Tag Archives: disruption

Transforming Supply Chain Management with Intelligent Software

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Robotic Process Automation (RPA) technology to automate business tasks with AI. Concept with expert setting up automated software on laptop computer. Digital transformation and change management.

Supply chain project management has evolved, shifting from a focus on efficiency to navigating a complex landscape influenced by globalization, technology, and changing consumer preferences. The vulnerabilities exposed during events like the COVID-19 pandemic underscore the need for adaptability. The pandemic posed challenges, disrupting production, leading to closures, and causing delays and increased costs in global transportation.

Additionally, unpredictable shifts in consumer behavior created demand fluctuations, impacting industries differently. Inventory management became more challenging, resulting in shortages or excess inventory. Supplier reliability and labor shortages further strained production capacity.

The crisis highlighted the necessity for digital transformation, remote work, and technology adoption in supply chain management. Regulatory changes and economic downturns added complexity to cross-border supply chains. Financial strain emphasized the importance of robust risk management, leading to a renewed focus on building resilient and agile supply chains. Businesses now invest in technology, diversify suppliers, and reassess inventory strategies.

Intelligent software enhances decision-making and risk management, facilitating collaboration throughout the supply chain. For instance, during sudden demand changes due to lockdowns, the software swiftly analyzes data, enabling real-time adjustments to inventory, production, and distribution. This adaptability ensures a responsive and agile supply chain, surpassing traditional approaches for efficiency and customer satisfaction.

The promise of intelligent software

In the current technological realm, intelligent software signifies more than just automation; it melds advanced algorithms, artificial intelligence, and machine learning to emulate human cognitive abilities. Unlike its conventional counterparts, this software learns, adapts, and autonomously recommends actions, excelling in data analysis and trend prediction. Its continuous adaptation based on feedback refines its performance over time.

How intelligent software could make a difference in specific situations

1. Demand volatility amidst global events.

The COVID-19 pandemic triggered significant demand shifts, straining supply chains. Intelligent software, with real-time analytics, could have monitored consumer behaviors, identified disruptions, and gauged inventory levels. Such insights would have refined demand forecasts, allowing organizations to adjust production and prioritize shipments, mitigating stockout risks and excess inventory costs.

2. Supply chain disruptions due to geopolitical tensions.

Geopolitical uncertainties can disrupt supply chains. Intelligent software could pre-emptively identify vulnerabilities, highlighting dependencies on specific regions or suppliers. Through simulations and alternative sourcing evaluations, it would have enabled organizations to devise resilient strategies, ensuring uninterrupted operations amid external disruptions.

3. Quality control and recall management.

Product recalls pose financial and reputational risks. Intelligent software, with advanced analytics, monitors production for deviations from quality standards. Using predictive analytics, it could anticipate issues, facilitating timely interventions, minimizing recall extents, and preserving brand reputation.

4. Transportation and logistics optimization.

Efficient transportation is crucial for supply chain success. Intelligent software, leveraging predictive analytics, would analyze factors like traffic and weather to optimize transportation strategies. This would reduce delays, enhance resource use, and boost supply chain effectiveness.

5. Inventory management in seasonal industries.

Seasonal industries face inventory challenges due to fluctuating demand and product perishability. Intelligent software, utilizing machine learning, analyzes sales trends and market dynamics to offer precise demand forecasts and inventory recommendations. This ensures optimal inventory levels, reduces holding costs, and capitalizes on market opportunities.

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Why decision intelligence is essential for overcoming supply chain constraints

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The current supply chain disruption is one of the many types of crises the marketplace has faced over the years. Even before COVID-induced challenges had cargo ships anchored off of ports across the globe and store shelves barely stocked, supply chain leaders have been in a race to keep up with changing consumer demands, a shifting competitive landscape, and technological advances.

Yet, as the development, reach and success of businesses has become highly dependent on tightly linked supply chains, the structure of those connections has become increasingly fragile and intricately connected.

Over the last two years, an unprecedented supply chain crisis has unfolded. With networks spanning multiple continents, global supply chains have broken down. From COVID-19 and the war in Ukraine to a sideways freighter that blocked the Suez Canal for a week and a growing list of environmental disasters, the upheaval has created a new benchmark for business-as-usual. A survey from the UK Office for National Statistics showed that 40% of businesses in the wholesale and retail trade industry reported global supply chain disruptions at the end of the first quarter this year.

This disruption is closely tied to a failure of foresight and planning built into supply chain systems.

