Supply Chains in a World of Disruption

It can be tempting to solve disruption-related challenges by responding to each problem individually, especially in a world where it’s nearly impossible to predict every curveball with complete accuracy. But, as many organizations have already learned the hard way, this approach is short-sighted and fails to address the underlying issues that leave companies vulnerable to the worst effects of supply chain disruption. The best way to build true supply chain resilience is to create long-term, holistic solutions that embrace the inevitability of disruption. Collaboration, visibility and digitalization are all essential tools in this effort.  

One of the most important things a company can do to achieve that holistic solution is to break down its silos both within the organization and across the supply chain, allowing for a continuous, end-to-end flow from each production stage to the next. If each department or supply chain partner is functioning independently from each other — making its own decisions, using its own data, and failing to communicate information outside its own silo — the entire supply chain is vulnerable. In today’s highly connected world, disruption is nearly impossible to isolate; if one link in the chain is damaged, everybody is at risk. Failing to embrace that connectivity only makes it more difficult to respond to disruption quickly and accurately. 

Instead, companies should be thinking about the end-to-end supply chain throughout the production process, even before the product enters the physical supply chain itself. From the very first design of the product, all the way down to delivery, the entire product lifecycle should be considered. This does not mean that everybody needs to be an expert in supply chain management to build resilience, but rather that each entity should be considering the bigger picture in their individual decision-making processes. For instance, as a product is being developed, the company should be thinking about how those design decisions will impact manufacturing and distribution further down the chain, using data and logistics insights that are shared among all relevant parties. Any silos within the supply chain will make it very difficult to achieve this level of visibility and flow. But by breaking down those silos, companies both increase resilience and become more competitive in the market.  

Technology also plays a crucial role in this effort. As companies build more visibility in their supply chain, it’s important that they bring the digital and the real world together through digitalization and AI. In particular, the use of digital twins (virtual models of real-world products or processes) can help an organization visualize the end-to-end supply chain throughout the planning process and optimize each stage accordingly. From the outset, companies should be making digital twins of every single stage. In doing so, they can collect robust data, optimize their processes, and set themselves up to bring AI into the picture. 

Though AI has garnered more hype in recent years, especially with the launch of ChatGPT, it’s not exactly new. Machine learning, for instance, has been an important part of the supply chain manager’s toolkit for some time. With the help of AI, companies can optimize their data and make better decisions based on that information. And as companies work to break down their silos, AI can help connect different parts of the process so that everybody is working with the same information in real time. 

But as with any technological supports, AI alone will not solve an organization’s supply chain problems, and it should not be used to replace human labor, which, despite some misguided fears, remains an essential part of a company’s success. Implementing and executing AI-driven solutions requires strategic thought, hard work, and human minds. While it can certainly help companies become more efficient and resilient, AI is not a magic bullet. 

As companies seek to combat disruption in today’s markedly unpredictable environment, they would do well to prioritize the removal of silos before anything else. As they do so, they can bring in digital twins to support them in that process. And as a final aid, AI can help optimize their data and decision-making processes in real time. Disruption is an inevitability today and in the years to come, but companies that can embrace that reality, promote collaboration and utilize technology to their advantage will be primed to meet the challenge. 

Resource Link: www.siemens-digital-logistics.com/home-en