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How to build transparency, resilience and agility into the supply chain

(Image credit: Image source: Shutterstock/KAMONRAT)

Almost every element of the way businesses operate has been drastically altered since the start of the Covid-19 crisis. In particular, many companies across the world have had to rapidly ask some fundamental questions of their supply chains; what they make, where they source from, what they move, where they store and who they sell to.  This has led to a heightened awareness of – and greater scrutiny on – the supply chain than ever before. This scrutiny has revealed the fragility of the modern supply chain, and many businesses have simply found themselves unable to rapidly adapt, causing a crisis in its own right.

So how can companies ensure that their supply chain is fit for purpose, whilst reducing the exposure to similar vulnerabilities in the future?

Vulnerabilities can be plugged, intelligently

The first step companies will need to take is to assess the current state of their supply chain – are they managing yesterday’s processes using legacy systems and technology or have they already begun the digital transformation process? And what vulnerabilities have been exposed in their own methods and practices? From there, they can then go about taking the necessary steps to address any deficiencies.

One of the initial steps for many companies is likely to be putting in place the KPI’s to ensure that the relevant insight and business intelligence is available. This is a necessity in times of crisis, but also in times of normality. In fact, research suggests that 68 per cent of professionals see increased business intelligence as a key advantage of emerging technology in supply chain operations.

The supply chain goes blind

The Covid-19 pandemic has brought into sharp focus why insight and intelligence is so important when it comes to the supply chain.

One of the main issues many companies have faced is that they simply lack visibility - not just visibility in terms of where their products or items are, but visibility into the partners and stakeholders upon whom many supply chains are so dependent in order to work efficiently, as well as the visibility and awareness of the external factors that have had such a dramatic impact on their operations.

This is why smart organisations – no matter their level of preparedness for the current crisis – see visibility as the key to the resilient supply chain.

There are several reasons why companies have encountered this lack of visibility. Traditionally, many supply chains have operated in silos, causing them to be slow to discover, and react to, issues.

What’s more, a lot of the IT systems and technological solutions were built for the traditional operations of the past – not the global, flexible supply chains that are needed today. Subsequently, business leaders haven’t necessarily focused on making their supply chains ‘intelligent’ with the full view of the supply chain from end-to-end. This, in effect, has left many companies almost blind to the plethora of moving parts and involved parties inherent in the modern supply chain, making it incredibly hard for them to both identify exceptions and adapt to change.

Making supply chains fit for purpose

The C-suite is now looking to transform their supply chain into one that is agile, resilient and intelligent. This kind of transformation will require visibility across multiple tiers of the supply chain, often at a degree of granularity that has been hitherto unknown. Going hand in hand with this will be the implementation of new technologies. These can enable companies to gather more information about the supply chain, so they can analyse situations, make predictions and act on insights.

For example, the ability to monitor demand at a very granular level across multiple tiers of the supply chain enables operational planning both within the company itself as well as with trading partners. Leveraging this intelligence enables the necessary operational agility to quickly reprioritise inventory in order to meet shifting customer demand or adjust to external impacts.

In practice, this means that companies will be required to integrate technologies like IoT, big data, blockchain and automation into their supply chain. Many might have done so already, although typically this has been done on a limited basis and for specific tactical projects.   But newer models exist.  Retraced, for example, is a company that uses Oracle’s Blockchain technology to let fashion brands map their supply chain right down to the manufacturers of the raw materials. That’s a level of transparency that is well beyond what most traditional companies are capable of at the moment.

What we can expect to see going forward is a significant ramp-up of this adoption, driven by the desire for supply chains to be more demand-driven and agile.  Similarly, we can expect the expansion of both AI and machine learning in the supply chain, leading to data-driven operations that will significantly improve production yield, product quality, lead times, equipment, and labour efficiencies. Digital supply chains will enable businesses to detect, analyse, and respond to IoT signals, then incorporate those insights into rapidly evolving market capabilities.

Balancing speed and agility is key. Starting with a smaller scale, quick implementation can help form a testbed and highlight incremental gains back to the business, instilling greater visibility at every stage. Focusing on this rapid time to value within the business encourages other parts of the organisation to accelerate their digitisation journey.

The creation of a new modern supply chain

With the focus now firmly back on both the importance, and the vulnerability, of supply chains, we can expect business leaders to take radical steps to make their supply chain processes truly fit for purpose in the modern era. Transparency is crucial to this, as the more companies understand about their supply chain, the more they are able to react to crisis, and to be agile and flexible enough to act on evolving situations. 

For companies that have previously operated in silos, introducing this will take a lot of time and hard work. However, by implementing new technologies, companies can speed up their digital transformation significantly and build agility and transparency into their supply chains as standard practice.

Dominic Regan, EMEA Senior Director for Logistics Applications, Oracle

Dominic Regan is the EMEA Senior Director for Logistics Applications at Oracle.