Asking the right questions

Many companies tackling supply chain disruption see themselves as “data-driven,” when in fact, most are not. A Gartner report shows that less than half of organizations have actively started to build a roadmap for supply chain digitization transformation, despite it being a key priority for most leaders. Another survey showed only two-thirds of supply chain organizations felt the strategy and execution of their supply chains were well aligned.

Business intelligence (BI) and analysis tools were the promised future, where business users could easily access and transform huge volumes of corporate-wide data to predict business outcomes and future demand. However, the reality is that traditional BI solutions and ERP systems are static and can only provide a snapshot of the present or past.

Decision intelligence rests on prescriptive analytics

Such foresight comes from adding a prescriptive analytics layer to a firm’s supply chain management. This layer answers the question “what should happen” and becomes the basis for generating decisions, not just insights. This approach elevates the level of analytic inquiry, using machine learning and optimization models to propose a course of action based on data, analytics and business models.

Ultimately, this can dramatically transform how companies manage the flow of goods throughout their supply chains because it resolves the question how to proceed to achieve the targeted outcome.

Decision intelligence and the future of the supply chain

Taking a new approach to supply chains relies on a new vision for data in an organization. Data is the engine of growth and the source of intelligence that will allow businesses to get a grip on their supply chains.

This means drawing on data from a wider variety of sources than ever before. Businesses need more actionable, real-time data from across their supply chains. They need to quickly and securely access multiple data sources across on-premises data centers and multiple clouds. To plan for future shocks, businesses need to learn from this historic moment and feed this information into predictive and prescriptive analytics modeling.

A new tomorrow

Supply chain management solutions based on decision intelligence and real-time prescriptive analytics models are potent instruments in the fight against the supply chain crisis. Such systems can improve overall processes throughout the enterprise and build resilience into demand forecasts. They can reduce costs associated with overstocking, inventory stockouts, and product obsolescence — even in the face of widespread crises.

Read more at Why decision intelligence is essential for overcoming supply chain constraints 

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How To Avoid a Third-Party Break in Your Supply Chain

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Your business is only as secure as the weakest link in your supply chain. A single lapse by a third-party can lead to an operational disruption, cyberattack, or compliance violation. How can you be certain that your vendors and partners are keeping up with the latest regulatory mandates, industry best practices, cybersecurity measures, and your own corporate standards?

Vendor Risk Management Should Be a Top Priority

In these days of high-profile data breaches and intensifying regulatory requirements, supply chain risk management has become a critical priority for every organization. Such programs typically encompass policies, standards, governance, and risk assessment. Vendor risk management falls under the last of these—and it’s the cornerstone of effective supply chain risk management.

Develop a Vendor Risk Policy with Teeth

Nothing gets the attention of a vendor like a withheld payment. To set the expectation that risk policy compliance is a requirement, not an option, let vendors know that no money will be released until the right boxes have been checked.

Document and Track

A supply chain risk register is essential to keep track of your vendors and their risk. Your database should provide a single source of information on which vendors have been approved and when, as well as their current risk assessment rating.

Stay Engaged During Procurement

Don’t wait until the final review of a master services agreement (MSA) to get involved. Build a strong collaborative relationship with the procurement team so you can be notified promptly when a business function submits a procurement request, and stay engaged during vendor sourcing. By getting in front of the process, you can avoid being labeled as a roadblock or deal-breaker.

Maintain, Scale, and Repeat Your Program

Running an effective vendor risk management program and managing supply chain risk in general is all about scaling and repeating. To uphold your policy and standards, be diligent and strict about annual security assessment and verification, and perform site inspections as needed depending on the severity of risks posed by a given vendor.

‘Trust But Verify’

From the earliest stages of the procurement process through onboarding, service provision, and offboarding, expectation-setting and verification should be woven through each vendor relationship. Even the most secure organizations can encounter challenges, and the best-run programs can break down—assume nothing, check everything.

Read more at How To Avoid a Third-Party Break in Your Supply Chain

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Supply Chain Network Optimization Technology is Ripe for Disruption

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Something struck me after spending a few days in Phoenix at Gartner’s Supply Chain Executive Conference.

Supply Chain Network Optimization is key to running an efficient and profitable operation today.

But while the market has changed, network optimization hasn’t actually advanced much since the 1990s. Yes, there are lots more features and a big increase in computing power. Yet, network optimization is still just a richer version of the 90’s experience.

Analyzing the Software Market

Network optimization software has become a big business that’s experienced exponential growth. There has been a strong adoption of boxed solutions that are feature rich with many bells and whistles.

