Three Steps For Tackling Supply Chain Uncertainty

Kiwi businesses can have better control over supply chains despite being at the end of global freight networks
 

Companies are increasingly looking to gain greater visibility off their supply chains so that they are better equipped to handle periods of disruption. That’s according to research from Accenture which found that 90% of global businesses perform risk management tests and simulations to their supply chain systems on a regular basis.

Accenture Supply Chain Lead, Vivek Luthra, said New Zealand companies will need to invest in resiliency as they face increasing costs for raw materials and freight, as well as shortages in transportation.

“All supply issues are supply chain issues. While they present great challenges, a shift in strategy towards resiliency means businesses can prepare for these risks and strengthen the most critical points of their network against them.

“Resilience is gained through increasing visibility over the structure of your supply chain, then shifting towards understanding and adapting to the dynamic movements happening within it in real time.

“For example, data can inform simulations and help proactive, real-time decisions to combat disruptions. Toyota’s use of a digital twin anticipated its lack of inventory early and began to stockpile microchips before the height of the semiconductor shortage. Other vehicle manufacturers didn’t do this and that led to Toyota topping American sales in 2021.”

In any scenario, leveraging technology will always provide more resilience for the supply chain. Here are three key steps:

Build a bigger picture, not a bigger warehouse

Building the picture of a supply chain is a cost-effective way to prepare for disruptions and mitigate the risk of delays.

Taking the initiative to map the network, points of manufacturing and usual lines of transport gives visibility of potential risks and weaknesses. It allows organisations to better anticipate problems far enough into the future for them to contingency plan and have more stock on shore.
 

Get proactive with digital twins

Creating a virtual supply chain replica with a digital twin allows companies to test their vulnerabilities and direct investments effectively.

Running a disruption simulation such as sudden facility shutdowns, spikes or drops in demand, or a transport hub interruption can help an organisation understand their risk exposure, how long it would take to recover, and what would be affected.

Equipped with that knowledge, a business can determine where best to invest efforts to improve capabilities within its network.

Enhance network control with digital tools

Investing into data and analytics can inform a ‘control tower’ that gathers information and executes decisions is an important part of a mature, responsive supply chain.

Representing an active birds’ eye view, a control tower might be a small group of people who monitor and react to a series of signals, interpreted from information produced as the supply chain operates.

Having disruption scenarios planned means decisions can be anticipated, or sometimes completely prepared to automatically occur.

The only certainty is uncertainty

“Each supply chain has its own unique circumstances when it comes to what will cause stress on it, but what will remain certain is shocks in the future,” says Vivek.

“What’s important now is looking for what technology is available to provide a clearer picture of the movement of your goods to help prepare for the next disruption.”

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