The rise of globalization has meant that supply chains have become increasingly complex. Just as supply chain organizations have begun to understand the intricacies of global trade, a new wave of economic nationalism is turning everything on its head and creating even greater complexities.
Whether the UK’s impending departure from the EU or ongoing trade wars in other global regions will cause organizations to adapt their supply chains remains to be seen, yet supply chain managers cannot afford to wait to see what happens to make changes to their supply chains. To ensure they are prepared for whatever comes next, those in the supply chain industry should begin modelling, testing, and planning for every potential scenario to ensure resilience at every stage of the supply chain.
By making it a goal to incorporate the following processes into their supply chain in 2019, supply chain managers will be prepared for any scenario that comes their way.
- Breaking Down Silos
Supply chains have traditionally been built up in what the industry calls the SCOR (Supply Chain Operations Reference) model. These are essentially linear models comprised of individual silos. Just like the way your business is structured into different departments or divisions such as sales, marketing, and customer service, supply chains are typically structured into a series of individual silos for planning, sourcing, production, and logistics. Silos create information asymmetry, which in turn makes the organization run at suboptimal levels and lengthens the time from strategy conception to strategy execution.
Typically, these different silos run on different platforms, meaning the data is passed through each individually, providing plenty of opportunity for errors that cost time and money to fix. To overcome this, organizations must first stop visualizing those functional silos when they think about the supply chain and think of ways to connect them by means of overarching metrics and connected processes and systems.
While the SCOR model has worked for organizations, it’s no longer resilient enough to contend with the challenges organizations face today or the challenges they will face tomorrow. If anything, those functional silos have become a barrier to the rapid, reactive decision making that is now required.
Supply chain management platforms that integrate with multiple systems and autonomously route the relevant data in a way that eradicates the margin for error and drives productivity and throughput are helping organizations reshape their supply chains. They are challenging organizations by constantly disrupting the computational horsepower required to make decisions faster and smarter.
- Enabling Digital Decision-Making
The advanced decision making that comes after silos have been broken down relies on accurate data being read in real time. This type of decision making is known as digital decisioning and reliable data sources need to be determined to enable it to happen, as well as setting up the right processes that align strategy to execution across the organization. The combination of expertise from the business, the right technology supporting infrastructure, and alignment within the organization are paramount to enable informed and engineered decision making.
Harnessing data from crucial points across the supply chain, including sourcing, manufacturing, production, distribution, logistics, transportation, and fulfilment provides a big opportunity for organizations.
With this data feeding into a supply chain management platform that integrates with systems across each of these stages of the supply chain, digital processes —including mathematical modelling and algorithms—come into play. The data either informs human decision making or making decisions that are rapidly reflected in the supply chain as a consequence of leveraging supporting approaches such as artificial intelligence, process automation, and remote control.
- Creating Digital Twins
The digitized supply chain is rapidly increasing the value of data. When organizations think about the data they are harnessing from their digitized supply chains, they are thinking about monetization. Creating a “digital twin” of the supply chain is a process through which organizations are unlocking the monetary value of that data.
Digital twinning is the mapping of any physical asset onto the supply chain management platform, which enables monitoring of the physical asset through sensors that track its performance and reflect that performance in the digital model.
The data collected from the physical asset allows the platform to understand and potentially enhance its performance and efficiency in real time by using, among other techniques, machine learning. The digital twin, if set correctly, can get to leverage the data to predict and report problems before they occur, giving organizations the opportunity to act and prevent disruption to the supply chain. This proactive approach to supply chain management is key in the fast paced, changing environment businesses are in currently in.
Beyond avoiding downtime and disruption, digital twinning optimizes productivity in real time and allows the organization to test alternatives to the current supply chain model by running and testing different and appropriately engineered scenarios. This is providing organizations with a rapid alternative to the traditionally time-consuming process of manual planning.
Looking ahead to 2019, organizations will require supply chain decision making to become smarter and more informed with reliable, accurate data from every stage of the supply chain. By breaking up the silos of the traditional SCOR model and investing in software that enables digital decision making and digital twinning, organizations can rely on their supply chains to become both resilient and malleable in the face of future disruption, enabling them to move quicker from strategy to strategy execution.
Carlos Valderrama is the Senior Vice President, Global Customer Success at LLamasoft, managing the Customer Success team which helps customers define and successfully execute their supply chain design strategy using LLamasoft tools.