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Supply Chain Check-Up: A Step Up In 2018

There are three core areas in which companies can begin taking charge of their supply chain to maximize success in 2018.

Mnet 194160 Supply Chain
Adam MussomeliAdam Mussomeli Stephen LaaperStephen Laaper

Last year, businesses saw disruption transpire in many different forms — from emerging technology to natural disasters. Without question, supply chain resilience has become more important than ever before. Looking ahead to the impending challenges of 2018, it is clear that any business’s success begins with a wellness check for the supply chain. But how do organizations embark on this task? There are three core areas in which companies can begin taking charge of their supply chain to maximize success in 2018:

Analyze your data: There is an enormous amount of data readily available from manufacturing lines to the warehouse floor, from tried and true methods, like sensors on machines, to new technologies, such as video analytics and cognitive capabilities. With this in mind, 2018 can be the year where organizations find ways to make sense of the large quantities of data at their fingertips and apply it to real business solutions.

The overwhelming task of leveraging this data is what’s holding many organizations back from unlocking a wealth of knowledge not only on their supply chain’s performance, but also on patterns of behavior of customers and partners. As organizations look to utilize this data, they should think big, start small and scale fast:

  • Think big: The reason data has remained largely untapped for many years without being used to its full potential is as much of an organizational problem as it is a data problem. Traditionally, businesses have been siloed across functions. However, if we start thinking bigger, looking at our skillset across finance, IT, mechanical workers on the warehouse floor and beyond, we can be able to “crack the code” on what all of this data truly means for our businesses at large.
  • Start small: Before full-scale implementation is put into place, teams have to prove to their organizational leadership where the value truly lies. As such, companies should “start small,” showing a concentrated use-case and overarching business value on a micro level before macro level implementation.
  • Scale fast: Once an organization finds its rhythm in leveraging this data, it’s time to move — and quickly. This momentum can help businesses break through the divides that previously prevented supply chains from leveraging data, in some instances for decades. Connecting the dots can help transform a linear supply chain into a robust, interconnected and efficient supply network, ultimately getting to the core of client needs.

Embrace emerging technology: Cognitive, AI and machine learning aren’t just reserved for the CIO — they can be implemented in the supply chain as well. As blockchain and other emerging technologies continue to take shape, leaders should examine how to use them to optimize the supply network.

Over the next year, technologies like AI and augmented reality will have real impact on the way supply chains function. The ability to augment data and scenarios within the supply chain can enable enterprises with real-time insight into their supply chain. And it won’t take away jobs either — it’s likely going to make us far more precise and intelligent in our decision making.

An example would go something like this: in typical inventory and supply chain management, teams can watch two or three thousand SKUs (stock keeping units) at any time. By implementing the right AI strategy, systems can flag potential inventory problems. This allows humans to be hyper-focused on 20 or 30 SKUs that really make the most impact, cutting down the volume and narrowing the scope on what is going awry and requires correction to ensure a smoother network. This drives value as workers can put their attention where it really counts.

Map your supply network: Businesses with seemingly straightforward supply networks may lose sight of the multiple tiers of suppliers beyond the first and second tier. It’s usually the case that organizations are not disrupted by a tier one or tier two supplier, but someone within the eighth or ninth tier who manufactures something small but critically important — say, a specialized titanium-coated screw that holds your machinery or product together — a risk supply chain leaders may not even see coming.

Adopting emerging technologies is an important factor here, and the human element has never been more critical. While having the ability to sort through the data and sound the alarm in the face of disruption is key, what are the next steps to ensure supply chain resiliency?

With disasters from hurricanes to wildfires taking a toll on availability and production in 2017, kicking off 2018 with a complete understanding of the tiers of your supply network can help avoid potential disruptions. It’s important to combine depth of tiering with rapid assessment and response capabilities. This isn’t dependent on someone watching the news and making a decision after the Richter scale is rattled thousands of miles away. The modern supply chain needs an “always on” tool assessing risk and serving up suggestions before the disaster truly strikes. People, however, will still need to align on recommendations, put it into action, and react to the consequences. Sole reliance on emerging technologies for decision making won’t be the solution: supply chains still need the human element, perhaps more than ever before.

As companies design supply chain strategies for 2018, the picture could not be clearer: it will be the combination of human and machine — not just machine — that makes the difference between success or breakdown for the organization of now and the future. By ensuring the right strategies, techniques, technology and talent are in place, supply chains can move in the right direction and foster success, even when disasters strike.

Adam Mussomeli and Stephen Laaper are the Digital Supply Networks Practice Leaders and Principals in the Supply Chain & Manufacturing Operations Practice at Deloitte Consulting LLP

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