Resilience equals visibility plus agility

Posted on 22 Dec 2020 by The Manufacturer

COVID-19 has accelerated changes in supply chain processes, with 85% of senior supply chain executives reporting an increased focus on building greater adaptability and resilience. IBM’s Roger Needham revealed how AI-powered Control Towers provide the real-time insights manufacturers need to more effectively take actions that deliver value to their customers and their bottom line.

COVID-19 has made for a bumpy ride across the manufacturing sector and the supply chains which support it. Notwithstanding what we’re currently experiencing, we’ve also all had to contend with ash clouds, forest fires, tsunamis, geo-political disruption of one form or another, and much more.

These events have had, to a varying level, a drastic effect on how supply chains work and how swiftly operations can adapt to unpredictable outcomes. Findings from the Business Continuity Institute’s Risk of Supply Chain Disruption report show a consistent theme regarding the extent to which businesses are affected following a ‘normal’ disruption – and COVID-19 is a disruption like no other we’ve faced:

• 55% of companies report productivity losses

• 46% report increased labour costs

• 43% receive complaints from customers

• 32% reporting declining revenue

Something else worth noting is that over the next four years it’s possible that any Fortune 1000 company has a one in five chance of experiencing a disruption that will result in damages totalling between US$120m and $150m, according to McKinsey. A significant sum of money.

McKinsey has also recently reported that 80% of global trade will pass through regions with poor political stability scores. That’s worrying because it means we’re facing an increasing level of unpredictability.

See, predict, act

The move to more digitised manufacturing processes is naturally supported by a digitised, AI-driven, cognitive supply chain. All that good work going on within the four walls of your factory needs to go hand-inhand with the materials and goods flowing into and out of it.

This synergy between manufacturing and supply chain brings real world cost savings such as helping to reduce ‘just in case’ inventories, avoiding expedited freight costs and helping to minimise line stops and end of line rework and so forth.

First, what do we mean by resilience? By talking to our customers and listening to the voice of the industry, resilience is a combination of visibility and agility. The way IBM approaches this is to focus on three words: See, predict, act.
• By see, we mean do you have endto-end visibility across your supply chain correlating data across siloed systems with external event information to provide actionable insights into potential disruptions?
• Can you then use that impact analysis to predict real business outcomes, i.e. if A and/or B happens, helping you to understand the upstream and downstream impact of events on supply or production and prioritise your response.
• With the mass of data that sits across modern manufacturers, expecting a team of humans to perform such analysis has become increasingly more challenging. Businesses need some form of AI-driven decision tools to consolidate all that information, build it into one picture and act quickly to respond to unplanned events. A survey conducted by IBM with global market intelligence firm IDC, found that senior supply chain professionals show an increasing level of focus, particularly in the manufacturing sector, around resilience. Specifically, regarding business operations resiliency programmes across their supplier base and digital infrastructure resiliency programmes.

Supply chain logistics world globe network - shutterstock_725917057

Image Courtesy Shutterstock

VISIBLITY “Visibility is always a challenge …but it just seems to become ever more vitally important”
Key challenge = real end-to-end, crossdomain visibility, i.e. given the disruptive factors we’re now facing, it’s becoming more and more important to address those factors.
AGILITY “We’re really focused on using AI to help around demand sensing and understanding external events.”
Key challenge = sensing demand and external events, i.e. how using AI can help you become more agile and predict what’s going on in the business environment.
RESILIENCE “Integration with our core system, that’s what really drives our choices…”
Key challenge = barriers to collaboration and integration, i.e. how you integrate and extract value from the information that sits around your operation and currently prevents cohesion between supply chain departments.

What can you do? Simply put, a supply chain control tower is a connected, personalised dashboard of data, key business metrics and events across the supply chain and enables an  organisation to better understand, prioritise and resolve critical issues in real time. The next generation of control towers focus on three key areas in particular:
• Unifying siloed systems such as your TMS, WMS and ERP, which may also be disparate if, for example, your business has gone through a recent merger or acquisition.
• Managing external data sources (clients, suppliers, partners) and unstructured information (news and social media) – i.e. is there a potential storm (meteorological or political) brewing on the other side of the world that could disrupt your supply chain? It’s worth noting that you will struggle to discover those potential disruption impacts and model them against your own business scenario with the spreadsheet-led approach that many have relied on over the years.
• Facilitating collaboration by breaking down organisational boundaries and bringing together the different parties within your workflows – logistics providers, supply chain partners, distributors and vendors – to communicate in one area and agree how you’re going to make those changes across the business.
It comes back to see, predict, act. Get visibility across your data siloes and processes, use that information to predict and detect external events and then act accordingly, to deliver real bottom line business value.

If you’d like to discover more about the next generation of supply chain control towers, please visit K

Header Image Courtesy IBM