The document discusses strategies for supply chain segmentation and modal IT. It suggests that one size does not fit all, and organizations need to balance stable/predictable priorities with explorative/innovative approaches across value chains. It analyzes different areas of the supply chain in terms of their suitability for mode 1 (stable, standardized) vs mode 2 (exploratory, innovative) IT approaches. Key areas highlighted as fitting mode 2 include planning, sourcing, delivery, customer chain, and harvesting data through analytics. The document emphasizes that segmentation and modal IT strategies require architecture and governance to avoid fragmentation.

1. Modal IT for supply chain
segmentation
ECSCIA, European Centre of Supply Chain Information
Architecture
Supply chain priorities
Stable & predictable ? Explorative & innovative?

2. ECSCIA, European Centre of Supply Chain Information
Architecture
Supply chain
objectives

3. Right product
portfolio
Inventory
reduction
Lead-time
reduction
Quality
improvement
ReachFind
Attract
Cost
optimization
Product Customer
Maintain
Right
technology
Right design
Right speed
Reuse Compliance
Services
Harvest Relate
Supply
ECSCIA, European Centre of Supply Chain Information
Architecture

4. Product Customer
Taking an APICS/SCC perspective
ServicesSupply
DCOR
SCOR
CCOR
PLCOR
ECSCIA, European Centre of Supply Chain Information
Architecture

5. ECSCIA, European Centre of Supply Chain Information
Architecture
Supply chain
segmentation

6. How we innovate
How we develop
How we source
How we make
How we plan
How we deliver
How we research
How we sell
How we contractValue chain 1
Value chain 2
How we harvest
How we integrate
How we relate
How we innovate
How we develop
How we source
How we make
How we plan
How we deliver
How we research
How we sell
How we contract How we harvest
How we integrate
How we relate
ECSCIA, European Centre of Supply Chain Information
Architecture

7. ECSCIA, European Centre of Supply Chain Information
Architecture
one size doesn´t fit all
In a world full of “different sizes”, it´s worth some
effort to consider how
strategies for supply chain
segmentation coexist with
strategies for modal IT

8. How we innovate
How we develop
How we source
How we make
How we plan
How we deliver
How we research
How we sell
How we contractValue chain How we harvest
How we integrate
How we relate
Priorities
Stable & predictable ? Explorative & innovative?
ECSCIA, European Centre of Supply Chain Information
Architecture

9. Priorities
Stable & predictable ? Explorative & innovative?
Balance in approach to modal IT changes over time ,
within value chains and between value chains
When?
Where?
ECSCIA, European Centre of Supply Chain Information
Architecture

10. ECSCIA, European Centre of Supply Chain Information
Architecture
Supply chain segmentation + modal IT
without architecture & governance equals
fragmentation. A broken chain, a
“Value archipelago”
Success, both in supply chain segmentation and in modal IT that supports it
requires an enterprise foundation & orchestration.
Some call it “strategy”, some “culture”, some “team spirit”.
(Architects knows it´s voodoo )

11. ECSCIA, European Centre of Supply Chain Information
Architecture
EA?

12. ECSCIA, European Centre of Supply Chain Information
Architecture
• What core IT landscape principles does the value chain strategy require?
• Within that landscape, where does supply chain segmentation motivate deviations
from those core principles?
• Where is mode 1 an absolute requirement?
• Where can mode 2 be managed?
• Where does mode 2 help enhance the roadmap?
• Where does mode 2 threaten the roadmap?
• Through what governance does EA align landscape roadmap with LOB
value chain and segmentation strategy?

