Global supply chains need a major change
The coronavirus pandemic has exposed inbuilt flaws in the current system that will need immediate rectifying
Almost every element of the way businesses operate has been drastically altered since the start of the virus crisis. In particular, many companies have had to quickly alter how they move things from A to B, leading to more scrutiny on the supply chain than ever before.
This scrutiny has revealed the fragility of the modern supply chain, with many struggling to adapt their methods quickly enough. So how can companies ensure that their supply chain is fit for purpose whilst reducing the exposure to similar vulnerabilities in the future?
The first step companies will need to take is to assess the current state of their supply chain — are they managing processes using legacy systems and yesterday’s technology or have they already begun the digital transformation process? And what vulnerabilities have been exposed in their methods? From there, they can then go about taking the necessary steps to address any deficiencies.
One of the initial steps is likely to be putting in place the KPIs to ensure that relevant insight and business intelligence is available. This is a necessity in times of crisis — but also in times of normality. In fact, research suggests that 68 per cent of professionals see increased business intelligence as a key advantage of emerging technology in supply chain operations.
The pandemic has brought into sharp focus why insight and intelligence is so important when it comes to supply chain. One of the main issues is that they simply lack visibility — not just visibility in terms of where their products or items are, but visibility into the partners and stakeholders upon whom many supply chains are so dependent to work efficiently.
Smart organisations — no matter their level of preparedness for the current crisis — see visibility as the key to a resilient supply chain.
There are several reasons why companies have encountered this lack of visibility. Traditionally many supply chain have operated in silos, and business leaders haven’t necessarily focused on making their supply chains “intelligent” with the full view of the supply chain from end-to-end. This, in effect, has left many companies almost blind to the plethora of moving parts and involved parties inherent in the modern supply chain, making it incredibly hard for them to both identify exceptions and adapt to change.
Fit to purpose
The C-suite is now looking to transform their supply chain into one that is agile, resilient and intelligent. This kind of transformation will require visibility across multiple tiers of the supply chain, often at a degree of granularity hitherto unknown. Going hand in hand with this will be the implementation of new technologies.
For example, the ability to monitor demand at a very granular level across multiple tiers of the supply chain enables operational planning both within the company as well as with trading partners. Leveraging this intelligence enables the necessary operational agility to quickly prioritise inventory to meet shifting customer demand or adjust to external impacts.
In practice, this means that companies will be required to integrate technologies like IoT, big data, blockchain and automation into their supply chain. Many might have done so already, although typically this has been done on a limited basis and for specific tactical projects.
Retraced, for example, is a company that uses Oracle’s Blockchain technology to let fashion brands map their supply chain right down to the manufacturers of the raw materials. That’s a level of transparency that is well beyond what most traditional companies are capable of at the moment.
What we can expect to see going forwards is a significant ramp-up of this adoption, driven by the desire for supply chains to be more demand-driven and agile. We can expect the expansion of both AI and machine learning in the supply chain, leading to data-driven operations that will significantly improve production yield, product quality, lead times, equipment, and labour efficiencies.
Digital supply chains will enable businesses to detect, analyse, and respond to IoT signals, then incorporate those insights into rapidly evolving market capabilities.
Balancing speed and agility is key. Staring with a smaller scale, quick implementation can help form a test bed and highlight incremental gains back to the business, instilling greater visibility at every stage. Focusing on this rapid time to value within the business encourages other parts of the organisation to accelerate their digitisation journey.
With the focus now firmly back on the importance and vulnerability of supply chains, we can expect business leaders to take radical steps to make the processes fit for purpose, and to build agility and transparency into them as standard practice.