What I heard at the Gartner conference is growing frustration with these large packages that have become cumbersome to use, too difficult for the average supply chain expert, lack flexibility and have high price tags. Sound familiar?

So what is the alternative? First, we need to go back to the original purpose. Supply Chain teams shouldn’t be overly focused on technology. Instead, they should have their eyes set on the desired outcome.

Supply Chain teams want a supply chain network that runs in an optimized fashion, with signals that indicate when and where to invest in future infrastructure. The network optimization tool should just be a means to an end.

So why hasn’t it become easier and cheaper to have an optimized network? Why are companies investing more and more in this focused discipline?

Read more at Supply Chain Network Optimization Technology is Ripe for Disruption

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6 in 10 businesses experienced at least one supply chain disruption in Asia Pacific in 2016

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One in four businesses exceed ‎US$1 million in losses, but almost half of survey respondents in Asia Pacific did not insure their losses.

Zurich Insurance has revealed the key Asia Pacific findings of the Business Continuity Institute (BCI) “Supply Chain Resilience Report 2016”. Despite six out of ten organisations experiencing at least one supply chain disruption during the past year, with one in four exceeding ‎US$1 million in losses, the report found that almost half of survey respondents in Asia Pacific did not insure their losses.

Partnering with BCI for the eighth year, the annual report is regarded as one of the most authoritative benchmark reports in this business area. The key findings for Asia Pacific (APAC) this year are:

  1. IT/Telecom outages was named as the number one cause of supply chain disruption
  2. One in four organisations experienced cumulative losses of over ‎US$1 million
  3. 46% of organisations do not insure their losses, meaning they bore the full brunt of the cost
  4. Only 30% of disruptions occur with an immediate supplier
  5. 48% responded that top management have made commitments to supply chain resilience

Read more 6 in 10 businesses experienced at least one supply chain disruption in Asia Pacific in 2016

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Why Supply Chain Risk Management is Key to Supplier Management

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While brand damage can be quite costly to the businesses whose sales rely strongly on the customer loyalty they generate from their brand strength, cost volatility and supply disruption is very costly to all manufacturers. In fact, in the latest 2015 study by the Business Continuity Institute, supply chain disruption is double in priority relative to other enterprise disruptions and over three-fourths of respondents cited that they had at least one recent (significant) disruption. The same percentage didn’t have full visibility of their supply chains.

While category management can address and even reduce supply chain risk by ensuring a chosen strategy has the right level of resiliency, prevention and agility, it cannot prevent risk or do much to eliminate the source of risk once something has happened. That can only be done by each party in the supply chain doing everything they can to eliminate the risk. In particular, a supplier needs to do all they can to minimize the risk on their end.

However, not all suppliers are as advanced in supply chain management, and in particular, risk management as the buying organization. That’s why good supplier management combined with SCRM is key. Good risk management is a combination of risk prevention and risk mitigation when a risk is detected. Risk prevention involves selecting suppliers, products and services that are low risk and risk mitigation involves taking action as soon as an indicator is detected.

A supplier is not always good at mitigating or even detecting risk in its supply chain, or may overlook an obvious sign that an observant buyer would not, which is why proper supplier management is key. This begins even when qualifying suppliers. Including risk criteria related to the supplier and supplier location gives a good indication of a supplier’s the risk level. Besides the supplier qualification criteria, supply location-related risks provide an overview on potential threats like natural disasters, political situation, sanctions or economic risk. This gives buyers the chance to take preventive actions.

Read more at Why Supply Chain Risk Management is Key to Supplier Management

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5 Critical Supply Risk Mitigation Principles for Your Sourcing Process

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Supply chain risk management (SCRM) is becoming a top priority in procurement, as organizations lose millions because of cost volatility, supply disruption, non-compliance fines and incidents that cause damage to the organizational brand and reputation.
Bribes to shady government officials, salmonella in the spinach and forced labor in the supply chain can all result in brand-damaging headlines that can cost an organization tens of millions in sales and hundred of millions in brand damage. And while reputation may only be important for name brands, cost volatility and supply disruption affect all manufacturers.

In fact, in the latest 2015 study by the Business Continuity Institute, supply chain disruption doubled in priority relative to other enterprise disruptions (48% of firms are concerned or extremely concerned). Roughly three-quarters of respondents said they had at least one disruption, and the same amount lack full visibility of their supply chains.

