Supply chain snarls have generated headlines for months. As a result, numerous articles have been written about how supply chains must transform to avoid future headaches. The conundrum is that few pundits seem to agree on how that transformation should transpire. That’s not surprising. The supply chain is complex and there are no one-size-fits-all solutions. Business consultant Mark Minevich (@MMinevich) writes, “The issue facing the world today is not simply ‘THE supply chain,’ the issue is that nearly every single link in the supply chain is compromised.”[1] The situation is so dire many business leaders don’t know where to begin. Among the challenges facing supply chains, Minevich notes, are: Too few workers to fill manufacturing jobs; constant disruptions from extreme weather events; inflation; and resource constraints. He adds, “Now consider that only 4% of supply chain leaders believe their operations are future ready. We are at the precipice of either complete disaster, or a brave new world.”
Saving the Supply Chain
Minevich believes artificial intelligence (AI) is the key to solving the supply chain puzzle. “Leveraging AI to its maximum potential in supply chain technology,” he writes, “is paramount in our race to solve the crises of the day. We can use AI to drive scale and efficiency through new distribution models including direct to consumer, click and collect and subscription, harnessing the automation in the full supply chain ecosystem by improving interconnectivity across customers, partners and suppliers.” On the other hand, tech journalist Christopher Mims (@mims) writes, “When it comes to technological fixes for the systems that make and move goods around our economy, the solutions that get the most attention — self-driving trucks, say, or the idea that pouring magic AI sauce on problems could make them go away — aren’t the ones making a difference.”[2]
For Mims, saving the supply chain will require implementing a number of different technologies, including AI, that address different links in the supply chain. He explains, “Entrepreneurs are tackling the most basic challenges that plague all supply chains. Their innovations include more nimble systems for managing warehouses and tracking inventory. They are also developing software and services that make it easier to rent out unused warehouse space, or to help retailers position goods closer to consumers so they can reach them quickly. And they are working on new ways to automate parts of the labor-intensive supply chain, not just to reduce the need for scarce workers but to help make the employees that companies do hire more productive and happy.”
The pandemic threw a wrench into the workings of the supply chain. Some pundits point fingers at popular supply chain strategies for contributing to the current mess. Matt Gunn (@mattgunn), Chief Marketing Officer at Slync.io, explains, “The same principles that enabled just-in-time manufacturing and lean inventories were also partly responsible for the fragility seen across global supply chains since the start of the Coronavirus disease (COVID-19) pandemic. Everything fell out of balance.”[3] On the other hand, Roger Landman, Product Operations Manager at Syspro, believes the lack of common sense, not just-in-time strategies, should be blamed. He explains, “There’s nothing in the lean and just-in-time methodologies that recommend keeping a bare minimum of parts on hand. In fact, they preach the exact opposite. Lean and just-in-time manufacturing have never advocated for keeping just a bare-bones inventory of parts on hand. Lean also advocates for a shortened supply chain, with the goal of making it as short as one possibly can, because a shorter supply chain is easier to manage. … [Keeping] low inventory levels of parts as a way to take profit [is] a shortsighted decision not supported by lean, and we’re seeing the consequences now.”[4]
The bottom line is that there are no silver bullet solutions to what ails supply chains. It will take a combination of strategies and technologies to future-proof them. Below are few suggestions companies might want to consider:
• Digitalization. Most of the recommendations being offered to improve supply chains require access to data. Craig Moss, Director of Data and Change Management at DSCI, notes, “Transforming to a digital supply chain isn’t easy. You need to keep running the supply chain while you transform. Companies are racing to use data, and develop new data models, to provide greater supply chain visibility and resiliency. But traditional data models where the supply chain function is disassociated from the customer no longer work. A customer-centric digital supply chain is needed.”[5] He adds, “One of the significant challenges companies face in transforming to a Digital Supply Chain is the ability to share data internally and gain specific, critical data from customers and suppliers.”
• Automation. Mims believes robots will come to the rescue in many supply chain situations — especially in warehouses. He describes the inner workings of a warehouse operated by Accelerate360 that was built by a Canadian company called Attabotics. Mims writes, “Because this system is so automated, goods go untouched by humans from the moment they enter the robot cube until the moment they are boxed and ready to be put on a truck — a sharp contrast with, for example, Amazon’s largely human-driven enterprise.” Willy Shih (@WillyShih_atHBS), a professor and supply-chain expert at Harvard Business School, told Mims, “Who wins and who loses in supply chains will depend on who is able to use automation and software to pare down the industry’s dependence on workers, and to make those who remain that much more productive.”
• Better decision-making. Minevich predicts, “Cognitive automation platforms will be used to make real-time recommendations, predict outcomes and make supply chain decisions autonomously within the context of agreed boundaries and business rules, creating self-driving supply chain advanced technologies. Cognitive automation has the potential to transform manual repetitive tasks into highly automated processes with superior performance.” I agree. At Enterra Solutions®, we are advancing Autonomous Decision Science™ so that organizations can make decisions at computer speed with the judgment and accuracy of its best experts.
Concluding Thoughts
Not only did the pandemic disrupt the supply side of the value chain, it affected the demand side as well. Consumers who dramatically reduced spending during lockdowns, found themselves with extra savings and a hankering to spend that money once restrictions eased. Gunn writes, “If you’re looking for a sudden return to a normal, pre-pandemic operating environment, keep waiting. Unless we see an unprecedented decline in demand for goods in western markets, carriers, shippers and logistics service providers (LSPs) will continue to experience more of the chaos that seen over the past year. And, just as things start to look stable again, another peak season will be upon us.” Unfortunately, the culprit most likely to dampen consumer demand is inflation.
Chances are, however, a new state of normality will be established. When normality does arrive, Minevich believes AI will have helped achieve it. He explains, “The global pandemic will push more companies across the U.S. to explore their options to add AI to their supply-chain management platforms. Big wins will help companies around the world to build more resilient, agile supply chains that thrive in any business condition. Now is the time for businesses across the U.S. to fully embrace the power of AI for the good of not only their company, but every company in every link of the global supply chain.” Data, automation, and artificial intelligence will all play a role in future-proofing supply chains.
Footnotes
[1] Mark Minevich, “Can Artificial Intelligence Save America From The Global Supply Chain Disaster?” Forbes, 5 November 2021.
[2] Christopher Mims, “The Technology That’s Helping Companies Thrive Amid the Supply-Chain Chaos,” The Wall Street Journal, 12 February 2022.
[3] Matt Gunn, “New Normal Presents New Way of Doing Things for Supply Chain Leaders,” Supply & Demand Chain Executive, 5 February 2022.
[4] Roger Landman, “Lean, ‘Just-in-Time’ Management Didn’t Cause the Supply Chain Crisis,” SupplyChainBrain, 9 February 2022.
[5] Craig Moss, “The Digital Supply Chain Runs on Data,” Supply Chain Management Review, 4 January 2022.
