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Supply chains: Challenge and Opportunities

A number of surveys IDC conducted for the past 3 to 5 months informed their presentation during an Infor Virtual Summit, about the importance of visibility of  supply chain ecosystems.

Visibility here is defined as the impact of changing circumstances upon supply of inventory whether it be raw material or finished goods from tier to eventual consumer regardless of whether it’s B2B, or B2C and so on.

IDC Research director, Stephanie Krishnan shared, “This gives us a good insight into what’s happening in the market for retailers, manufacturers and distributors.” This has inevitable impact upon customer experience and satisfaction, she also later pointed out.

The current situation has brought a lot of existing and pre-pandemic issues in supply chain, into sharp focus.

For example, sustainability and recovery, the battle for talent, and more.

One point, the integration and convergence of technology is actually an advantage for organisations that successfully executed it.

“Those organisations that have done this, are actually seeing there is value in doing so, and are actually coming out ahead during this current period,” Stephanie pointed out, adding that they are ahead of most organisations in going through recovery and looking for new areas of investment to grow.

It has made things like remote work and touchless production increasingly possible.

“All of these systems using cloud computing, remote learning. virtualisation – these are our top responses when it comes to technologies that that have had increased performance over the last few months,” Stephanie shared.

Two other items of concern that the Research Director pointed out were ensuring supply and dealing with complexity of value chains. This does not impact just the physical moving of goods, but also customer experience.

Complex value chains still exist and current conversations veer towards making them shorter. “However some concerns around that is we will end up with multiple shorter supply chains, and we are actually going to be dealing with more increased complexity,” Stephanie said.

Supply chain vulnerabilities

As transport of raw materials became constrained, companies became acutely aware of supply chain vulnerabilities.

“Now we are all looking to see what will happen from a demand shock perspective as well as addressing any current and future restrictions as we move through the current situation,” Stephanie said.

IDC also heard how visibility beyond Tier 1 has been limited. This concerns the upstream portion of the supply chain, but they carry implications for retailers and distributors further downstream.

Talk of simplifying supply chains have also wandered into talk about localising manufacturing and shortening supply lines.

She said, “We’re hearing stories about government potentially putting in legislation that says ‘if you want to sell in my country, you have to make in my country’.”

Stephanie brought up the potential of this creating more complexity with more mini supply chains.

“Think of the number of different factory networks to put things together. And it begs us to ask the question whether this would be more or less complicated.”

But there are opportunities

Stephanie also highlighted the supply chain opportunities that the coronavirus pandemic is actually triggering.

For example, she said, that there is a trend for the role of AI, driving decisions, automating activities such as inspection and supporting other capabilities such as collaboration and ecosystem support.

Automation for hardware and software is another opportunity, for example robotics (hardware automation) and RPA (software automation). “These are the clear technology choices for this category,” Stephanie said.

Another trend is the convergence of IT and OT data, bringing together sensor data that is coming from the factory floor, from transportation, from retail and so on, and then integrating them into IT capabilities to drive greater insights and decisions.

Addressing visibility and digital competency

Another opportunity has also arisen but as a consequence of digital competency gaps. This is in the context of increasing visibility into upstream and downstream of the supply chain.

“Cloud access and online learning are two areas where we are seeing organisations seek to build up the competencies required in order to support remote access and also to support other systems they are putting in place, including chatbots, being able to do things via cloud, being able to do virtualisation and so on.”

Organisations are actually seeking to address this particular digital competency gap with short courses and online learning, Stephanie said.

In conclusion, information sharing, cloud and connectivity are becoming essential for the industry to be able to adapt to the current situation.