Supply chain cracks have been forming for quite some time and the threats to global supply chain performance have been exacerbated by the powerful black swan events of Covid-19, the war in Ukraine, labor, economy, and so much more. As one professor of supply chain strategy in the UK recently put it, “The problem at the moment is we have a whole flock of black swans coming at us.”
For supply chain management teams worldwide, a new reality has sunk in. It appears that backlogs, breakdowns, and disruptions are to be the new normal, not an aberration. Right now, the Ukrainian war is causing devastating ripple effects across Europe and Africa. China’s Coronavirus protocols are stifling major trade hubs like Shanghai. But it appears that there may be no end in sight for shipping delays, sourcing problems, labor shortages, lockdowns, political sanctions, and other systemic disruptions. For the foreseeable future, a company’s success will be impacted by how well it prepares for, heads off, and handles volatility exacerbated by geopolitical strife.
As one expert at the Center for Strategic and International Studies puts it, “It’s a perfect storm, between Covid, the war, trade turmoil, and the growing antagonism between the US and China on economic issues.”
Along with strategic moves such as more aggressive reshoring and sourcing diversification, tools and tactics for giving stakeholders greater supply chain visibility are crucial. According to a recent Gartner report “Every planning solution needs a model of the system it is trying to plan. Therefore, this model needs to be a good representation of the real-world. If it is not, the plans created by using it will work in the model, but not in the real world. Digital supply chain twins emerge to enable higher quality supply chain decision making and end to end visibility.” That visibility includes adopting an inquisitive approach to planning that explores alternate possibilities by running simulations and testing scenarios using the digital twin.
Data: The Heartbeat of the Modern Supply Chain
Everything starts with data: accessing data from multiple internal and external sources and being able to sense and monitor activity across the end-to-end chain, from sourcing materials to manufacturing, warehousing and DCs, and every mode of transportation. IoT devices are helping monitor usage and consumption in the field. Sensors, IoT devices, and RFID tags track movement through the supply chain of everything from shipping crates to individual products.
The data feeds into decision making. Especially during volatile and uncertain conditions, data-driven decisions perform better than human instinct. For instance, data analytics minimizes the risk of forecast bias introduced by subjective human motivations and ensures counterintuitive tactics like targeted inventory overstocking are justified and linked to business goals.
One of the biggest impacts data can have comes in concert with implementing a digital twin of the supply chain. An accurate digital simulation of a company’s unique supply chain allows planners to examine the potential effects of a range of real-world possibilities. They can understand in advance how changing conditions will impact operations, customer service levels, inventory costs, product availability, and financial objectives. An accurate model coupled with what-if scenario analyses can anticipate the outcome and create a response to these changing conditions by assessing postponement strategies, production schedules, lifecycle assumptions, segmentation strategies, replenishment policies, transportation plans, and so much more.
It's the best way to be ready for whatever is coming next and to build resiliency into your plan.
Creating a digital twin of your supply chain is not difficult if you have the right partner. The Atlas Planning Platform from John Galt Solutions powers the digital supply chain twin for many enterprises across industries and geographies to help them create their own simulations to improve readiness and build confidence that their decisions will deliver the best possible results in an uncertain world. There’s a lot that can be done to survive and thrive during volatile times. One important facet starts with data and a digital supply chain model.