Supply chain resilience is determined by two major areas – the ability to avoid or contain risks, and the ability to stabilize and return to normal after a disruptive event. Although organizations should strive to do both, they often fall short in one of these two areas – sacrificing agility for preparedness, or conversely favoring nimbleness over hindrance.
In the last few years, countless organizations have had to deal with disruption to their supply chain – ranging from natural disasters to unexpected recalls – pushing supply chains far beyond capacity and costing millions of dollars. In addition, the explosion of data transiting across worldwide supply chain ecosystems has led to IP infringements, lack of compliance, and data corruption, which is further destabilizing supply chains.
The core factors that today make these events more likely to occur – namely globalization and increased complexity – are exacerbated by a lack of visibility and the somewhat inherent growth of supply chain ecosystems that often involve several supplier tiers.
Addressing the challenges
To tackle these issues, organizations must not only constantly strive to create the appropriate resilience level, but also continuously improve and iteratively find new opportunities to manage both expected and unexpected risks.
There are four approaches your organization can take to address these challenges:
- Develop or enhance monitoring capabilities – weather disruption, and port or rail traffic, blockages, and strikes can be proactively managed and sometimes anticipated by creating best-in class planning capabilities. In addition, implementing control tower solutions across your supply chain delivers real-time visibility and rapid reaction times that create a true competitive advantage directly linked to customer experience
- Leverage and master supply chain data – bottlenecks in supply chain processes directly affect the agility of your operations and eventually adversely affect supply chain resilience. Inefficient supply chain master data management (e.g., material, price, logistics, vendor, and customer) will disrupt your operations, create stock outs, and tie up valuable resources. However, with the right blend of cost-effective resources coupled with intelligent automation solutions, master data management can be handled seamlessly to optimize your operations across all major supply chain disciplines
- Optimize the supplier landscape – supplier risk such as bankruptcy or compliance issues (quality, environmental) can be anticipated and managed proactively by, for instance, leveraging blockchain solutions to create instantaneous information sharing across all partners. This includes certifying institutions (for example, ISO and other industry-specific certifications required by suppliers and the entire supply chain ecosystem in certain highly-regulated industries) and providing transparency to all actors.
- Create buffers to foster agility – change in laws and regulations can be addressed by having scalable, agile teams ready to handle the operational impact of any expected or unexpected amendments in regulations – as exemplified by the use case below.
Capgemini’s Digital Supply Chain service is helping a major international client mitigate Brexit-induced risk.
In the United Kingdom, Brexit is creating a significant risk of disruption that could send supply chains into a spin. Although some organizations might feel unconcerned as their operations do not encompass the UK and thus will remain unaffected, consider this situation: a UK tier 2 supplier providing materials to a tier 1 supplier based outside of the UK might not represent an immediate risk. However, this indirect risk will eventually propagate and affect operations if the tier 1 supplier does not manage its own risk properly.
Brexit will have consequences for many – over 150,000 importers and exporters will need to declare customs for the first time in a post-Brexit-scenario. Trucks could create major traffic tailbacks causing significant delays. Companies will need to be nimble and ready for all possible outcomes. In the event of a soft Brexit, the true impact will remain unknown until the actual cut-off day.
A UK-based tier 1 supplier, for example, is facing a direct Brexit threat due to expected, standard customs being instituted between the UK and continental Europe. The level of detail and amount of data required to transition from monthly Intrastat reporting (a monthly obligation for companies that move goods cross-border in the EU) to full customs clearance-required paperwork needs to be managed proactively.
The creation of a lean scalable and cost-effective onsite and remote team to:
- Proactively update all customs-required master data information to enable smooth Brexit transition
- Reactively respond to customs requests in the event of missing or inaccurate information, and thus prevent additional:
- Costs such as, for example, demurrage costs
- Delays, which would stop production elsewhere
In order to increase efficiency, robotic process automation (RPA) opportunities are identified and intelligent automation is implemented as standard to balance the scale and cost of operations.
Immediate increase in supply chain resilience with minimum effort and low investment when considering the potential cost of having goods stuck at the border. Additionally, the client will benefit from the scalability of a solution that enables virtually any volume increase.
With organizations having to process more and more information, the increase in supply chain complexity caused by increasing globalization is creating unsustainable situations for supply chains that need to be continuously addressed to prevent a decrease in competitive advantage and reputation.
Solutions such as control towers, planning excellence, and supply chain data management, combined with intelligent automation and analytics, are key to any organization wanting to create sustainable resilience across the supply chain – incorporating nimbleness and a capacity to anticipate upcoming risks.
In addition, and as illustrated by the case study above, the ability to create added scalable capacities can help you to handle unexpected regulation changes and create business continuity.
To learn more about how Capgemini’s Digital Supply Chain Practice can help your organization implement a resilient blockchain program that tackles your key supply chain challenges, contact: firstname.lastname@example.org
Read Capgemini Research Institute’s “Does blockchain hold the key to a new age of supply chain transparency and trust?” report to learn more about how organizations have moved from blockchain hype to reality.
Jörg Junghanns leverages innovation and a strategic and service mindset to help clients transform their supply chain operations into a growth enabler.