13. ECSCIA, European Centre of Supply Chain Information
Architecture
Grey IT

14. ECSCIA, European Centre of Supply Chain Information
Architecture
Some like to label “grey IT” as mode 2.
“Grey IT” as in :
“Let´s just try something… anything… on our own..
fast… and figure out the rest along the way”. “
CIT doesn´t understand the business anyway…”

15. Then on the other hand…It´s been polarized.
Historically, any hint of IT listening to LOB has been
referred to as mode 2.
ECSCIA, European Centre of Supply Chain Information
Architecture

16. ECSCIA, European Centre of Supply Chain Information
Architecture
Can´t blame them….. Digital brings spherical organizations that are driven by processes
and automation. That change spells career death to middle management in supply chain.
The traditional management role of the command hierarchy adds little value when
process guides employees and automation executes.
….Running a grey IT project posing as mode 2 might be their last career opportunity….

17. ECSCIA, European Centre of Supply Chain Information
Architecture
Think like them

18. ECSCIA, European Centre of Supply Chain Information
Architecture
Supply chain professionals tend to like LEAN and LSS,
so lets look at modal IT using some LEAN concepts

19. ECSCIA, European Centre of Supply Chain Information
Architecture
LEAN Meaning Mode 1 Mode 2 Grey IT
Visual mgmt. See together, know
together, act together
Not a major factor.
Business expects
service to be there
Major factor, Mode 2
requires interaction
and sharing
Doesn´t exist. Grey It
protects the silo
5 WHY Challenge and seek
understanding
Continuous, low key
part of the regular
governance process
Key to motivate and
position the mode 2
effort
Often missing. Often
summarized as “IT
doesn´t understand
the business”, we run..
5S Sort, Set in order,
Shine, standardize,
sustain
Focus on maintaining
the state/continuous
improvement
Somewhat disruptive.
Important to know
how the mode 2 effort
fits into standardize
and sustain
At best well aligned, at
worst in conflict.
Jidoka Push upstream, push
to source
Well… applied but still
learning
Rarely, mode 2 tends
to exist in isolation
Catastrophe
Poka Yoke Proactively avoid
errors
Of course Taking chances Wild and crazy..
Plan Do Check Act Iterative continuous
improvements
Yes, to protect stability Yes to stay on track
while exploring
Yes, but grey It tends
to lack self awareness

20. ECSCIA, European Centre of Supply Chain Information
Architecture
LSS is great but don´t fall in the LSS IT trap.
Desire for LSS belt certification often involve IT activities
That line of business argue are “mode 2” but
tend to carry all the flaws of “grey IT”, leaving both
IT and business with building blocks that do not fit
into the dynamics of supply chain segmentation

21. ECSCIA, European Centre of Supply Chain Information
Architecture
A few observations on segments and modal IT

22. Plan
…..has been and will remain an supply chain
area where mode 2 is highly adopted.
Mode 2 fits well in the plan area as this is
where new technologies can easily be
deployed in small scale for specific segments
and then, if fruitful, gradually grow into rigid
Mode 1. We saw it in early days of S&OP, in
SC collaboration and now in optimization, big
data & predictive/prescriptive. Small IT teams
working close to business line to explore new
potential in ability to process large sets of
data through advanced algorithms
ECSCIA, European Centre of Supply Chain Information
Architecture

23. Plan
ECSCIA, European Centre of Supply Chain Information
Architecture
S&OP Used to be Mode 2, now
Mode 1
MPS
MRP Mode 1
PP/DS
DRP Mode 2
Forecast Mode 2
SNO
Mode 2

24. SOURCE
Strategic sourcing is an area where mode 2 IT
efforts have had a role to play. “Source”
should be close to “plan” but as sourcing
communities have a tendency to operate on
their own rather than act subordinate to
planning, the opportunity to establish mode 1
relations between planning and source is
often replaced by separated mode 2 efforts in
both groups.
Both strategic and operational sourcing
encompasses a lot of supplier collaboration,
areas where mode 2 efforts have historically
ruled but mode 1 is destined to prevail
ECSCIA, European Centre of Supply Chain Information
Architecture

