To cope with the COVID-19 pandemic, retailers need a comprehensive supply chain strategy with a flexible and solid digital foundation. This way, they anticipate disruptions and get proactive recommendations from the system to meet the constant changes in supply and demand.
Due to increasing global interdependencies, today's supply chains are becoming increasingly fluctuating, uncertain and complex. In fact, supply chain market leaders indicate that about a third of goods sold by companies to consumers cross at least one international border.
By applying systems thinking, the supply chain can be viewed as a whole. Zooming out on the supply chain provides a more comprehensive, holistic view. This is in contrast to traditional approaches where individual parts of a supply chain are viewed and managed individually. Systems thinking provides a picture of the supply chain's behaviour over a period of time - and as part of a wider network.
This approach means that organisations need to collect data over a time series and use this input to predict supply chain fluctuations. For example, consider looking at the buffer stock versus the kill rate over many months rather than a short period of time. Systems thinking can be used to rethink the key performance indicators (KPIs) of the company-wide supply chain. When that chain is not properly managed, it creates segregated, individual processes and a 'command and control' culture.
Creating the digital foundation
A strong digital foundation equips an organisation with the capabilities to embrace product-centric and digital-native business practices. Thus, they are alerted to and prepared for possible disruptions in the future. After all, we never know for sure where and when the next obstacle will follow, but with a strong digital foundation, retailers are better prepared when needed. This means they need to focus on three business fundamentals:
- People: ensure that employees, partners and customers are informed about the challenges and opportunities in this new supply chain era. Using systems thinking, supply chain leaders can maintain an overview and plan ahead, instead of making one-off operational decisions at every crisis. Establishing a learning culture that feeds back into the intelligent supply chain is a top priority for companies across the entire value chain.
- Processes: in an uncertain world, supply chain processes need to be flexible and able to resolve disruptions. With artificial intelligence (AI) and machine learning (ML), digital supply chains can take a fresh look at the decision-making process. Organisations need to move from 'command and control' to leading by example. When designing new business processes, collaboration across the entire supply chain should be central to be better prepared for any crisis.
- Platforms and tools: digital platforms and tools (e.g. Blue Yonder, IBM Sterling, Oracle Supply Chain, etc.) are central to delivering advanced supply chain planning capabilities. These tools help companies create the right digital foundation and promote supply chain collaboration. Many supply chain vendors are investing in platforms that are self-learning (with ML) and have the ability to manage complex networks (with AI). For example, there are platforms that can be integrated with third-party data sources, including social media and news feeds. This offers the ability to signal, interpret social media responses and learn from the insights displayed.
Given the ongoing COVID-19 pandemic, it is important to balance efficiency and resilience. Supply chains that account for disruptions even before they strike and provide information on real-time workaround strategies perform better than supply chains created solely for operational efficiency. As a result, they enable organisations to contend with constant uncertainties, such as those caused in the supply chain by the new coronavirus. Ultimately, they can contribute to more sustainable operations that will benefit us for a long time to come.
Author: Premankur Roy Paladhi, Industry Solutions Group Lead at Cognizant Retail
