With supply chain disruptions continuing to roil business and consumer markets, getting back to normal won't happen on its own without a change in processes and technology says Dave Food, Head of Supply Chain at Board International. He shares the three key factors that businesses need to take into account when overhauling their own supply chain management processes.
The recent domino effect of disruptions, such as Brexit, the pandemic and the war in Ukraine, has inevitably resulted in a huge strain on business’ supply chains. It’s a difficult landscape to navigate, but disruption is a fundamental part of the supply chain and organizations should be taking measures to mitigate these challenges.
Today, most supply chains have some element of protection built in to combat disruption, whether that be extra capacity, extra inventory, alternative suppliers or different routes to market. The problem is, from source to consumption point, disruptions are impacting multiple routes of the supply chain in multiple locations. The existing protection isn’t enough.
Combine these challenges with the call for more sustainable practices to be adopted throughout the supply chain, and businesses are facing a complete overhaul of operations to stabilise stock flow and meet customer demands. By leveraging technology such as intelligent planning, encompassing scenario planning, businesses can build additional resilience before disruption happens. In our fluctuating economy, companies must be strategic and flexible in their approach.
There are three key factors that businesses need to take into account when overhauling their own supply chain management processes.
1. Prioritize Data-Driven Insights
Many businesses are still siloed, with different departments managing different sets of unstructured data in different Excel sheets. This prevents business leaders from having a holistic understanding of the organization and its performance.
There is a huge opportunity for businesses that bring together their data – and not by creating a mega-spreadsheet! Data is one of a business’ greatest, lowest-cost assets, which can be leveraged to gain a comprehensive picture of the organization and used to make informed decisions. The age of trusting your gut has passed, paving the way for the decade of data.
2. Seeing the Future
We can only make decisions based on what we know. Take the recent rail strikes for example: these were announced weeks in advance, meaning businesses could adapt their operations to take into account that some staff would not be able to get into the office.
Meetings have been rescheduled and working from home organized, saving employees time and stress and preventing further disruption to organisations. When business leaders know where they stand and where they want to be, they can plan the optimal route to get there.
The key is generating maximum visibility, not just from the business’s own supply chain, but from key partners and customers too. Enlarging the business’s peripheral vision to be able to make a data-driven decisions could save organizations lots of money. Apply that across the tens and hundreds of decisions being made in organizations every day, and suddenly profit margins have increased.
A retailer, for example, might have a product that is hugely popular and is considering whether to increase stock in-stores. Intelligent planning, however, shows that in-store sales are significantly lower than online sales, which equate to 90% of the total purchases. The retailer can adapt its approach to stockholding, saving time, resources and money by truly understanding its target customers’ shopping trends.
The way to achieve this level of insight is via predictive planning, which can turn historic data into predictions without the significant time and effort required by traditional analytics solutions. Input the scenario and instantaneously view the impact that that situation will have on the business and uncover unexpected insights.
3. Account for Change
Sustainability must be embedded into the supply chain over the next five years. Consumers are calling for it, businesses are planning for it, and, most importantly, the world needs it. In the U.K., 34% of shoppers choose to shop from brands that have environmentally sustainable practices and values.
Given the increased consumer focus on sustainability, I expect that the measurement and evaluation criteria around ESG will become more stringent and internationally aligned, as pressure rises across the globe. To prepare, business leaders need to be able to simulate different decisions to understand which course of action will have the greatest impact; help them demonstrate the results of ESG initiatives, particularly across their supply chains; and avoid accusations of greenwashing.
To become more sustainable, supply chains will have to change dramatically. In order to make major operational sustainability changes, business leaders first need to understand their existing supply chain model. Intelligent planning can show how efficient different components of the supply chain are and outline areas for improvement. With this understanding, leaders can make informed decisions about where more sustainable practices can be adopted.
The overarching message is simple. Businesses need to plan and prepare for disruption. If every business took intelligent business planning and collaboration seriously, it would still take five to 10 years for the supply chains to fully rebalance, returning to a stable condition. Until we reach this point, disruptions will continue and businesses will need to prepare to be flexible. It’s time to leverage historic data; to intelligently plan for the future.