Supply chains are having a moment in the sun right now – and unfortunately, not an entirely positive one. Widespread shortages, labor issues, and overall supply chain disruption is keeping supply chain topics front and center in the news. And as the supply chain industry experts who joined us during Empower emphasized, the disruption is not going anywhere any time soon.
Here is what those experts said is coming next with reacting to supply chain current events – and how the continued embrace of technology in supply chain management is leading teams to react.
The “bullwhip” effect and continued disruption
Even with the pandemic abating, there are still sweeping supply and demand shocks, adding to the complexity of developing flexible supply chains. Experts even predict the possibility of the bullwhip effect, which describes how impacts of demand are considerably amplified at the top of the supply chain. With misreading demand a major reason for this, the struggles in procurement are becoming more prevalent.
“We are living now in the perfect storm of procurement. There is a very complex situation on many fronts. You need visibility to enable that reaction in the supply chain organization and free up time for your people. It is not humanly possible to do everything right now.”
-Raul Granados, Director at Schneider Electric
Many industry watchers also say volatility is likely to continue as pandemic-related issues shape the global economy and consumer buying habits. Other contributing factors, such as national policies, international politics, and trade wars, also continue to influence supply chain structures.
Still, it’s vital to note that the pandemic only accelerated things — some of the problems the industry is experiencing now were already there before COVID. For example, there was already a shortage of raw materials, such as copper and parts like semiconductors.
Ultimately, the pandemic forced supply chain teams to begin to finally react to these long-simmering changes. Our recent Supply Chain Resilience Survey found that 80% of supply chain executives plan to make moderate changes to their supply chains due to COVID-19, while 14% plan to make extreme changes.
Pivoting after disruption
“As a supply chain leader, you need to have an alternative. Resilience is having alternatives.”
-Martin Weis, partner at McKinsey & Company & supply chain expert
As other leaders on the panel shared, one of the best ways to have other options at the ready in the face of disruption is increased visibility.
“We are trying to be more granular in everything we’re doing. We want to know individual component pieces to be able to handle future problems,” said Giovanni Store, Vice President, Advanced Automation Executive at Daifuku Intralogistics America. Store added that this is a critical component to being agile and improving reaction time to change.
At Schneider Electric, increasing this reaction time and actualizing data comes from giving individual teams the tools to do their jobs most effectively.
“The best gift you can give to…teams is to send them home early. Quick reaction times come not from the big systems, but the tools given to procurement teams to complete their jobs fast,” noted Granados.
Enabling agility with technology
Bringing these tools to the right folks involves a strong technology stack for your supply chain needs. Martin Weis refers to this technology as a “control center,” giving you the ability to cross-functionally track critical data and increase visibility across your entire supply chain.
Aside from being this control center, “Technology can also provide you better insights into some of the shortages you see and the KPIs you want to track,“ Weis added. This can get at some of the granular visibility that Store mentioned earlier. And with an agility platform to go beyond the capabilities of a core system like an ERP, your data will be truly activated through your organization.
“The big systems are okay to manage big data or the organization of the data that’s being constructed from the supply chain operations. But these systems are not good to react to the dynamic situations that we are living in right now,” said Granados.
Weis added that leaders should invest in technology, such as artificial intelligence (AI) and machine learning to address their significant challenges and future-proof their supply chains. This should allow companies to free up human resources for processes that matter. Granados also shared his sentiments.
“Incorporating machine learning and AI will be key. We’ve now integrated big data with low-code platforms, and it’s working very well,” explained Granados.
As more organizations look to solve the issues they have struggled with due to disruption, those that can embrace technology are the ones who will be able to enable the necessary flexibility and agility throughout their organizations. Ultimately, that can make the difference between thriving in disruption and having your supply chain upended.
