Since 2020, organizations have been plagued by one global supply chain disruption after another. This has exposed the fragility of the complex system that supports world trade. A combination of factors—including COVID shutdowns, global supply chain problems, the Russia-Ukraine war, fuel costs and fresh COVID-19 restrictions in China—have exacerbated an already bleak supply chain situation, causing new risks and stress.
Disruptions continued in 2021 but, despite these, global trade reached a record high in value, according to the UN Conference on Trade and Development.
Supply chains have traditionally been fragmented, globally dispersed and susceptible to concentration risks which, as COVID taught us, have not been captured by most companies. Add in multiple partners and providers and inconsistent cross-border regulations, then the task of creating a strong and reliable supply chain looks near to impossible.
New supply chain risks and stress
According to research by JPMorgan, the risks to supply chains include a rebound in US port congestion, spillover from the Russia-Ukraine war affecting northern European ports, limitations on air freight particularly in the Asia-Europe Lane and disruptions to rail freight, including the track between China and Europe.
Supply chain complexity can wreak havoc on costs, risk, reliability, customer satisfaction and the ability to implement change. With consumers continuing to expect more choices—delivered faster, cheaper and sustainably—disruptions have forced organizations to explore new concepts. The traditional approach to transformation fails to balance these priorities.
More significantly, many supply chains are not yet influenced by technology. Sure, systems help companies manage warehouses and transport. But the complexity and diversity of supply chains still runs ahead of the technology systems that can underpin supply chain environments.
According to Gartner, more than 50 per cent of supply chain leaders expect complexity to increase over the next five years. For most customers the answer will be the targeted use of technology.
If supply chain organizations focus on end-to-end views, underpinned by real time data and analytics, they can vastly reduce the chance of disruption. By using artificial intelligence (AI) and advanced forecasting, it is possible to create scenarios, predict disruptions and design mitigations.
Sixty-eight per cent of companies stated that planning, forecasting and inventory management were the most important areas for technology investment, while 53 per cent said end to end supply chain management and AI technology was critical. Emerging technologies will improve planning and decision-making by chief supply chain officers.
Analytics and real-time decision-making
Supply chain analytics synchronize data from multiple sources to improve decision-making by supply chain managers. AI, blockchain, hyper automation and graph analytics will generate accurate and useful predictions to be embedded into workflows.
Organizations are under pressure to capture real-time data and use it to make decisions faster. The future reliability of supply chains depends on how quickly companies can improve their data capabilities and analytics.
Resilience in action
Building a resilient supply chain is a never-ending process. The risks, complexities and hyper-connectedness of global chains evolve constantly. Risks cannot be avoided but can be minimized. All businesses should have continuity plans to aid recovery in the event of critical disruption.
Tools including resilience indices, risk visualization and supply chain simulations can help companies understand the complexity of supply chain risks, meaning that they are more likely to bounce back from adversity.
Ashish K. Gupta was speaking to HCLTech's Mousume Roy, APAC Reporter