Category Management. Jason Kirst is Lead User Experience Designer for SAP Category Management. The two partnered up early in the product development process to help ensure that SAP’s new addition would be user-friendly.
Disclaimer: The information in this article is not a commitment, promise, or legal obligation to deliver any material, code, or functionality or pursue any course of business outlined in this article. SAP has no obligation to pursue any course of business outlined in this article or to develop or release any functionality mentioned therein. This article and SAP’s strategy and possible future developments, solutions, platforms, directions, and functionality are all subject to change and may be changed by SAP at any time for any reason without notice. This article is for informational purposes only and may not be incorporated into a contract. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Readers are cautioned not to place undue reliance on these forward-looking statements, and they should not be relied upon in making purchasing decisions.
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