Current and imminent global supply chain problems have been due to outdated planning methods and lack of real-time insights and simulations.
Supply chain delays are not just frustrating for consumers, like those challenged by not being able to get those stocking stuffers last Christmas. Even major organizations like Apple and Amazon cut their projected earnings, following huge losses in Q3 due to supply chain problems.
Sadly, what we saw was just a dress rehearsal for what is to come in Asia — the upcoming Lunar New Year holiday landing 1 Feb 2022.
Typically, across China, factories are closed and capacity across the supply chain is drastically reduced as Chinese everywhere take time off to celebrate this most important festive season.
While the long break during the Lunar New Year typically results in some disruption in the supply chain every year, the coming one in 2022 will have serious ramifications to an already-traumatized supply chain and global freight market, and likely be felt well into the second quarter of the new year and beyond.
Planning ahead in uncertain times
While the obvious answers to better connectivity across the supply chain is knowing “where my stuff is”, solving the problem is a different thing because many firms in the supply chain ecosystem in Asia still rely largely on legacy technology.
Using business intelligence software to aggregate invoices and look at historical costs, many procurement planning teams have run into the limitations of this approach. Even before the pandemic hit, the limitations were obvious and had been exacerbated by factors such as weather, oil prices and changing customer trends.
Given the unpredictable consumer demands in the past two years, combined with the fact that history data has become increasingly less useful in demand-sensing and forecasting, supply chain problems are bound to persist in organizations that have not transformed digitally. In an 2021 supply chain survey commissioned by Anaplan, approximately 60% of respondents had indicated that digitally transforming their operations was the “highest priority” at the time of the survey. Some 20% of respondents indicated they were “data rich but insight poor”.
Asking “what if” instead of “what happened”
Typically, supply chain visibility typically reflects a lag of over a week. Today, firms need to see even further, with daily or even intra-day visibility—to give them a handle on risk management and alternative sourcing arrangements. Just foreseeing problems—forwards to customers and backwards to suppliers and logistics—is not enough.
If the last few months have demonstrated anything, it is that firms that have largely been reactive, transactional, and operating on a “what happened” mentality now face the vulnerabilities of their inability to act or pivot digitally.
Such firms need to help their peers and partners understand that they need to digitalize completely to harness global supply chain data, and get real-time, multi-enterprise collaboration to drive actionable insights. This is because as important as visibility is, firms need the agility to understand the implications of recent data and act on them quickly.
The ability to connect, share and collaborate with suppliers and partners can help firms to enhance their operations, identify bottlenecks and embark on scenario-based planning even in uncertain times.
Switching from a “what happened” to a “what if” mentality can make digitally ready firms more proactive. The onus is on supply chain leaders today to plan for just in case, not just in time.
Getting started on “just in case”
To get into this mode of planning, firms can start by relying on connected platforms built for the supply chain and supporting ecosystems, so that they can approach their business operations in multi-faceted ways and anticipate the problems of tomorrow.
For instance, on some platforms, firms can create a ‘supply chain twin’—a virtual representation of their physical supply chain—by orchestrating data from disparate sources to get a more complete view of suppliers, inventories, and other information. This can help leaders to enact “what if” and “just in case” scenarios to aid in their data-driven decision-making.
In this new year of opportunity, as the supply chains of yesteryear continue to bleed and languor due to lack of insightful planning, one thing is clear: consumers’ wallets and spending will take a beating, and so will businesses that cannot and will not fix their supply chain planning abilities.
It really is time for key decision makers to start challenging the status quo. While change is difficult for any sector, let alone one that has been knee-deep in problems for so long, the good news is firms are more ready than ever to tackle them. They simply need more business leaders to be better prepared to respond to key demand signals, and to help them align their resources accordingly. When they do this, they will be ahead of the pack, and can navigate the demand spikes with the celebratory and holiday periods to come in 2022.