Supply chain managers must prioritise visibility to build resiliency

Posted on 28 Jun 2022 by The Manufacturer

Supply chain managers have had a tough couple of years, contending with the most challenging set of circumstances they’ve likely ever faced in their careers. Key suppliers shut down operations for weeks at a time during lockdowns around the world, ports became jammed, and container prices went through the roof. In fact, supply chain disruption related to COVID-19 cost Eurozone economies alone €112.7 in lost GDP in 2021.

And, even as the world reopens for business, as one problem is resolved another pops up in its place. After tackling the challenge of a driver shortage, for example, organisations have found themselves with the opposite problem of not being able to source enough trucks because of the ongoing semiconductor shortage.

Russia’s invasion of Ukraine has further aggravated the situation – Accenture’s research suggests that a protracted war could lead to a further loss to GDP of up to €318bn in 2022.

For supply chain managers, the traditional notion of building resiliency into supply chains with flexible manufacturing, keeping more inventory or having redundant supply sources no longer cuts it. Research from Accenture suggests that visibility is the new key – finding that companies with greater visibility are better positioned to handle all kinds of disruptions.

This may not come as a surprise to supply chain managers, but it might be news to hear that the research uncovered two distinct types of visibility: structural and dynamic. Thanks to new technologies and analytics, this second type of visibility is helping organisations to create much more resilient supply chains. So, what is the difference between the two?

Type 1: Structural Visibility

In a nutshell, structural visibility tells companies where their suppliers are. This is everything from where their points of manufacturing are, what logistics routes they use, and the interrelationships across the broader supply chain network.

Most companies generate structural visibility by employing regular network mapping, classic risk management, network simulation, optimisation and modelling. This is best practice but is typically done more frequently during times of disruption.

Leading companies are generating greater structural visibility using new technologies such as digital twins to create a virtual replica of their company’s supply chain. With a digital twin, a company can use advanced analytics to simulate its supply chain’s performance and stress test for risks and vulnerabilities.

Nonetheless, structural visibility is still limited. You can think of it like an X-ray – it gives you a snapshot of your operations to help uncover vulnerabilities, but it’s restricted to just one point in time or a certain period.

Type 2: Dynamic Visibility

If structural visibility is an X-ray, then dynamic visibility is video surveillance. It enables a company to monitor and respond to events in real time, allowing them to see where products are across the supply chain, how plants and warehouses are running, when and where disruptions are occurring, what disruptions are affecting, and how.

This type of dynamic visibility has been made possible thanks to the help of a tool called the supply chain control tower. It allows you to monitor, predict, prescribe and execute autonomously across your supply chain.

The most important point to emphasise here is the execution element, which enables companies to take action on issues as they see them or even for the control tower to take action autonomously by leveraging artificial intelligence, machine learning and robotic process automation. In doing so, it can independently act on real-time supply chain signals to capitalise on opportunities and minimise the impact of disruptions.

Creating resilience with visibility

While structural visibility is a requirement for successful supply chain resilience – dynamic visibility must be the goal. Most companies are already monitoring demand and supply and use data predictively, but this prescriptive use enabled by dynamic visibility is still rare.

Accenture’s research found that autonomous execution is the least used form of dynamic visibility. Companies report using it for internal operations and suppliers and customers, but haven’t made the leap to applying it to external events. However, it’s precisely this predictive visibility and autonomous execution, orchestrated by a sophisticated control tower, that are the keys to maximising resiliency.

As companies move from centralised, linear models of supply to decentralised supply networks that are flexible and efficient, they also need to build in new capabilities to help assess where they are most vulnerable and enable them to see what’s occurring across the extended supply chain. Equipped with this type of visibility, supply chain leaders will be able to rebound quicker from disruptions, or even avoid them altogether, no matter how many are thrown their way.

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About the author

Stephane CrosnierStéphane Crosnier, Supply Chain and Operations Lead for Accenture in the UK

Stephane has over 20 years of experience in the supply chain sector, consulting some of the world’s largest businesses on their operations strategy and supply chain management. His expertise spans several industries, including automotive, high-technology and pharmaceuticals.