How to build resilient supply chains in times of crisis

The role of digital in the supply chain

Visibility across the supply chain includes capabilities to sense or predict supply and demand, processes for collaboration with suppliers and customers and ways to assess and measure supplier-risk in near real time. The role of visibility cannot be understated: a 2019 EY supply chain survey of 500 executives across the Americas showed that end-to-end visibility was ranked as the top factor in creating a successful supply chain.
 

Building these digital capabilities starts with making sure supply chain data is accurate, timely and secure — no easy task for chief information officers and chief data officers. In addition, investments in digital twin, control tower technology, internet of things, and shop floor technologies can make a critical difference in bringing about the digital supply chain.

A digital twin is a virtual model of the physical supply chain. It helps supply chain leaders model what-if scenarios using numerous variables and presumed operating conditions. Digital twins enable smart real-time decisions to optimize the supply chain during regular operations — and can serve as a form of continuity planning in the event of a crisis.

Control tower functionality leverages AI and machine learning to anticipate supply chain interruptions and react to real-time disruptions in supply. Companies can then deploy resources as needed to encourage suppliers to shift production from one product to another, monitor supplier financial risk and update contingency planning and forecast on a per-minute basis.

The internet of things uses devices and sensors across the supply chain to monitor and track events. These sensors are found inside instrumentation on factory production lines, in wearable medical and location monitors and even through distribution/logistics systems to track goods, including perishable items. Event collection, data-integration technologies and analytics are crucial in making data arriving from hundreds of thousands of sensors throughout the supply chain actionable.

For manufacturing companies, the shop floor is the linchpin of the supply chain. When something goes wrong there, the disruption cascades far and wide. One of the immediate benefits of a digitally amplified supply chain is that leading practices and “in-the-trenches” wisdom from the shop floor can be effectively captured and utilized. This increases resiliency during a crisis such as COVID-19, when management staff might be absent. Operators on a digitally enabled shop floor also have more autonomy and can more easily physically distance from supervisors. Coaching can happen remotely as needed.

Beyond the shop floor, supply chain transformation helps break down organizational silos to reduce redundancies and other inefficiencies. A digital supply chain connects seamlessly to other parts of the business: finance, sales, real estate and so on. This helps companies manage costs and avoid unnecessary capital expenditures.

Across the entire supply chain, digital made a significant difference in P&G’s response to the COVID-19 crisis. The company’s supply chain model included self-sufficient supply chain teams that could operate without a manager on premises and could be physically fragmented as needed for social distancing.