Article by Sunil KardamConsulting & Analytics Leader at Grass-A Strive Business
THE three-day dockers’ strike a few months ago caused a shock wave throughout the entire American commercial industry, costing the country’s economy $5 billion per day. Although the dust has since settled, this event serves as a serious business lesson in the importance of supply chain resilience.
Experts predict that disruption will only become an increasingly common thorn in the side of business owners, as crises such as geopolitical turmoil, climate disasters and cyberattacks continue to increase.
And yet, surprisingly, businesses lose momentum by revolutionizing supply chains to make them stronger and more agile. The fact that companies are slow to create advanced planning and scheduling systems is extremely concerning given the exponential risk of disruptions and threats.
It is crucial that business leaders do not drop the ball and reorganize their efforts to strengthen the resilience of their supply chain. Let’s see how they can achieve this through proper risk management and digitalization.
Out of sight shouldn’t mean out of mind
Risk management should involve careful forecasting of contingency plans in the event of a disruption, not in the event of a disruption.
In fact, there is a whole zoo of risks experts have invented over the past two decades to truly illustrate the scenarios of these impending problems. Concepts such as the gray rhino, black swan, and white elephant can help business leaders plan risk management strategies for various scenarios that disrupt supply chains and operations.
Global political unrest is the main cause of disruption. Additionally, Deloitte highlights that geopolitical turbulence is a huge disruptor in delivery and delivery times: their ideas show that the average lead time for materials is around 79 days, compared to 65 days in 2019. This is not just a major problem for manufacturers: it threatens the continuity of businesses throughout the value chain . And with continued geopolitical instability, such as the ongoing wars in the Middle East and Ukraine, businesses should prepare for the high likelihood of continued disruptions to delivery times and shipments.
Another risk that business leaders need to increase their resilience against is cyberattacks. Which is worrying, cybercrime is only increasingand the resulting financial losses reached a record $12.5 billion. No business is safe from this threat, and Gartner predicts that by next year, 45% of businesses worldwide will have suffered a cyberattack on their software supply chain, triple the number in 2021.
Finally, the current climate crisis is a problem that we cannot continue to ignore. Environmental risks expected to cost businesses dearly collective 120 billion dollars by 2026 – by mid-century they are expected to lead to a the enormous sum of 25,000 billion dollars in net supply chain losses. To illustrate the ramifications of climate on supply chains, the devastating impact of Hurricane Milton in Florida brought trade through seaports to a sudden stopimpacting more than 900,000 jobs.
The catastrophic consequences of these major supply chain disruptions are undeniable and constantly loom on the horizon as threats to businesses and manufacturers. Without a robust action plan to manage these risks, they will continue to harm livelihoods and the viability of businesses.
Listen to the data
Emerging technologies such as AI are essential tools for future-proofing supply chains, and end-to-end visibility is essential to maximizing agility and resilience. Real-time data sharing is essential for proactive risk management so businesses can act quickly to address disruptions as they arise.
Actionable analytics is at the heart of the digital revolution. They transform business reporting and KPI monitoring to help executives identify bottlenecks, track performance, and forecast demand, easily making sense of their data.
Supply chains are becoming increasingly complex, and business leaders must be able to act on this real-time information to weather storms as they arise. Additionally, continuous improvement of risk management strategies should be non-negotiable for future planning, and the KPIs derived from this valuable information will enable companies to continue to raise their operational performance benchmarks.
However, the challenge lies in accessing this data. Fortunately, there are a number of emerging solutions that help businesses digitally transform their supply chains.
Exploit emerging solutions
According to a recent McKinsey global survey65% of organizations regularly use generative AI (GenAI). For supply chain management, GenAI is an extremely valuable tool, helping businesses extract actionable insights from structured data (such as databases and spreadsheets) and unstructured sources (such such as emails, videos and documents). This technology helps simplify decision-making by providing understandable summaries from data sources so business leaders can focus on strategic actions without having to sift through huge volumes of information.
Another rising star is computer vision, which helps companies improve their quality control by automatically detecting defections and monitoring staff performance. The business benefits of computer vision are multiple: they can use it to improve safety, reduce waste and maintain high standards in production and handling processes. This solution also helps organizations gain visibility into their supply chains with the real-time sharing capabilities of computer vision.
Finally, digital twin technology is another tool that businesses should consider leveraging to strengthen their operations and supply chain management. Combined with Industrial Internet of Things (IIOT) capabilities, digital twin technology offers virtual models of physical assets such as machines so businesses can perform predictive maintenance and minimize downtime. By anticipating issues before they impact operations, digital twins support continuous productivity, allowing businesses to respond quickly to fluctuations in demand or unanticipated interruptions.
Supply chain resilience won’t happen overnight, but technology and data are certainly helping business leaders get back on track before it’s too little, too late. Although the road ahead won’t be easy, having the right action plan in place will help businesses overcome obstacles as they arise.