It is no secret that the global supply chain is in crisis, fueled by a cascading series of events from shuttered factories and energy shortages to rising fuel prices and scarce workers. With the holidays approaching, these challenges will continue to grow, negatively impacting individual businesses and the global economy. Although retailers remain optimistic about sales this year, it is not surprising that a KPMG survey found 82% of them are concerned about inventory shortages.
It is tempting, and maybe even a little comforting, to dismiss this as a one-time confluence of extenuating circumstances. Companies need to learn from our current reality and take the necessary steps to shore up their supply chain for the future.
We know that most supply chains operate under institutional knowledge, relying on past experiences, data and expertise to predict future needs. While this collective information is valuable, it needs to be balanced with systems that can respond to large and small fluctuations in the overall global environment.
1. Use the Past to Predict the Future
Instead of only preparing for future events that are predictable, companies need to apply past data and experiences to address new and unexpected scenarios. For instance, a shipper may run a simulation that addresses a severe mismatch of inventory and demand due to a sudden power failure that paralyzes a region. Or, a carrier may examine how to make contingency plans for a sudden excess of inventory due to panic ordering from end users.
Improving existing operations to prepare for the unknown requires three key components:
- Visibility: Real-time visibility shows exactly what is happening all along the supply chain. For instance, it can pinpoint where each vehicle/driver is located so they can be redeployed when there is a disruption in plans or an urgent delivery suddenly crops up.
- Availability: It is important to know the status of all resources, from drivers and vehicles to warehouse employees and inventory. This is especially important when it comes to fleet management because it allows companies to do a real-time check of all of vehicles, including availability, load capacity, and fuel level/electric charge status.
- Predictability: A decision-making support system can help predict different scenarios and prescribe solutions for each one. A good example is if a driver is running late, it will say how late, how many orders will be late as a result, and where to find another resource to assist.
2. Be Ready for Anything with Technology
A recent study by ACG Global of 90,000 midcap corporate executives found that only 18% of companies have adopted technology platforms to solve their supply challenges since the pandemic began. To tackle many of the existing and future supply chain issues, company leaders need to vastly accelerate their technology adoption.
There are a host of options to help improve supply chain systems, including:
- Those that provide real time visibility all along the continuum
- Predictive analytics that look at past data and make logical assumptions about the future
- Optimization-based decision support systems that help strengthen strategic planning
- Learning and corrective based technologies that reconfigure system parameters to adopt to changing situations
- Network wide watchtowers that track key supply chain performance parameters in real time.
3. Take Advantage of Pilot Programs
Companies often debate building in-house solutions or buying off-the-shelf. While internal IT teams know their organizations better than anyone else, they often underestimate the time and cost of building an in-house solution. Today, best of breed SaaS providers have many options that can be tested and implemented in a very short time. Unlike IT projects of the past, these do not require purchasing licenses and upfront implementation costs. Instead, companies can pilot new technologies before making a large investment.
A successful pilot relies on a few key elements starting with identifying the metrics that will be measured to determine the solution’s effectiveness. Selecting the right people to run the pilot is also critical. They need to be the internal tech teams that run the systems day-to-day. Finally, the timing needs to be right. Ideally, a pilot should not take place during an extremely busy period for the company when there are no resources to properly assess the technology.
When evaluating vendors for the pilot, there are a few key questions to ask:
- Do they have the right expertise and knowledge of your business?
- How long have they been in business and what is their reputation?
- Is the system easy to deploy and use?
- Does it deliver the right level of functionality for your business?
- Can it easily integrate with your other tech systems?
- Is the solution scalable and can it grow with your business?
- Is it technically secure? And, what security policies and procedures does the vendor have in place?
No matter where you are in your preparedness of the upcoming holiday season, you can always future proof your operations. No solution is foolproof, but companies that embrace technology to build more intelligent, resilient and agile supply chains will be better prepared for whatever challenges come their way.