For supply chain companies to grow, they must lean on data to future proof

All over the world, supply chains are groaning under the weight of pandemic disruptions, materials shortages, and a lack of key workers. In some places, such as the Middle east and Africa, these problems are being exacerbated by domestic factors. At the same time, reopening is driving record levels of consumer demand in countries, putting additional pressure on already-strained transport networks, manufacturing plants, and infrastructure. It all adds up to danger for the global economy in the form of product shortages, higher inflation, and slower-than-expected growth in key industries. Worse yet, despite efforts by governments and industry, there are few simple solutions to the problems bedeviling supply networks.

The bottom line is that for supply chain-reliant businesses to survive short-term and grow in the long run, they need to be better positioned to respond rapidly and efficiently to market disruptions; they need to future-proof against risks.

Over the past five years, 89 percent of globally surveyed companies have faced a supply chain risk event, according to a recent Gartner study. When the pandemic hit last year, the level of disruption to global supply chains only intensified. In the Middle Eastern context, the Economist Intelligence Unit (EIU) noted that businesses’ heavy reliance on Asian suppliers was already a risk pre-pandemic. Government restrictions to contain the spread of COVID-19 severely impacted access to these businesses’ global partners, reiterating the already established need to strengthen local production.

To increase agility and resilience, many businesses in the Middle East are likely to do one of two things, says the EIU: shorten and diversify supply chains, or digitally transform. The EIU notes that the former essentially entails prioritising resilience over efficiency, while the latter allows for simultaneous focus on boosting efficiency and resilience. As such, it’s clear why digital transformation in the region’s supply chain has been accelerated.

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A shift in key focus areas

Latest surveys reveal that only 21 percent of supply chain organisations across the world feel they have a resilient operation. We cannot overstate the importance of creating agility and building resilience. These are key priority areas for the bulk of supply chain organisations, according to Gartner, which noted that 90 percent of surveyed companies had earmarked investments to build supply chain resilience over the next two years.

These modern focus areas, Gartner continues, have displaced the industry’s previous goal of cost-efficiency, which has been a primary driver of business success over the last two decades. In the face of the current volatile business landscape, in which the pandemic has shaped much change, creating digital readiness that underpins agility for navigating disruptions is a better bet for continued competitiveness and business continuity.

Data is at the core of the transformation required to instil agility and resilience. This is because, properly leveraged, it empowers organisations with an end-to-end overview across supply chain operations, bringing a much-needed level of visibility that better highlights potential risks and challenges, while supporting agile decision making.

?Leveraging data to mitigate risk

The supply chain of the future is an agile one that’s been digitally equipped to predict future risk in a way that enables proactive rather than reactive decision making. This is what Microsoft envisioned when creating the Dynamics 365 Supply Chain Insights tool.

The power of such a tool lies in the fact that businesses can create a digital twin of their physical supply chain, which enhances visibility of their entire operation.?Dynamics 365 Supply Chain Insights then taps into advanced analytics powered by Azure’s AI and Machine Learning technology to model forecasts and run “What-if analyses” to simulate the impact of potential disruptions. Having access to this level of data-fuelled intelligence in a test scenario is an incredibly fast and cost-effective way to gauge the impact of various solutions a company could employ to mitigate identified risks. Having run several tests, a business is well informed on the best approach to take when tackling any similar issue in the future. This is the pinnacle of resilient planning.

?Turning disruption into opportunity

One thing that the pandemic did was highlight vulnerabilities across supply chain operations, illuminating what needs to change as we move forward. While the EIU pointed to the gradual recovery already taking place for supply chain businesses emerging from the 2020 slump, the unit notes that such companies have been presented with “a unique opportunity to re-examine their foundations and rebuild a much stronger trade ecosystem”. This rebuilding and reimagining must be undertaken alongside a digital transformation, supported by intelligent data insights – this is the formula for shaping a sustainable supply chain.