Building a supply chain fit for the modern era

From hold ups in hand sanitiser and toilet roll, to much needed medical equipment, the Covid-19 crisis has revealed the fragility of the modern supply chain. Never before has this been scrutisined to such an extent, with many companies struggling to adapt their methods on how they move things from A to B.

Moving forward, it’s crucial companies ensure their supply chain is fit for purpose and resilient against similar vulnerabilities that could arise in future. But how exactly can this be achieved?

 

Assessing the current situation

Companies must first assess the current state of their supply chain. Are they managing yesterday’s processes using legacy systems and technology, or have they already begun the digital transformation process? Moreover, what vulnerabilities have been exposed in their own methods and practices? From there, they can then progress to taking the necessary steps to address any deficiencies.

For many companies, one of the key initial steps is likely to be putting in place the KPI’s to ensure that the 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 percent of professionals see increased business intelligence as a key advantage of emerging technology in supply chain operations.

 

Visibility is key

During the global pandemic, one of the main issues many companies have faced is that they simply lack visibility. This doesn’t just mean 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 in order to work efficiently.

Insight and intelligence sits at the heart of the modern supply chain. Smart organisations – no matter their level of preparedness for the current crisis – see such visibility as the key to the resilient supply chain.

There are several reasons why companies have encountered this lack of visibility. Traditionally many supply chains 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 identify the exceptions, prioritise the mitigation strategies, and then implement the necessary changes.

 

Monitoring demand at a granular level

The supply chain needs to become agile, resilient and intelligent. While the C-suite may buy into the idea of such transformation, success will require visibility across multiple tiers of the supply chain, often at a degree of granularity that has been hitherto unknown. Going hand in hand with this transformation will be the implementation of new technologies, designed to automatically sense, react, predict and act upon changes detected within the supply chain.

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 itself as well as with trading partners. Leveraging this intelligence enables the necessary operational agility to quickly reprioritise inventory in order to meet shifting customer demand or adjust to external impacts.

This means that, in practice, companies will need 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.  This somewhat “inwardly focused” approach needs to be revisited.  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.

Going forward we can expect to see a significant ramp-up of this adoption, driven by the desire for supply chains to be more transparent, more demand-driven and more agile.  Similarly 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 rapidly detect, analyse, and respond to IoT signals, then incorporate those insights into rapidly evolving market capabilities.

Key to successful transformation is the balancing of speed with agility. Staring with a smaller scale, quick implementation can help form a testbed 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.

 

A supply chain fit for the modern era

The Covid-19 crisis has shone a spotlight on the importance and vulnerability of supply chains, and radical steps must be taken to make these processes truly fit for purpose in the modern era. Moving forward, businesses leaders must build agility and transparency into their supply chains as standard practice.

 

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