Do You Know Where Your Papers Have Been? 3M Does.
Companies of all shapes and sizes throughout every industry are beginning to adopt Supply Chain Digitization practices. How has 3M, a 100-year-old industrial goods company embraced supply chain digitization and more importantly, how will the company continue to innovate with their suppliers using new technologies?
3M’s Global Supply Chain
Over the past 100+ years, 3M has amassed a massive global supply chain selling over 30 billion dollars with of products in 200 countries from plants and distribution centers in 50 different countries in 2016 [1] [2]. They have been widely recognized for their innovative and successful supply chain operations and are currently number 12 on Gartner’s Supply Chain Top 25 [3]. As a leader in supply chain management, 3M is committed to continually advancing their operations and pursuing best practices. In 2017, this means that they must fully embrace supply chain digitization. According to the 2016 Future of Supply Chain Survey, 67% of practitioners said that Digital Supply Chain Technology was disruptive and important for their company [4]. With such a high-volume global supply chain, 3M is at risk of being out-maneuvered by competitors if they do not keep up with new technological and digitization trends.
Conventional and Unconventional Uses of Digitization
Consistent with their position as a leader in supply chain management, 3M has already begun to explore and adopt digitization throughout their operations. According to Paul Keel, the Vice President of Supply Chain Management at 3M, digitization is important for his company because it provides trust between parties in the sense that, “A statistical track record that our suppliers will perform as they promise us they will, and 3M in turn will perform as we promise our customers that we will. This is data. Digitization.” [5]. They are currently pursuing opportunities that allow them to establish that trust, like creating a “geometric network” with one of their largest chemical suppliers, BASF, that enables the companies to see each other’s consumption and capacity [6]. In the next few years, 3M plans to take advantage of many of the more traditional prospects that supply chain digitization offers like directly connecting their ERP to that of their suppliers to allow the two systems to communicate instantaneously and without any human intervention [7].
However, 3M is also employing supply chain digitization in much more unconventional ways in order support their sustainability and corporate social responsibility efforts. They have already begun implementing the 3M Pulp and Paper Sourcing Initiative that ensures “virgin wood fiber going into [their] paper-based products and packaging comes from sources that protect forests and respect the rights of workers and people who live in or may depend on forests for their livelihood” [8]. For this initiative, 3M has partnered with their suppliers as well as various not-for-profits and cloud-based applications in order to trace back the source of their paper products all the way to the forest the trees originated from using barcodes on bark and hand-held RFID scanners [9].
Beyond just forestry sourcing and traceability, 3M is committed to further uses of digitization to reach their sustainability goals. According to their website, by 2025 they aim to “Drive supply chain Sustainability through targeted raw material traceability and supplier performance assurance. To continue to advance important environmental and social expectations of our suppliers, we’ll use a comprehensive risk-based approach to engage critical supply chains for collaboration and improvement” [10]. In addition, 3M is also looking to use enhanced supply chain technology and communication to ensure their suppliers are using conflict-free minerals [11].
Moving forward with Supply Chain Digitization and the Sustainable Supply Chain
I think that 3M should continue to invest in both traditional and non-traditional forms of supply chain digitization. As they move forward, I would recommend they explicitly address some of the risks and road-blocks to all types of digitization but in particular the sustainability efforts. It would appear that their suppliers are at least receptive to the idea of using new technology to enhance sustainability. According to their 2017 survey of suppliers that 3M administered to gain insight on urgent trends, opportunities and challenges facing suppliers, 69% of suppliers desire to create a more socially responsible supply chain [12]. However, I would like to see 3M model what the partnership with suppliers would look like to implement the new technologies and processes. I wonder if 69% of suppliers would be as keen to create a more socially responsible supply chain if they had to bear significant costs and/or risks associated with the undertaking. Additionally, as 3M publicizes their efforts around sustainability in the supply chain, they should be aware of the potential risks inherent in the fact that not all their raw materials are as sustainably sourced as lumber. I would be concerned that critics and environmental advocates will demand the same degree of responsibility in other areas of their supply chain and procurement. They should be prepared to defend their sourcing processes for all raw materials.
Questions for Further Consideration
Can we brainstorm other unconventional uses of Digitization that 3M or other companies could pursue?
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References
[1] “Who We Are – 3M US Company Information”. 2017. Solutions.3M.Com. http://solutions.3m.com/wps/portal/3M/en_US/3M-Company/Information/AboutUs/WhoWeAre/.
[2] DiPietro, Ben. 2017. “3M Sees Opportunity In Supply Chain Risk”. WSJ. https://blogs.wsj.com/riskandcompliance/2017/06/15/3m-sees-opportunity-in-supply-chain-risk/.
[3] “Supply Chain Top 25 | Gartner Inc.”. 2017. Gartner.Com. https://www.gartner.com/technology/supply-chain/top25.jsp.
