By Swapnil Mishra - June 26, 2023 8 Mins Read
Businesses experience supply chain problems due to minor variations in demand at the retail level. This leads to increasingly larger variations at different levels.
Traditional supply chain planning included routing, transportation, logistics, warehouses, supply planning, demand planning, production planning, operations, inventory optimization, and much more.
Modern supply chains have undergone significant changes. They will continue to do so as markets, goods and services, and trading partner interactions change over time.
However, a typical legacy SCM is rigid, complex, and faces integration challenges. This makes it a business inhibitor rather than an enabler.
When there are breaks due to these challenges, the plans become uncertain. Even small disruptions in the supply chain have a huge impact.
Organizations can be better prepared to react even though they can’t account for all the variables or predict the unpredictable. Businesses must create a new set of SCM capabilities to handle the challenges of the modern supply chain.
An intelligent supply chain is built ground up from a robust system. It has architectural flexibility, a rich (yet simple to use) user experience, multi-enterprise support, and broad, cross-functional business flows.
A supply chain’s delicate balance can tip at any point. This may lead to chaos later.
Today’s mass production environment encourages acquiring goods only as needed for production and just-in-time manufacturing. This strategy can lower waste and inventory costs. Occasionally, businesses experience supply chain problems due to minor variations in demand. This can lead to snowballing larger variations at the wholesale, distributor, and supplier levels.
People tend to overreact when there is a slight variation at one point in the supply chain. this impact could be from wider world events (like Russia’s invasion of Ukraine).
A thousand different parts could come into the factory from the organization. What happens if the supplier’s stock of an element the team needs is low? A small inventory would have allowed careful management of all the steps, but they suddenly stopped working.
Let’s take the case of a global fall in the supply of chips. Some companies stockpiled chips and placed advance orders with early indications of shifting demand patterns.
So, other businesses faced shortages too.
As they anticipated declining demand for new cars, auto manufacturers reduced their charges for semiconductor chips. Later, other industries seized those chips for phones, computers, and video games. In the meantime, a single missing component caused the production of the entire vehicle to stall, which stopped global auto production.
Chief information officers, or CIOs, play a critical role in managing the modern supply chain. They have the technology and data-driven insights to solve various problems. Here are some of the issues with supply chain management and possible solutions that CIOs could use:
Real-time visibility into inventory levels, shipment status, and overall supply chain performance can be difficult in a complex supply chain. Transparency is lacking, which causes inefficiencies, delays, and higher costs.
CIOs can use enterprise resource planning (ERP) software to implement sophisticated supply chain management systems. these systems use combine data from various sources. They can give the supply chain real-time visibility. so, it becomes easier to accurately track inventories, forecast demand, and resolve problems before they arise.
Long manual procedures, paper-based documentation, and disconnected systems slow down the supply chain. these factors also increase the risk of errors. Without automation, efficiency and scalability also suffer.
CIOs can introduce process automation tools and technologies like Robotic Process Automation (RPA) to streamline manual tasks and eliminate errors. They can implement Electronic Data Interchange (EDI) and Application Programming Interfaces (APIs). these will help to enable seamless data exchange between supply chain partners and minimize manual interventions.
Natural disasters, geopolitical events, supplier bankruptcy, or unforeseen circumstances like the COVID-19 pandemic can all cause supply chains to break down. Delays, scarcities, and higher prices are the results of these disruptions.
CIOs can use advanced analytics and machine learning algorithms to predict and reduce supply chain risks. They can implement real-time monitoring systems for outside variables and issue alerts. These will also allow for proactive decision-making and temporary risk mitigation measures.
The issue is that supply chain operations frequently occur in silos within organizations and use disjointed software platforms. Due to this lack of integration, data is inconsistent and duplicated, making it challenging to get precise insights.
CIOs can oversee the development of a system that connects various functional areas. These would include such as procurement, logistics, and inventory management, and also eliminates data silos in the supply chain.
They can use cloud computing and data integration platforms to create a unified view of the supply chain and enable data sharing and collaboration.
Traditional supply chain management frequently uses reactive decision-making and historical data. It is difficult to optimize inventory levels, demand forecasting, and supplier performance without advanced analytics.
CIOs can create a data-driven culture by implementing supply chain analytics tools and constructing a strong data infrastructure. By utilizing artificial intelligence and machine learning, CIOs can examine enormous amounts of data to find patterns, forecast demand, optimize inventory, and improve supplier collaboration.
As supply chains become digital, they are at risk from cybersecurity threats, data breaches, and problems with regulatory compliance. Data privacy and sensitive information protection have become crucial.
CIOs can implement reliable cybersecurity safeguards like firewalls, encryption, multi-factor authentication, and staff training on best practices. To ensure compliance with rules like the GDPR or CCPA, they can set up data governance frameworks. Conducting routine audits will also help to spot vulnerabilities.
Rising consumer awareness and regulatory requirements require sustainable and moral supply chain practices. A lack of understanding of suppliers’ business practices and environmental impact harms the brand reputation.
CIOs can use Blockchain technology to create transparent and traceable supply chains. CIOs can ensure compliance and advance ethical sourcing by implementing supplier management systems that assess suppliers’ sustainability and ethical standards.
It is about responding, not about planning: “What if” scenario graphing
These supply chain disruptions could result from inadequate forecasting and ineffective planning.
Instead of a lack of planning, there seems to be a lack of effective response. How is it possible to predict numbers for the next six months when one has no idea what will occur then?
It was not possible to create forecasting tools for the upcoming pandemic. For such situations, they ought to establish a minimum number of units for inventory. They can then concentrate on identifying market demand signals and acting upon them. The key is learning to change.
Having data systems that highlight the options and quantify the effects of each option is essential for adapting to change. And within the supply chain, organizations must act as soon as possible.
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It becomes more challenging to calibrate throughout the supply chain once that signal moves downstream. This could lead to overstocked goods or a shortage of inventory.
Relational databases serve as a boundary for traditional supply chain software, which is linear and passive.
Relational databases encourage steady data retention. They do not use data that requires a lot of dynamic data processing. Also, they store customer, order, and product data in separate tables.
However, a database can simulate various dependencies and relationships in a way that closely resembles reality. Massive amounts of data can be loaded into a tool that tracks every component of the supply chain. Right from the supplier via the manufacturer to the finished product, it can reveal real-time relationship patterns. With these tools, businesses can build a digital representation of a complex system (like an automotive supply chain).
The algorithms, which consider proximity and the shortest path, can assist businesses in managing and reducing complex dependencies in real time. Companies must be ready to react because no one can predict various internal and external factors (involving parts, people, and things).
CIOs can address supply chain management challenges by utilizing technology, automation, data-driven insights, and collaboration. They enable organizations to achieve greater visibility, efficiency, resilience, and sustainability in the supply chain. the trick here is to apply cutting-edge systems and their strategic vision.
Swapnil Mishra is a global news correspondent at OnDot Media, with over six years of experience in the field. Swapnil has established herself as a trusted voice in the industry, specializing in technology journalism encompassing enterprise tech. Having collaborated with various media outlets, she has honed her skills in writing about executive leadership, business strategy, industry insights, business technology, supply chain management, blockchain and data management. As a journalism graduate, Swapnil possesses a keen eye for editorial detail and a mastery of language, enabling her to deliver compelling and informative news stories. She has a keen eye for detail and a knack for breaking down complex technical concepts into easy-to-understand language.
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