Global Disruption: How Supply Chain Leaders Can Adapt to the Latest ‘New Normal’
Wanting to check items off your to-do list is human nature. The feeling of accomplishment that comes from completing a task can be extremely satisfying. Where this approach causes problems is when we convince ourselves we don’t need to return to those items for a long while.
This is especially true for supply chain managers today. It can feel good to implement a new strategy or software solution or system or whatever it might be. But that doesn’t mean your work is done. The recent attacks on ships in the Red Sea have served as yet another reminder of that, in delivering an all-too-common shock to global trade, shipping, and distribution.
It is, of course, complicated. Iran-backed Houthi rebels in Yemen, seeking to stop Israel’s offensive against Hamas in Gaza, are attacking cargo ships navigating the waters connecting Asia with Europe and the United States, forcing traffic away from the Suez Canal and around the southern tip of Africa. This disruption is causing delays and driving up costs, all while the world continues to fight off inflation. At the same time, halfway around the world, passage through the Panama Canal is restricted due to low water levels caused by drought. Not to mention, Chinese factories will be closed in mid-February for the Lunar New Year holiday. Like I said, it’s complicated.
Despite all this complexity, the reality is straightforward: Supply chain simplicity is an oxymoron. Leaders and strategists must view the work of supply chain maintenance and optimization as never-ending and always evolving. It’s as vital as ever that they continue finding ways to reinvent and transform supply chain practices, processes, and strategies to be prepared for any unforeseen circumstances. The old world, as much as some people like to think otherwise, just isn’t coming back.
In this article, we’ll discuss some ways supply chain executives can plan and respond to disruption — in a day and age where the exception is, in fact, the rule.
20/20 Vision, Just-In-Time
Many supply chain managers today are playing a dangerous game. A monthly survey of them (courtesy of the Logistics Managers’ Index) found that inventory levels across organizations declined in December for the seventh time in eight months. This shows that — despite the never-ending turbulence — a “just-in-time” inventory management strategy is coming back into style in some places.
However, things aren’t always as simple as they seem. What looks like shortsightedness by some in this survey is actually — in some cases — smart thinking made possible by technological advances in supply chain strategy. Put another way, the visibility into leaders’ full supply chain picture is better than ever thanks to today’s software and solutions.
Best-in-class executives aren’t just reverting to a state of “back to normal” when it comes to supply chain strategy. They’re using technology to keep up with the new normal — in a way that enables them to quickly react to production trends, changes in demand, and global events. They can easily shift between “just in case” and “just in time,” because they truly know what’s happening.
More so, the tools built to enable this kind of targeted, real-time approach are advancing further. Forecasting and understanding of consumer sentiment is continuing to improve — meaning companies can more accurately predict demand every day. This equals better lead times, more effective executive review cycles, and more reactive inventory levels.
Putting the ‘R’ in Data
Not only is visibility improved in today’s supply chain, what decision makers are visualizing is better as well. In other words, getting it right is now possible through leveraging detailed, actionable data. Think of the breadth and depth of the kind of information that is available in real-time these days, including:
• Current demand needs
• Ongoing production schedules
• Shipment status updates
• Clear timelines for delivery
Live data also enables predictive — rather than reactive — insights to fuel the supply chain planning necessary for an enterprise to align its strategy with genuine demand for its products and services.
Data must also drive resiliency for a global enterprise. This means having relevant data that speaks to your business needs and decision-making priorities, responsible data that respects the privacy of sensitive information and avoids bias, and reliable data that justifies its own business value with the benefit it provides. This will help build a risk-resilient operation.
Natural Benefits of Artificial Intelligence
Another vital element of a modern supply chain strategy is, of course, artificial intelligence (AI). It’s still the talk of the town, and it’s widely accepted that it will aid managers and executives in making informed, confident decisions about the challenges they face every day.
But what will this actually mean? Outside of general data improvements, what benefits will AI offer to supply chain leaders? A few things jump out:
• Process Optimization: Enterprises will be able to use AI, for instance, to quickly analyze vast amounts of data from manufacturing processes — helping to identify patterns, bottlenecks, and workflows, and then working to optimize them. This can lead to not only reduced downtime but improved overall efficiency and productivity.
• Predictive Maintenance: AI will also enable real-time equipment monitoring, anomaly detection, and prediction of potential failures. By identifying maintenance issues and lifecycles in advance, AI can improve equipment lifespans and ensure smoother operations across company facilities.
• Quality Control: AI should even enhance quality control capabilities — by analyzing data from sensors, cameras, and other areas to properly identify defects and challenges as they arise. This will enable manufacturing teams to address issues promptly, meaning reduced waste and better overall product quality.
• Risk Assessment and Predictions: Algorithms designed to analyze historical data, current events, and security intelligence can also be created using AI to better assess risk in both the present and future.
• Real-Time Monitoring and Alerts: This is another way AI can keep decision-makers up to date on shipments so they can take immediate, decisive action that benefits their enterprise.
• Security Analytics: AI can analyze data from various sources, such as surveillance cameras, radar, and satellite, to help detect anomalies and potential security threats.
• Natural Language Processing: Chatbots and virtual assistants, powered by AI, can serve instant information to anyone in the chain, meaning quicker access to relevant information and faster, more informed decisions.
There are clearly myriad ways AI can help enhance productivity, efficiency, and decision making thanks to its ability to perform large-scale analysis in an accurate, automated fashion. Leaders must simply keep in mind that AI is best used as a tool that augments human decision making and wisdom — not one that intends to replace it.
Connect, Contextualize, Collaborate
When adopting, implementing, and optimizing AI for your organization, remember the importance of the ‘Three Cs’: Connecting, Contextualizing, and Collaborating. Everything you implement from a technology perspective must flow across your entire supply chain strategy. One-off forays into transformation or change won’t make a lasting impact. You also must keep things in context if you want to avoid making decisions that can come back to bite you. Something that makes sense on paper might not make sense in reality. Lastly, you must remember that successful supply chain operations are a team sport. Collaboration — across your business and your broader networks — is integral to success.
In the end, it’s all about consistent, dedicated effort — so that you’re built to succeed no matter what’s happening in the world that day. So, throw away that to-do list; it’s time for a strategic approach that’s a little more high-tech.
Darcy MacClaren is chief revenue officer at SAP Digital Supply Chain.