[4] “Digitization in Supply Chain Five Key Trends”. 2017. Forbes.Com. https://www.forbes.com/sites/kevinomarah/2016/11/17/digitization-in-supply-chain-five-key-trends/#52375503428a.
[5] “Digitization and the 3M Supply Chain”. 2017. Forbes.Com. https://www.forbes.com/sites/stevebanker/2017/05/03/digitization-and-the-3m-supply-chain/#212fc50941c1.
[6] “Digitization and the 3M Supply Chain”. 2017. Forbes.Com. https://www.forbes.com/sites/stevebanker/2017/05/03/digitization-and-the-3m-supply-chain/#212fc50941c1.
[7] “Digitization and the 3M Supply Chain”. 2017. Forbes.Com. https://www.forbes.com/sites/stevebanker/2017/05/03/digitization-and-the-3m-supply-chain/#212fc50941c1.
[8] “Sustainable Forestry | Sustainability At 3M United States”. 2017. 3M.Com. https://www.3m.com/3M/en_US/sustainability-us/policies-reports/sustainable-forestry/?WT.mc_id=www.3m.com/sustainableforestry.
[9] “Digitization and the 3M Supply Chain”. 2017. Forbes.Com. https://www.forbes.com/sites/stevebanker/2017/05/03/digitization-and-the-3m-supply-chain/#212fc50941c1.
[10] “Goals & Progress | Sustainability At 3M United States”. 2017. 3M.Com. https://www.3m.com/3M/en_US/sustainability-us/goals-progress/.
[11] “Supplier Responsibility Expectations”. 2017. 3M.Com. https://www.3m.com/3M/en_US/suppliers-direct/supplier-requirements/supplier-responsibility-expectations/.
[12] “Supplier Survey Whitepaper”. 2017. Multimedia.3M.Com. http://multimedia.3m.com/mws/media/1397989O/supplier-survey-whitepaper.pdf
Nicki – Really appreciated your post bc you highlight an unconventional application of digitization/ RFID’s to a much more traditional industry like lumber/ paper packaging.
To your point – wonder if digitization could improve productivity (as well as sustainability, as you point out). For example, 3M could use data on forests, to enhance yield/ productivity. By placing sensors/ RFIDs on forests, 3M could potentially get real-time data on the trees’ surrounding environment like temperature & precipitation, in addition to location. With sufficient trees and variability across trees’ growing conditions, they could use this data to further inform where to invest future tree-farms, to maximize yield.
Thank you for the wonderful article, Nicki – I found this informative and interesting. Your introduction caught my attention due to its mention of 3M’s scale, which I wasn’t aware of. As a leader in supply chain management, I’m not surprised to hear that 3M is leading the movement for digitization of supply chains, but I wonder if their scale serves as a barrier to innovation, as well as a benefit to creating change.
You wrote about the economies of scale that 3M is able to employ when digitizing their supply chain, for example, the data that they collect can be leveraged to identify areas of opportunity. However, I wonder if scale also disincentives them from pursuing the disruptive change that you point out might be necessary to remain relevant. Presumably, changing aspects of their supply chain is capital intensive, and the risks of systems failing are severe. I wonder how 3M can continue to digitize their operations without sacrificing performance: one idea would be to use data to simulate the impact of future changes, much like the simulator we saw in the team New Zealand case. I’m very interested to see how 3M continues to champion digitization of their supply chain going forward, and hope to hear about their innovation in the news soon.
Since 3M is a solutions provider as well, I’d love to see them turn their supply chain innovations into new offerings to sell. 3M is fortunate to have the scale that it does (which can fund this type of development) and can become a market leader in pushing this type of supply chain tracking to other industries. Then 3M can earn a multiple benefit off of its investments in technology while promoting its mission to improve supply chain sustainability by encouraging the industry to adopt their systems (even if they aren’t perfect yet).
Hi Nicki!
Loved your article. It’s really interesting to see how companies are viewing digitalization as a lever they can pull to drive greater customer loyalty through transparency efforts. The part of your article that referenced 3M putting barcodes on the bark of trees in order the track the sustainability of their products and provide transparency to customers reminded me of the TOM in your world article I mentioned in class the other day regarding the fashion industry and their installation of QR codes on clothing. I find it interesting that across multiple industries sustainability is going to be a key differentiator in not only securing the long term success of an organization from a production standpoint – but also in terms of building deeper customer relationships. I am excited to see what new technological advancements are made in the coming years to better support transparency and sustainability within the supply chain.
Here is a link to the article I shared in class about how QR codes are being used in the production process of clothing to track the blockchain process: http://techwireasia.com/2017/11/blockchain-enable-transparency-fashion-supply-chain/
Very interesting to see the use of bar coding trees for supply-chain tracing of forestry products! Outside of sustainability initiatives, I wonder if forestry companies could use this to run more granular data analytics on their forests, harvesting and demand for their product. Perhaps more data on the individual trees that comprise their forests could provide more accurate valuation of their assets.