Imagine a world without supply chains

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Author: Levine Naidoo – IBM Sterling, Frictionless Business & Supply Chain Evangelist

It’s difficult to imagine what the world would look like without supply chains. They contribute to human survival, improve quality of life, create jobs and support commerce.

Despite their importance, most people only notice them when they become problematic. The COVID-19 pandemic has shone a spotlight on the “weak links” in the supply chain ecosystem. The reaction mode to continue operations has had significant cost implications, determined by resource availability, ultimately impacting profitability.

Consequently, business leaders are becoming acutely aware of how dependant their businesses are on supply chains and the need to build resilience in order to future proof these systems. This is where we see Artificial Intelligence (AI) becoming an invaluable asset.

If anyone hasn’t noticed, AI has made the transition from being a futuristic technology into one that we use in our daily lives – yet we call it emerging as it continues to rapidly evolve and transform. So how can we use it to build resilience?

AI’s role in building resilience:

1. Visibility is improved when AI is used to rapidly process and correlate large amounts of structured and unstructured data from disparate internal, external and in-flight sources. With the ability to present data in a meaningful manner.

2. Automatically reconciling, discovering patterns, detecting and predicting disruptions or anomalies helps to reduce response times.

3. The ability to provide contextual awareness and insights across business silos, recommend alternate or next best actions, and assist humans to make quick and informed decisions. In return, teams are able to manage exceptions and mitigate disruption.

Many leaders are eager to find out what the first step is, what the risks are, and how to drive change across the organisation with so much going on.

Key considerations when rethinking the way forward:

It’s vital to take an outside-in view and understand the impacts of change on our external ecosystem:

No business is an island and interoperability, through the adoption of standards, is important to reduce business friction with trading partners. It’s also essential to understand the maturity of the trading partner ecosystem – can they and will they make the change?

Adopting emerging technology needs a strong sponsorship of change:  Harvard Business Review (HBR) surveyed thousands of executives to understand why their organisation’s efforts in leveraging AI were falling short. According to the research, nearly 90% of companies with successful scaling practices spent more than half of their analytics budget on adoption activities. Leaders need to provide a strong vision that rallies teams around a common goal and allay fears that automation with AI does not replace people, but frees them for higher-value activities. To scale up AI organisations must involve staff through design thinking exercises to get the greatest buy-in.  They must also embrace the test-and-learn mentality and move from rigid and risk-averse to agile, experimental and adaptable methods – will allow the creation of minimum viable/value products in quick succession to sustain the change momentum.

The solution approach is equally important:

The majority of leaders are reluctant to go through a rip and replace existing systems with a completely new Enterprise Resource Planning capability (ERP). Broadly speaking there are two approaches to integrate disruptive technologies into everyday supply chain management processes.

1. Supply chain management processes or workflows can be redesigned by weaving in disruptive technologies through internal IT custom development and integration projects. Even executed as small iterations this usually comes with steep learning curves, higher risk and a lot of mistakes.
2. Alternatively, optimised and intelligent workflows can be deployed through adopting and configuring pre-assembled commercial off the shelf (COTS) cloud-ready services to minimize risks, costs and accelerate time to market – standing on the shoulders of others. Visibility is the best place to start building supply chain resilience. Leaders should consider leveraging pre-assembled COTS that complement, extend and enhance existing investments. It can break down silos in the internal supply chain and act as a radar across the external supply chain.

To learn more about how you can build a smarter and more resilient global supply chain, join us live at the Supply Chain Academy on 19 August 2020 16.00 AEST l 18.00 NZ.