SCM in the time of the new normal
The 2021 Work Trend Index report, recently released by Microsoft, states that if the highlight of 2020 was a shift to remote working, 2021 will be all about hybrid working. Organizations will end up with blended structures, with some employees going back to offices, and others continuing to work from home. And this situation will be the norm, even after the pandemic is dealt with.
In a way, the supply chain and logistics sector has been leading the way in this shift to hybrid work. Unlike a software company where 100% of the staff can work from home – and keep the business running smoothly – the nature of the logistics business means that certain employees must show up for work if the business is to survive. For example, drivers at a trucking company or delivery people and fulfilment staff at an ecommerce firm. Which means, the supply chain was amongst the first to adjust and adapt to the new normal. In fact, examples from this sector can be used as case studies on how organizations across industries can flourish in the new normal.
The World Economic Forum (WEF) states that the Covid pandemic has revealed the fragility of the modern supply chain. Initially, governments, businesses and consumers struggled to procure basic products and materials. “The urgent need to design smarter, stronger and more diverse supply chains has been one of the main lessons of this crisis,” says the report, adding that the transition to a new model for supply chains will be underpinned by a rapid and wholesale digitization of the paperwork that accompanies global trade.
Besides, with technologies like artificial intelligence and the Internet of Things, supply chains can quickly switch to alternative providers when regular suppliers face disruption. “The current crisis is an opportunity to reset a system that has relied on outdated processes. Creating smart and nimble supply chains is the key to building a global trade and investment network that’s capable of weathering future storms,” concludes the WEF report.
Deloitte’s analysis of supply chains echoes similar views when it wonders if Covid-19 will be the black swan event that finally forces many companies – and entire industries – to rethink and transform their global supply chain model. Well, the answer seems to be an emphatic yes! At the very least, you can count on it that the roadmap for many players in the supply chain is now looking significantly different from what it did in 2019.
Deloitte asserts that before the pandemic, supply chain focused obsessively on cost optimizations, reduction of inventories and on driving up asset utilization. Unfortunately, this approach removed the buffers and flexibility industry players had to absorb disruptions like those caused by Covid-19. “Fortunately, new supply chain technologies are emerging that dramatically improve visibility across the supply chain, and support companies’ ability to resist such shocks.” Specifically, the traditional linear supply chain model is transforming into digital supply networks (DSNs) “where functional silos are broken down and organizations become connected to their complete supply network. This enables end-to-end visibility, collaboration, agility, and optimization”. Similarly, an Oracle study found that most supply chain executives agree that there is an accelerating need for a digital supply chain. However, 76% felt that their digital transformation projects are not aligned.
Within SCM, Oracle visualizes “a digital thread” that connects external systems to the cloud and provides supply chain organizations with “the voices of the digital twin, factory, product, and customer”. Connected capacities would cover network visibility, asset tracking and detection, asset monitoring, remote diagnostics, production monitoring, real-time analytics, fleet monitoring, predictive models and digital field service. To deliver on this, the SCM cloud roadmap calls for the implementation of IoT applications, artificial intelligence, connected digital twin and blockchain applications.
And as PwC concludes, volatility, uncertainty and major disruptions are pushing companies to lift and shift their supply chains quickly. “The key to success lies in the transformation to a more connected and self-orchestrating supply chain ecosystem, where companies can quickly anticipate opportunities and address challenges and risks before they arise.”
One of the most potent ways to deal with risks while they are still manageable, is to have a sophisticated AI and ML-based predictive system in place. A system that can crunch vast amounts of data and forecast not only where things are headed, but also what to do about potential issues that might crop up. To see how machine learning can assist you with your post-Covid roadmap, you can connect with the leaders in this area – Amplo Global.