25. SOURCE
Tender, contract management, spend analytics
and supplier performance management adopted
SaaS early.
This adoption was often done under the illusion
of mode 2, while in reality it is often more of
“grey IT”. Although seemingly a good fit for SaaS
at first glance, these areas are tightly connected
to planning, product development and
manufacturing. They need the stability of mode 1
to manage integration. Lack of this insight often
results in statements like : “We got it in place, its
not really being used… you know we still need to
work on “master data”…”
ECSCIA, European Centre of Supply Chain Information
Architecture

26. ECSCIA, European Centre of Supply Chain Information
Architecture
SOURCE
Tender Contract Analyze
Grey IT/ Mode 2
Moving towards mode 1
Mode 1 although a
lot of SaaS that some
would label as mode 2
A lot about BI & analytics
Should be mode 1, a
“information factory” but often
approached as if it was mode 2

27. MAKE
Manufacturing benefits from stability but
faces constant change driving innovation and
exploration. New technologies need to be
adapted into legacy production systems,
often requiring IT development close to the
operational business flow. Is that mode 2?
Model factories, standardized equipment and
structured governance are ideal states where
mode 1 has a natural fit. In reality factories
often “make do” and get by through
compromise. It takes a lot of grey IT.
ECSCIA, European Centre of Supply Chain Information
Architecture

28. DELIVER
Outbound logistics is a volcano about to go
off….Traditionally, with the exception of some
planning / optimization, some telematics &
RFID, logistics has been mode 1 territory.
Booking and executing transport has not
invited to much mode 2 exploration. Although
technology & IT intense, complex & expensive
warehouse systems are mode 1 territory
Given what is happening in terms of IOT,
connectivity, autonomous vehicles (AI) and
smart networks this is bound to change.
Outbound logistics will be mode 2 territory.
ECSCIA, European Centre of Supply Chain Information
Architecture

29. DCOR
ECSCIA, European Centre of Supply Chain Information
Architecture
Research and design are activities that are expected
to be exploratory and increasingly faster.
The IT portfolio supporting them needs to follow but
due to the complex nature and need for structure, IT
support is a matter of being fast and available within
mode 1 rather than practicing mode 2.
Although…. Disruptive change sometimes calls
For assembly of mode 2 teams. Competitive moves
or corrective actions in the amend flow can force
DCOR to move from stable and predictable to
explorative. At it´s worst, this is a “fire fighting
practice”. At it´s best it´s a structured routine.

30. ECSCIA, European Centre of Supply Chain Information
Architecture
DCOR
Transition
Disruption
Crisis
Mode 1
Research
Design
Research
Design Mode 2
Stable
Continuous
Adjacent

31. CCOR
ECSCIA, European Centre of Supply Chain Information
Architecture
The customer chain has transitioned from hardly any
IT support at all to advanced sales management. It is
an area full of mode 2 initiatives.
However, digital channels require flawless and fast
execution from the supply chain backend. Mode 2
exploration needs to be backed up by a rock solid
mode 1 backend.

32. ECSCIA, European Centre of Supply Chain Information
Architecture
“Harvest”
“Harvest”, cashing in on accelerated data availability
driven by digitalization, IOT and big data analytics
is obvious mode 2 territory
There is no one to follow, no fundament to apply
mode 1 on.

33. Recap, core supply chain perspectives
ECSCIA, European Centre of Supply Chain Information
Architecture
Stating the obvious… Consider value chain and supply chain segment objectives when determining modal
strategy
Looking for low hanging fruit right now? Lok in segments supporting PLAN & DELIVER. This is where buzzwords
are transforming to rubber on the road right now. It takes mode 2 to cash in
Want to free up resources? Question why SOURCE invest in mode 2 when there is so much to gain from Mode 1.
Grey IT blocking the way to joint mode 2? Work on culture. Supply chain people tend to be 20 years behind on
cultural relation with CIT. That gap is really not helping when building competitive value chains….
Of course, explore “HARVEST” but the fruit is hanging a bit higher, it takes hard work and some failures…