Businesses are building supply chain resilience with data
Companies are trying to strengthen their supply chain resilience by using data to improve visibility and connectivity between disparate links, data management and supply chain experts say.
Decades of globalization have meant that supply chains have become increasingly complex, but the outbreak of the Covid-19 pandemic led to continued disruption, prompting many to abandon their earlier laser focus on efficiency and “just in time” to also build of resilience and reliability.
Therefore, to achieve this increased resilience in the context of increasingly complex and global supply chains, many companies have sought to increase their visibility and connectivity with suppliers through improved data flows and integration.
The importance of transparency and connectivity is highlighted to Computer Weekly by Henrik Smedberg, Head of Intelligence Spend Management at SAP, who tells the story of an unnamed SAP customer who found out two weeks after the fact that one of his pallets was on the container ship was blocked the Suez Canal in March 2021.
A chief procurement officer told him, “Had we known this earlier, we probably would have sent someone to get another pallet of these goods.” The problem wasn’t an inability to source from elsewhere, but the fact that the company didn’t once knew it had cargo on the ship.
“Had they known, they could have diverted the other traffic – that pallet would have been stuck, but their production would not have stopped, which it did [as a result of the stuck pallet],” he says.
Tom Fairbairn, engineer and supply chain expert at software company Solace, says supply chains have come under significant pressure over the past two years from a mix of intermittent lockdowns resulting from the pandemic, broader geopolitical instability and rising consumer demand for more complex and personalized products.
“The key message here is that these instabilities are not getting better, that there will be future supply chain shocks. What we’re seeing now, particularly from our more advanced customers, is that there’s only so much transparency you can do,” he says, adding that many companies are moving to a real-time data sharing model to communicate things as they happen.
Monitor and respond
While modern supply chains are designed for “just-in-time” production, Fairbairn says, the IT behind it is batch-based, “so you report every night and adjust things accordingly.”
Unlike batch processing – which processes the data collected and stored at a specific point in time – Solace software’s event-based architecture allows its customers to monitor and respond to “events” affecting the business as they occur.
“Transparency gives you the ability to see what’s going on within the supply chain, and without that visibility you won’t be able to act [to changes]…but there’s no point in being able to say “my shipment won’t arrive on time” or “my factory production will be delayed” if you can’t do anything about it,” he adds communication between the links in the chain is crucial.
“The ability to connect all of these disparate systems while enabling this real-time, event-driven capability is critical, especially for large, global organizations. But it’s difficult because you have to communicate in many different types of protocols – you can’t use one integration standard, you have to be able to talk about many different ones.”
Henrik Schmedberg, SAP
Smedberg adds that many of SAP’s customers have also worked to gain better insights into their supply chains by working more closely with trading partners throughout the chain.
“The digital dialogue between trading partners is crucial, not just for these two [direct trading partners]but also for the downstream impacts,” he says, adding that SAP’s focus when it comes to supply chains and procurement is to help its customers ensure the data is “flowing to the right trading partners so they can make proactive decisions equipment, logistics and the right purchase when moving”.
He adds that organizations that have traditionally revolved around “cost, control and compliance” are now considering “connectivity, conscience and convenience” alongside these other factors.
On the last point regarding convenience, Henrik says this refers to “having information at my fingertips whenever I need it”, meaning that it is important for companies not only to collect data about their operations, but them Structure them to deliver actionable insights. “Once you get actionable insights from the data, real change happens, and that’s really what companies are looking for,” he says.
A story of two supply chains
According to Leo Bonanni, co-founder and CEO of supply chain visibility firm Sourcemap, companies that had already invested in creating these digital connections between links in the supply chain performed much better during the pandemic because they were better able to respond to unexpected changes.
“The pandemic was really a story of two supply chains. Those companies that have mapped supply chains down to raw materials – what we call end-to-end visibility – have been able to reach out instantly to people around the world they depend on for raw materials,” he says.
Leo Bonanni, Sourcemap
Bonanni adds that Covid has prompted many companies to start digitizing their supply chains to avoid similar disruptions in the future. “We’ve seen fivefold growth in the last two years. Many companies realized that they could save themselves a huge headache at very little cost,” he says.
In addition to the transparency that comes from digitally linking all levels of the supply chain down to raw materials, the data collected through this process also helps to anticipate risks, whether operational, regulatory or sustainability-related, according to Bonanni.
“Once you’ve mapped your supply chain early enough, you can find your pain points and start exploring alternate sourcing regions, alternate suppliers, and alternate ways to get the goods to market,” he says.
“It’s really just a matter of time. Worst case scenario is finding out you had to map your supply chain to solve the current crisis; The best case is when you have mapped your supply chain, identified the risks and created the contingency plans in case something happens and something happens.”
However, a major obstacle to achieving this level of integration, according to Bonanni, is the sheer volume of data companies need to review and analyze, as well as the need to build new business processes around this capability.
mastery of the data
Mike Kiersey, senior technologist at data management firm Boomi, adds that in order to get high-quality and trustworthy data insights, organizations need to examine their own digital assets as well as those of their partners — which is the case for larger providers, likely a mix of legacy and legacy Cloud-based technology – prior to integration, to allow all parts of the chain to communicate effectively.
With a mix of out-of-the-box connectors and bespoke application programming interfaces (APIs), Boomi is able to help customers integrate with a range of software vendors and hardware manufacturers, allowing its customers to manage data at a “master” level.
“They’re going to be a mix of legacy technology, a mix of legacy integration technology, probably point-to-point and hard-coded, and probably built on top of a set of legacy APIs,” he says. “The ability to connect to these different systems…allows customers to expedite troubleshooting that they may have related to a particular order.”
He adds: “You cannot take reactive, proactive or corrective action if you do not have visibility into this data.”
Pointing to how consumers are being kept up to date on the progress of deliveries from companies like Amazon, Smedberg says: “The way we do business at home on a Sunday is what people are now of expect a Monday”.
He adds that ultimately, using data to improve connectivity and visibility is part of a broader trend to “consume enterprise behavior.”