In the same study, 14% had losses from supply chain disruptions (e.g., natural hazards, labor strikes, fires, etc.) that cost over €1 million, and these disruptions can easily go up to nine figures. For example, Toyota estimates the costs for the recent Kumamoto earthquakes to be nearly $300 million. Imagine being out of stock on a product line that does $12 million in annual sales for two months. That’s $2 million in immediate lost sales and longer-term brand damage.

Risk management, and what is necessary for ongoing risk management, never gets operationalized, and as new suppliers get added, supply shifts and supply chains change, new risk enters the picture — risks that go undetected unless risk management is embedded in all key procurement activities, including sourcing. It is important to remember that:

1. When You are Sourcing, You are Really Changing Your Supply Chain Network

2. Supplier Risk is Only One Aspect of Supply Chain Risk

3. Your Sourcing Criteria Must Be ‘Protected’ and Risk Must Be Factored In

4. You Need to Cost the Risk” and Also Get It in the Contract

5. You Must Design a Monitoring System That is Part of Onboarding

Read more at 5 Critical Supply Risk Mitigation Principles for Your Sourcing Process

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How to recover from supply chain disruptions

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Risk mitigation is a crucial component of supply chain management. Preparing for potential disruptions is one of the most important yet challenging tasks faced by company managers, especially since there is an abundance of possible situations threatening operations at all times.

Unfortunately, damage control planning is something many companies tend to neglect. Last year, a study conducted by the supply chain management team at the University of Tennessee found that only about 50 percent of businesses have a recovery process in place to reference in the event a facility’s operations are interrupted.

Importance of response planning
Companies of all sizes are susceptible to dangerous disruptions, with global supply chains being the most vulnerable. Which is why it is surprising that the report also discovered nearly all, or 90 percent, of surveyed organizations do not take potential risks into consideration when outsourcing.

It’s understandable that managers are generally more focused on improving day-to-day operations, such as customer service, identifying cost-savings opportunities and driving revenue. However, disruptions along the supply chain have the power to severely impact financial growth and overall performance.

Between natural disasters, security breaches, safety and regulatory compliance and system failures, it is virtually impossible to anticipate what will be affected and when attacks may occur. But the best approach for supply chain teams to take is implementing strategic risk management practices that will help minimize monetary losses associated with disasters.

Read more at How to recover from supply chain disruptions

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2015 New Year’s Resolutions for the Supply Chain Industry

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2015 New Year’s Resolutions for the Supply Chain Industry

Resolution #1 – Stop using the term VISIBILITY

People say that information is power. I beg to differ. I say, an informed decision is power. The visibility term has been over used. I’ve even heard some say that getting visibility to your supply chain is 80% of the challenge. They must not have run a supply chain. I see many supply chain leaders that have visibility, some in excel and some in automated tools. The ones that don’t have visibility can easily call the supplier and get it. Getting visibility isn’t the challenge. The real 80% challenge is “what are you doing with the visibility?”

Resolution #2 – Read only ONE “Cool Theme” report

In 2015, I resolve to read only one Cool Theme report. I’m tired of research analysts peddling these themes as a means to gain an edge on readership. Yet, I watch the audience during some of these Cool Theme presentations. And, half the people are on their smartphone working core issues back home, while the Analyst is talking about how supply chains should save the Panamanian golden frog, reduce the ozone layer, produce products with plastic wire from 3D printers and generate forecasts from Facebook posts!

Resolution #3 – Stop moaning about Bad Data

Let’s face it, everyone has some form of bad data. And, when you include all your tiered suppliers, they have bad data. The one constant is that you will never fix all the internal and external bad data. Yet, I still hear supply chain leaders say they need to focus first on fixing the data. I’ve seen many presentations from “Top 25” supply chains and how they’ve cleaned data, and why they should be considered a top tier supply chain story.

Resolution #4 – Fix the Disruption you can influence, not the Disruption you are concerned with

There are two types of disruptions. That which you are concerned with, and that which you can influence.

Volatility, regulation, geopolitics, economics, energy, and the list goes on. These are in your Circle of Concern. They happen, and you should be concerned. Yet, many supply chain leaders face fail to focus on the Circle of Influence, the area where you can make a difference.

Resolution #5 – Scrap the Talent Research, Make Planners more Productive

After reading all the Talent Research done in 2014, the topics of attrition, retiring professionals, and university-business alignment, I notice a big gap. The one thing missing in all this Supply Chain Talent research is the concept of being more productive with the talent you already have.

How can every supply chain improve productivity? In every supply chain I’ve seen in my past 25 years, there’s one constant – they all use some form of Excel – mostly to search for exceptions. Planners spend half their day dumping ERP and BI data into Excel, and then search for exceptions.

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