Digital technologies mitigate risk, allowing organizations to focus on better inventory management, planning for disruptions, future growth and other operational concerns.
By Sara Pearson Specter
The coronavirus lockdowns revealed shortcomings in many supply chains: cutting off supplies of raw materials and components; impacting labor with social distancing guidelines; increasing online consumer buying habits. As a result, many organizations’ supply chains experienced unprecedented disruptions, as unexpected weaknesses were quickly exposed. And consumers encountered empty shelves and out-of-stocks on key products, as panicked shoppers hoarded cleaning supplies, over-the-counter medications, toilet paper and personal protective equipment (PPE).
While it may have seemed to most consumers that global supply chains were doing a poor job of managing inventory during the initial months of the pandemic, in actuality, such organizations were unsuccessful in mitigating the risks posed by such a widespread, Black Swan event.
“Many organizations’ supply networks did not have the established level of connectivity or visibility to be able to map, track back or understand where products were originating. This new spectrum of risks has surprised many organizations, as it did not align with historic measures for risk management or were not part of their worst-case scenario planning,” said Andrew Stevens, senior director analyst with the supply chain practice at Gartner.
COVID-19 has therefore been a catalyst for companies to not only reevaluate existing and historic technology deployments, processes, systems, best practices and benchmarks, but also to reset their overarching approach. Many are now taking a much broader view of the complete, end-to-end dynamics of the value chain, as opposed to having a singular supply chain focus, continued Stevens.
“Organizations are reevaluating and mapping the specific requirements that need to be captured at either a data or an asset level across the entire product life cycle, outside of the boundaries of the traditional concepts of end-to-end. As an example, consider the food and beverage industry’s pre-pandemic movement to farm-to-fork mapping for enhanced traceability,” he said.
Expanding their view end-to-end gives companies the ability to become much more resilient and agile when facing future, global, risk-based events. It also delivers a greater element of control. Yet achieving these objectives across an intensely dynamic and extended ecosystem of partners—from source through the point of consumption—is no small undertaking.
That’s why companies have recognized, top to bottom, that achieving those objectives requires adopting innovations delivered by a range of digital technologies, many of which were already a part of future strategic plans or projects piloted at the supply chain level, said Ram Krishnan, CMO of Aera Technology. The pandemic, however, has thrust such organizations into what he calls “an existential crisis.”