The Role of Digitisation and Analytics in Supply Chain Resilience

The Role of Digitisation and Analytics in Supply Chain Resilience

The Role of Digitisation and Analytics in Supply Chain Resilience

by Dr Shereen Nassar – Global Director of Logistics Studies and Supply Chain Management Programmes Heriot-Watt University Dubai.

 

 

Although the need to have cost effective and reliable supply chains has been exacerbated by the pandemic and continuous disruption, it has long been underway. Along with significant market changes and an unpredictable trade climate, it has become clear that supply chains must also become resilient and sustainable. The pandemic uncovered the dangers that a global crisis can pose to businesses when supply chains are not equipped to operate during crisis. Therefore, a strategy for resilience is necessary to meet the changing demands of consumers and ensure sustainable growth.

As Bain & Company, a management consulting firm, coins the term, supply chain resilience is a supply chain’s ability to heal, reroute or substitute inputs. Technology has become a game changer in achieving supply chain resilience through allowing real time data, visibility, and responsiveness. Dr. Shereen Nassar, Global Director of Logistics Studies and Director of the MSc Logistics and Supply Chain Management at Heriot-Watt University Dubai shares her views on how digital technologies and analytics can support supply chain and logistics resilience as a topmost determining factor for business continuity and growth.

Digital Supply Chain to Drive Resilience
As the availability of data continues to increase exponentially, adoption of technologies such as Artificial Intelligence (AI), the Internet of Things (IoT), blockchain and 5G makes it easier to gather real time data. According to Accenture Technology Vision 2021 research, Cloud, AI, and Digital Twins are among the top technologies supply chain executives are looking to deploy in their organizations. Systems empowered with this technology can allow for greater traceability and end-to-end supply chain visibility during different stages of the supply chain process. This allows for a new level of supply chain transparency and sector-wide collaboration. Systems empowered with AI can gather information about competitor activity, customer feedback, and can even spot opportunities and trends. Not only that, but combined with machine learning and Big Data, digital supply chain technologies can analyse and learn from data in a way that gives supply chain managers the real-time insights they need to respond quickly to disruption and unexpected events.

Analytics for Diversifying the Supply Base
Diversifying suppliers is necessary for meeting consumer demand and achieving supply chain resilience. Although supply chain managers have traditionally minimised the number of suppliers in their network to reduce operational and logistical complexity, this strategy is not equipped for unexpected disruptions. Maintaining dual or multiple suppliers reduces dependency on one or a few suppliers. As such, it should be viewed more as a priority than a trade-off.

A resilient supply chain requires an assessment of the importance of suppliers and adjusting relationships accordingly to ensure resource availability. For example, many companies gain visibility into the reliability of suppliers through traditional KPIs such as credit ratings and geographic concentration. They also require suppliers to share relevant information on a regular basis. This enables companies to gain transparency into multiple tiers of suppliers so that they can fully assess risks.

The use of technology and AI continue to play a role in the due diligence and risk assessment process. There are many tools and software available supported by customised models and templates that can quickly analyse documents, populate a risk assessment, and offer indicators of risk-level. A leading risk platform can fully automate risk assessment and procedures using data and analytics. It is noteworthy that the role of experts and qualified compliance professionals is indispensable. Digital applications and analytics can support and inform effective decisions.

Digitisation for Optimised Capacity and Inventory Buffers
Traditionally, supply chain profitability has long depended on minimizing surplus due to the cost of capacity and inventory buffers. After the pandemic, many companies realised that their approach needs to change as the consequences of not having inventory buffers proved arduous. Inventory buffers encourage adaptability, create agility in the supply chain and allow for better planning.

Digital technology can optimise supply chain operations through virtual inventories and predictive demand, especially in times of uncertainty. The use of real-time sensor data and tracking technology supported by analytics can optimise inventory management through avoiding obsolescence, optimising placement, enabling proactive planning and responsive replenishment. The use of inventory optimisation software allows more sophisticated inventory segmentation compared to the basic ABC classification through which the reorder points and quantities along with safety stock are dynamically calculated based on market dynamics and enhanced visibility. In addition, digital twins, a virtual simulation model, can be built through harnessing the data that capture the real movement of inventory across a supply chain versus what was planned. This allows better insights into what is needed, identifying the excess and the impact of demand volatility, lead time, supply variability, quality, production and shipping frequency on inventory requirements. Therefore, digital supply chain supported by analytics can optimise inventory and enhance resilience without compromising efficiency.

Although supply chain technologies undoubtedly facilitate business and supply chain resilience, the pace of digital transformation necessitates inevitable challenges. This includes workforce readiness, technical challenges and organisational siloes. However, as executives recognise the benefits and opportunities in deploying these technologies, more and more investments are being allocated to the digital fluency of employees and other digital challenges.

About the Author

Dr. Shereen Nassar – Global Director of Logistics Studies and Supply Chain Management Programmes, Heriot-Watt University Dubai

Global Director of Logistics Studies and Director of MSc Logistics and Supply Chain Management programmes Heriot-Watt University Dubai. She earned her PhD in the impact of advanced tracking technology such as Radio Frequency Identification (RFID) in attaining sustainable supply chain competitive advantage in 2012 from Bath University, UK. Dr Nassar’s main research interest is sustainability and supply chain resilience. She has published a number of research papers and book chapters in areas such as automotive recall risk and social sustainable supply chain performance, sustainable maritime logistics, supply chain information security, contemporary disruptive business applications of blockchain technology, smart cities and implementation challenges. Dr Nassar has extensive international teaching experience across UK and MENA region. She teaches both postgraduate and undergraduate levels. Her teaching proves the diverse expertise she has developed over a decade.

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