How next-gen supply chains deliver unmatched value by unleashing the power of data and AI

Today, it still takes, on average 145 days to recover from a more important disruption.

I was recently invited to speak at the Digital Procurement World event in Amsterdam. I chose to talk about a topic that continues to affect supply chains everywhere: how companies can build resilient supply chain networks of the future that not only withstand challenges but enable companies to grow and deliver business value through difficult times. The key to achieving this lies in releasing the power of data and AI in the supply chain and making this a priority for your company. I wanted to share these insights with a larger audience. Let's first dive into the challenges.??

Navigating supply chain challenges in a volatile era?

In today’s interconnected world, supply chains face a multitude of challenges that can disrupt operations and hinder business growth:?

Geopolitical tensions are increasing the number of trade restrictions imposed globally. This has been happening for a few years now and trade restrictions are expected to increase throughout 2024 and beyond. There are several serious outcomes we see emerging from this, such as increasing supply constraints for raw materials and input materials, and high inflation. This makes it ever more difficult to globally connect supply chains seamlessly.?

Extreme weather events continue to have devastating effects on people’s lives. The increase in extreme weather events caused by climate change is another important concern. It is well-known that supply chains generate the most carbon emissions globally.??

While your supplier base is a significant competitive advantage, it also presents substantial risks, especially a few tiers down where visibility diminishes. The complexity increases with new regulations affecting your extended supplier network, such as the EU Due Diligence Act on Deforestation, regulations against human rights violations and the use of certain materials, cybersecurity threats and more.?

Supply chain networks are becoming more complex due to companies’ go-to-market growth strategies. These strategies are increasing the complexity of supply chains.?

Furthermore, we must recognize the uneven landscape of digital maturity within supply chain functions. While customer-facing sectors have eagerly adopted digital tools, many core supply chain processes remain less digitally mature, with some processes still running on paper and Excel sheets. The end result is a supply chain that is less adaptable and more susceptible to disturbances. This vulnerability has caused businesses to miss out on a $1.6 trillion potential revenue growth opportunity on average each year.?

The complex supply chain networks that are tackling these challenges can no longer be optimized for micro-precision by humans. The key to enhancing these networks lies in the reinvention of supply chains through data and AI. Empowering 'network orchestrators' with these tools will enhance supply chain agility, speed up responses to disruptions, and integrate sustainability metrics. Without digitization, unleashing the full potential of data is impossible, as manual processes slow down operations and increase the risk of inaccuracies.?

How advanced digital capabilities are transforming supply chain networks?

The future of supply chain networks sits in the power of extensive network data and the adoption of advanced digital capabilities.. In collaboration with IDC and Gartner, we have identified a set of Horizon 2 digital capabilities. Let's take a look at the most distinctive digital capabilities:??

• N-tier supply sensing. This means you have identified the areas of vulnerabilities in your N-tier supplier network; you have a digital twin that models the N-tier supplier network for the parts that are most vulnerable, and you connect the nodes with external data sources to sense disruptions and mitigate potential risks.?

• Autonomous warehouses. Although not as far ahead as autonomous manufacturing sites, autonomous warehouses are using robotics, automation and advanced algorithms to optimize picking and storage processes. These warehouses promise faster and more accurate order fulfillment, reduced labor costs and improved inventory management.??

• Channel-agnostic fulfillment. This is becoming increasingly important, requiring expertise in warehousing, transportation and order management to ensure seamless fulfillment across multiple channels, including e-commerce, retail stores and direct-to-consumer sales.?

• Circular operations. This approach applies the principles of circular economy to the supply chains of the future, an area where most supply chains are still ill-prepared. Some industries, like fashion, were pushed into circular operations much faster due to regulations. However, we expect track and trace capabilities in circularity to become a Horizon 2 differentiated capability.?

• After-sales supply chain. For many industries, the journey towards circularity is expected to accelerate in the after-sales supply chain. This is also where we will see digitization happen faster, as it helps deliver better customer experiences and business outcomes.?

• Nerve centers (or next-generation control towers). This offers unprecedented visibility and orchestration across supply chain networks. These advanced control towers will consolidate data from numerous sources to deliver real-time insights and facilitate proactive decision-making.??

• Generative AI. This new technology creates human-like interactions that allow explainability, leverage unstructured data and generate machine learning code, enabling more continuous planning and execution. Accenture research suggests that 43% of all working hours across the end-to-end supply chain could be impacted by this technology .?

While these digital capabilities are brimming with potential, we must be honest about the existing gap between their promise and their current application. In one of our more recent studies, we found that supply chain maturity is generally lacking, with the global average at just 36%. Nearly two-thirds of the digitization in global supply chains still needs to happen.??

However, some companies are already using and scaling next-generation digital capabilities. These companies have made significant progress in their supply chain networks. They have significantly reduced the time it takes to recover from disruptions and have improved productivity and customer service, while reducing their greenhouse emissions, just to name a few. ?

3 key elements for success?

We identified 3 key elements that leaders in supply chain capabilities do differently to scale with confidence:?

1. NorthStar. Having a vision of where they’re going that has been signed off by the executive team. This translates in not having to defend every new capability or use case they are looking to implement. Having the vision signed off by the board, these companies are on a journey toward scaling.??
2. Modern data foundation. We see a lot of companies running into a data wall. Companies need a modern data architecture with curated data that is connected to external data sources. Without this, it is impossible to scale these new digital capabilities.?
3. Human adoption. We need to regard human adoption as the element that sits at the center of all of this. Supply chain leaders need to create trust in these new AI models from day 1. Cultivating a culture of trust and offering robust training and support are important in making sure your teams not only accept but also use these new tools?

Harnessing these three key elements helps companies leverage the potential of advanced digital capabilities empowered by data, creating resilient, autonomous supply chains that thrive amid uncertainty.??

For more insights, download our latest report on the advanced supply chain capabilities of the future Next stop, next-gen and watch my session from DPW here .?

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