How to build a shock-proof digital supply chain

The COVID-19 pandemic has put the supply chain function of every business in the spotlight, revealing how interconnected our world truly is, and how vulnerable businesses are to any disruption of this delicate, interwoven ecosystem of suppliers and buyers, spread across countries and continents. Think of all the things that happened before and after the unforgettable years of the pandemic to add to the global economic stress - Brexit, the trade war between the U.S. and China, and most recently, the armed conflict between Russia and Ukraine. 

Once considered a behind-the-scenes player in a business, the supply chain has now taken the hero’s role - today’s supply chain managers are responsible for adding the extra edge that takes the company ahead of the competition, shockproofs the business from disruptions, and creates a responsible company that cares about environmental sustainability.

Let’s understand this with an example. Say you are a bottled drink manufacturer. You have a supplier at every step in the process - one who manufactures the bottles, the other who produces labels, another who creates the drink, one who bottles the drink, and yet another who packages the product. Considering the economics involved, these suppliers may be spread across different countries, so that you get the price advantage. Then, comes your distribution chain, which again involves an intricate network of suppliers. Imagine a disturbance at any of these stages - your entire business model goes for a toss. 

The supply chain, therefore, is no longer a single entity, or a simple one or two-step process where you source, package and sell.  It can be imagined as a five-step process, from design to operation:

1. Design - The connection of people and processes in a single platform, so that innovation can be fruitful. If you think ‘green’ or sustainable at this stage, it reverberates across your supply chain. This can be as simple as substituting recycled plastic for your product.
2. Plan - Sourcing and collaborating with ethical suppliers, so that your production line meets legal and regulatory requirements.
3. Manufacture - The creation of an integrated system where departments talk to each other so that there is a reduction of wastage, and elimination of errors.
4. Deliver - The logistics of how you deliver your product to the consumer. It should be fast, efficient and in the current business scenario, have a low carbon impact.
5. Operate - Your operations systems have to be intelligent enough to adapt to changing needs and be built to continuously improve the performance of your assets.

The next part of the challenge today for businesses, and unsurprisingly, MSMEs in particular, is to inject resilience, or the ability to withstand hard times, into this complex, five-stage supply chain function. 

The changing role of the supply chain that we see above has prompted technology to enter into the picture, transforming what was once a routine, manually operated function into a dynamic, strategy-oriented, thinking department, that now acts as the hub of the company’s network of suppliers that is able to quickly substitute for any losses along the chain, identify crisis before they arrive at the doorstep and able to adapt to new business models, like the ones that require extending post-sale services to consumers. 

Technology also incorporates the present movement toward sustainability, where governments and corporations are accounting for the carbon footprint at every link in the chain. Sustainability is not just about greening your business, it is also about creating value systems that are meant to live longer, which is why there is a focus on ensuring the dignity of labor and providing a clean and safe working environment for your people. 

Before you get started on your digitisation journey, here is a short self-assessment checklist to consider:

1. Are you willing to become more agile, i.e., adaptable?

This will help you sense, predict and respond appropriately to disruptions. When you become agile, you break down barriers and connect the various ecosystems within the supply chain - suppliers, contract manufacturers, logistics providers, vendor partners, and even customers. 

With cloud-based demand planning, you can combine production, network, and distribution aspects, and keep an eye on inventory, supply, replenishment, sales, and operations simultaneously, which will help you adjust demand and supply requirements, even in uncertain times. 

2. Are you ready to embrace Industry 4.0? 

Companies that invest in digital technologies have the advantage of creating digital assets that integrate all the business functions on a single platform and enable machines to ‘speak’ through sensors - the simplest explanation for Industry 4.0.

Next-gen technologies like AI, Machine Learning, and Data Analytics also make companies more productive, and able to sense and respond to changes as they have better visibility and predictive capabilities. When connected to digital logistics, there is the added benefit of being able to make better decisions in times of crisis, and improve customer experience with fewer delays and hiccups.

Whether you work with third-party vendors or operate your own logistics and warehouse systems, you can automate and build predictive analytics in these crucial systems to enable faster last-mile delivery.

3. Are you looking forward to deepening your connections with business partners? 

Networking will improve collaboration and help you achieve your business goals.

If you want to be resilient, you cannot rely on one set of suppliers alone. Getting comfortable with the same network is what caused several MSMEs to fall flat during the COVID-19 pandemic. 

Technology will enable you to broaden your network and interconnect your supplier systems so that you are able to easily locate alternate sources in case of any crisis. Going local reduces the strain on not just production but also logistics. With technology, you can, for example, automate supplier management and manage your global supplier network in real time. 

4. How much do you care about sustainability? 

For several industries, becoming sustainable is not an option anymore, it is a way of life. It is also the path to long-term profitability. 

When you incorporate sustainability principles, technology will help you evaluate your success in this endeavor by showing you the carbon footprint of your business at every stage, so that you can make the necessary adjustments to meet your sustainability targets.

You can also integrate environment, health, and safety principles into your supply chain to protect your workers and receive regular reports on whether these systems are in compliance with regulatory norms, or even your company policies.

Digitisation, therefore, holds the key to unlocking your potential as a business, as it has the capacity to address all of these complexities. With cloud integration, you will also be able to manage your supply chain from anywhere, at any time, maintain the health of your assets and deal with customer needs quicker. 

Ultimately, you will be able to create a business that is productive, cost-efficient, profitable, customer-centric, sustainable, and able to withstand the pressures of uncertainty. 

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