Supply Chain Resiliency, Sustainability & the role of Technology

All views are my personal here.

Over the last 2+ years, the shelter-in-place mandate and casualties due to pandemic was not enough to disrupt the economy. Supply chain disruption due to various geopolitical causes further exacerbated the predicament of the corporate world. Besides, the whole world’s target of becoming carbon neutral and later achieving zero carbon footprint also got impacted heavily.?

By virtue of which, organisations are faced with a not so easily surmountable challenge of dealing with a gravely disrupted supply chain.?

So how companies can overcome supply chain disruption while still maintaining the image of being responsible producers of products. Hence, achieving resiliency and sustainability together whilst staying profitable.?

Emerging technologies can be a potent enabler here, provided interwoven deliberately into supply chain resiliency and sustainability goals of the organisation. According to McKinsey, the typical consumer company’s supply chain creates much greater social and environmental costs than its own operations. Supply chain impacts account for more than 80% of greenhouse gas emissions and more than 90% of the impact on air, land, water, biodiversity and geological resources. Thus targeting optimisation of supply chain also assists in achieving sustainability targets of the company.

To achieve resiliency, need of which is uncovered by recent pandemic, wars and natural ruinous events of the past, organisations need to build transparency, agility, contingency mitigation, and flexibility into their end to end supply chain.?

A typical Supply Chain includes numerous stakeholders and myriad of systems to complete infinite no. of transitions, then only a product is manufactured and reaches into consumer’s hand. So to bring transparency we need a platform which intertwines all these systems together and provides real time status and artefacts about any product or material of our interest, e.g. Raw material originated from which country? What mode of logistics was used? Why did unloading at the destination port get delayed??

Once we have a platform which is integrated with all the building blocks of the supply chain, we can reap furthermore benefits by adding AI & analytics which will help us in predicting in well advance the potential disruptions. Organisations now follow an integrated S&OP approach. Above and beyond, several emerged technologies are altering the ways S&OP methodology is followed across companies. Thus a Digital S&OP ensures integrated operations from customers to suppliers.

Now imagine an ideal world where?

• AI & Analytical dashboards not only augments portfolio management team, but also guide them to decide which NPI/NPD to opt for based on predicted market demand, profitability and minimal carbon footprint. Hence carving out a growth trajectory whilst aligning with Net zero objective
• Then demand planning team comes up with a almost accurate forecast based on history, Sales team engagements, AI based demand prediction, and technology assisted positive & negative cannibalisation estimates through ML. While also forecasting Scope 1, 2 & 3 emission for the demand forecast enabled via AI and integrated S&OP solution
• Operation planning team takes demand forecast as an input via integrated S&OP solution and do the detailed manufacturing & procurement planning using the same integrated S&OP solution.
• During manufacturing planning, Digital S&OP solution provides feasibility to optimise the production line from cost, schedule and carbon emission perspective.
• Same digital S&OP solution is integrated with an asset management & predictive and prescriptive maintenance management IoT solution ensuring minimal/no downtime and minimising carbon emission due to maintenance activities
• System guides early purchase orders for identified long lead items through a combination of historical deliveries and prediction via AI keeping watch of current and evolving market & Geopolitical dynamics
• Digital S&OP predicts supply chain risk for parts and commodities during the engineering phase and also suggests alternative routes for minimal disruption, optimal cost and trifling Carbon emission
• Installed sensors and digital tools in the plants & for supply chain’s other components like logistics, labour availability, geopolitical shifts provide agility and flexibility to decision makers to adjust course before getting into crisis situation
• Same S&OP platform also predicts/includes cost dynamics like tariff change, new foreign trade agreements, logistics cost, optimal supply chain network, zonal commodity price change, cost of carbon credits etc. to ensure optimal cost of the product manufacturing
• By being connected to climate and catstrophy prediction system, digital S&OP solution suggests production load shift to a safer manufacturing plant?
• System keeps watch on Supplier performance and automatically changes suppliers’ ratings based on business continuity risk, delivery, quality, price etc.

Now in such a digital intertwined world, if a Sales person is sitting across a customer, s/he would takeout her/his iPad and straightaway tell the customer exact delivery date, a competitive price and how much aggregated carbon emission per piece of the product under discussion.

…………………..to be continued

Ref:

https://www.mckinsey.com/business-functions/operations/our-insights/supply-chain-40--the-next-generation-digital-supply-chain