This article was originally published on Forbes.
Covid-19 has upended our lives, and there is hardly an industry that has not been shaken by the pandemic. Services from health care to education are being delivered virtually. However, we are not at a point where food, clothing, raw material, health care supplies, etc. can be experienced “remotely.” As a result, supply chains are being stretched, strained and broken in unprecedented fashion. Failure to address critical supply chain issues promptly could exacerbate this situation, causing extreme food shortage and increased global conflict.
This is the first time in recent decades that supply chain disruption has taken place on a global scale, and enterprises need to rise to the occasion. In a future where trade wars, nationalism and preference for domestic manufacturing could become the norm, companies need to adapt quickly and re-architect their supply chains to ensure minimal disruption and loss of economic value.
How Should Companies Address The Challenge?
As complex as this sounds in theory, reality is even more complicated, and the effort needed to implement technologies to redesign supply chains is not trivial. Digital transformation of supply chains is still in relatively early stages and is no longer a “nice to have” capability. The next generation of winning companies will be defined by their supply chain innovation as much as product innovation. An analogy can be made to the role of a CISO (chief information security officer), who was considered optional not too long ago, but has grown to be a critical member of the executive team. Similarly, in less than a decade, I predict chief supply chain officer will be a specialized role companies will create.
Digital transformation of supply chains involves integration between multiple disjointed systems: application programming interface (API) and electronic data interchange (EDI) systems, third party packing, shipping and logistics software, order management, inventory management, supplier relationship management, global trade and compliance management, to name a few. Merely digitizing these processes is not the solution.
Predictions And Recommendations For Supply Chain Technology
To build robust and scalable supply chains of the future, companies must prioritize supply chain resilience, compliance, risk management and reduction of waste/fraud through technologies such as automation, AI, blockchain and data analytics. AI and robotic process automation are increasingly expected to drive the procurement and planning phases of supply chains, and will enable companies to look for inherent supply chain risks, such as delays, noncompliance and lack of transparency. As Thomson Reuters notes, data analytics can improve the efficiency of supply chains by “validating data; detecting anomalies; benchmarking operations; allowing for mobile reporting and visibility into global logistics’ offering real-time route optimization, improved demand forecasts, and inventory management.” Broader acceptance of blockchain will allow supply chains to become more transparent and informed. Blockchain can be a breakthrough in centralizing supply chain data and simplifying the intricate web of relationships between suppliers, customers, exchanges and carriers.
Incorporating these technologies and increasing real-time visibility in supply chains are critical. In addition, supply chain technologies specific to end markets such as food, health care, manufacturing and e-commerce will continue to gain traction as enterprises look for customized solutions that cater to their industry.
I believe these kinds of technologies will drive investments, mergers and acquisitions, and innovation in supply chain technology in the coming years.
Fortunately, many technology companies have solutions to address each of the above requirements. From companies that provide end-to-end diversified platforms for supply chains, to those that are leaders in niche solutions, such as compliance and risk management, there are many options for enterprises to devise the next generation supply chain. The question is, how fast will enterprises move to redesign their supply chains using these exciting technologies?
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