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The pandemic is exposing vulnerabilities in global supply networks across industries, making the case for digital transformation more compelling.
By Pragati Verma, Contributing Editor, Straight Talk
2020 has proved to be a year of reckoning for companies with global supply chains, as quarantines, factory closures and travel restrictions have disrupted business operations at an unprecedented speed and scale.
The damage caused by the pandemic is already the single biggest event of the decade — more potent than cyber threats, says the Supply Chain Resilience Report 2020 from 3D Hubs. According to their data, cybersecurity issues have affected less than 10 percent of firms over the past 10 years, compared to 60 percent that have suffered directly as a result of COVID-19 disruption.
Virus Exposing Cracks
Despite the pandemic’s massive toll on supply chains, most analysts believe that this is not a new problem. In a blog post, Forrester principal analyst Renee Murphy calls it a “tale as old as time.” To her, public health-related crises, such as COVID-19 are a “systemic risk related to supply chain and third parties” and have exposed the vulnerabilities of global supply networks.
She explains, “Replace the coronavirus with SARS, MERS, or even the bird flu, and you have the same basic story. A specific region (usually in Asia) that typically serves as a manufacturing and supply chain hub sees a mass outbreak of an epidemic virus. The virus inhibits production lines and manufacturing slows to a halt. Then the virus itself and the economic implications it caused join forces to create a global panic.”
It might not be a new challenge, but it is exposing the vulnerabilities of supply chain networks, says Michele Goetz, vice president and principal analyst, Forrester. In a blog post, she writes, “Peering into enterprise technology investments and implementations, the story is clear. Instead of data leading strategy, plans, and processes, it followed the centuries-old industrial practices of lean automation.”
To her, the problem with lean automation is that it is “linear, defined, rigid” and doesn’t leave any room for disruptions. “The data, even in the age of machine-learning-driven automation, is simple and contained to a handful of data points and 1–2 metrics. The coronavirus demonstrated immediately from shutdown to treading water to reopening that our over-optimized businesses failed. There was no elasticity because the process defined the data, rather than data defining the process,” she adds.
Time to Double Down on Digital
In this moment of reassessment, supply chain executives need an agile strategy that allows them to sense and respond to changes in the business context as they happen, according to Gartner’s report announcing Top 25 Supply Chain leaders for 2020. Noting that the leading supply chain companies “are early and frequent adopters of digital technologies”, Gartner analysts recommend steeping up investments in digital technologies to thrive in the harshest economic conditions.
“In the current environment, the natural tendency of many companies is to pull back spending, including money tied to transformational programs. Advanced supply chains are pressing forward, and in some cases, accelerating investments in real-time visibility, planning and agile supply execution capabilities that are well-suited for supporting uncertain demand mixes and volumes,” says Mike Griswold, vice president analyst with the Gartner Supply Chain practice.
In its report The 2020 Strategic Supply Chain Technology Trends, Gartner has identified the top eight technology trends with “a high potential for positive impact”
- Hyperautomation: A framework to mix and match a vast array of technologies in the best possible way, such as historic legacy platforms with recently deployed tools and planned investments.
- Digital Supply Chain Twin: A digital representation of the physical supply chain to enhance situational awareness and support decision-making.
- Continuous Intelligence: Systems that can look at the processed data in near real-time, understand what is happening and take action immediately.
- Supply Chain Governance and Security: New solutions in the fields of privacy and cyber/data security, such as track-and-trace solutions and smart packaging.
- Edge Computing and Analytics: proliferation of Internet of Things devices to process and analyze data close to its collection point to enable low-latency processing and real-time, automated decision making.
- Artificial Intelligence: Toolbox of technology options helping supply chain leaders solve long-standing challenges around data silos and governance.
- 5G Networks: Fifth generation mobile network that can minimize latency and enhance real-time visibility across the network.
- Immersive Experience: Virtual, augmented and mixed reality interaction models can help in use cases like onboarding new factory workers through immersive on-the-job training in a safe, realistic virtual environment.
The Future is Data-driven
This push for digital technologies and modern data analytics tools might not stop even after the pandemic passes. “The post-COVID-19 world is a data-driven world. It is also a much more complex world, going against the grain of the “simple is best” aspect of the pre-COVID-19 viewpoint,” says Forrester’s Goetz in a blog post. She expects all organizations to capture all the data, in all its forms and formats, whether they need it or not.
“While businesses put plans in place for any global, economic, industry, and biological events they can imagine, it is the data they collect and can access that will bring strategic elasticity when needed for the things the C-suite doesn’t see,” she sums up.
Pragati Verma is a writer and editor exploring new and emerging technologies. She has been a business journalist and managed technology sections at India’s The Economic Times and The Financial Express.