SupplyChainTalk: Transforming supply chain decision-making in a volatile world

Views on news 

The UK government is preparing contingency plans to support food supply chains as the ongoing Iran conflict raises risks around key inputs, including carbon dioxide. In its trading update, the UK’s largest retailer, Tesco said its supply chain remains stable. However, the wider outlook remains uncertain. National Farmers’ Union has warned that produce prices could rise in the coming weeks, with further increases expected across dairy and other categories. Supply chains’ vulnerability lies in the fact that they have developed into long, complex chains where links can break. Getting better visibility into them beyond tier one and two suppliers, is, therefore, essential. Points of fragility and vulnerability must be clearly identified and, ideally, a business’s vendor partners should be involved in the continuity planning process to see how unexpected events can impact them. 

 

A shift to end-to-end supply chain thinking 

When supply chains are optimised, decisions must also be made with the end-to-end value chain in mind. While the main conversation revolves around technology deployments and their RoI, people and the increasing labour shortage should be taken into consideration too. As experienced workforce is leaving the labour market fast, data connectivity and how insights are delivered to technicians have become more important than ever. Meanwhile, data often sits in different systems adopted over the years, which hinders the understanding of how a particular disruption may impact the business. Investing into core infrastructure to create a unified system without disrupting what is already in place can help resolve this problem. It’s supply chain’s responsibility to explain to other functions and top management in easy-to-grasp business terms how supply chain decisions impact service quality or working capital. S&OP and IBP are great platforms to aid decision making where the C-suite and the board can create an effective “battle plan.” Although they use different metrics, there are questions that each of them must be able to answer, for example, what a 2 % improvement in throughput or uptime means, what the trade-offs are and what 2 days’ supply means in terms of cost and impact.  

 

Companies are more open to making investments in sophisticated planning systems but are less willing to do so when it comes to execution – although momentum is gathering as businesses are increasing their investments in S&OP. Monthly sales and forecasting meetings, however, should be replaced by much shorter planning cycles. Some tasks which are ready for automation – such as customs documentation checks – are still done by humans, though. Investments in AI can not only increase the speed but also the quality of decision making, which will increase the organisation’s agility and resilience too in the long run. AI deployments should always be resolving bottlenecks and inefficiencies not just serve as shiny tools. For maximum effect, they need to be employed by educated users, as – although a useful tool to support humans – AI is still not mature for making autonomous decisions.  

 

The panel’s advice 

• Although a business has a strategy, it must execute in the moment.  
• Whatever scorecards different functions use in your business, make sure they all speak the same language.  
• If you don’t invest in technology and AI, you’ll be left behind.