The supply chain battles back

Building resilient, flexible supply chains in the post-COVID era.

By Joe Berti July 26, 2021

The COVID-19 pandemic attacked supply chains from every angle, prompting labor, part and supply shortages while also drastically altering consumer behavior. And as we know by now, the impact stretched far beyond retailers and manufacturers. A recent survey found 94% of procurement officers across aerospace and defense, financial services and IT reported negative impacts from the pandemic, with companies averaging $184 million in lost revenue.

For many manufacturers, the pains of the pandemic have hardly subsided even as vaccines became widely available across the U.S. shortages have remained so manufacturers now set their product strategy based on what parts and components are available as opposed to what their consumers want or what their competitors can’t offer.

For plant managers, the imperative is threefold: Build supply chain resilience and inventory visibility, extend asset lifespan to decrease downtime and enhance productivity across all of their operations to remain competitive in the face of ongoing supply chain threats.

Supply chain resilience with AI and blockchain

One of the main lessons of the pandemic was the critical importance of establishing greater supply chain resilience. Even before the pandemic, 87% of chief supply chain officers said it was extremely difficult to predict and manage supply chain disruptions. For most organizations –84% –the greatest challenge for supply chain officers is the lack of visibility, with an estimated 90% of today’s supply chain data going effectively unused. If you don’t know where your goods are or when your supply chain partners experience disruptions, it is incredibly difficult to plan. Even relatively localized supply chain incidents have massive global effects. Roughly 90% of Fortune 1000 companies reported having tier 2 suppliers in the regions of China most affected in the initial phase.

Organizations that have invested in advanced technology that can promote supply chain resilience are more likely to thrive both in the face of disruptions but also post-pandemic. Working together, the predictive capability of artificial intelligence (AI) and the accountable track-and-tracing provided by blockchain can promote supply chain resilience in a number of ways.

These intelligent supply chains offer end-to-end inventory actionable intelligence and visibility, giving companies more warning in the event of supply chain disruptions. They also can manage the inflow and outflow of inventory more efficiently, reducing storage and transportation costs. Procurement officers can also collaborate more effectively with their supply chain partners, aligning or spotting problems much earlier in the production cycle, reducing dispute resolution and letting them collaborate in near real time using up-to-date information.

Maximize output with predictive maintenance

Manufacturers also need to ensure they do not create bottlenecks and supply chain disruptions of their own when equipment goes down. This requires taking advantage of the predictive capabilities of a cutting-edge enterprise asset management system that can ensure you can keep your equipment and operations running. It also requires knowledge of what parts and equipment are critical to operations, oftentimes, across large numbers of maintenance, repair and operations (MRO) spares inventory and thousands of assets. Unplanned downtime costs an average $260,000 an hour, according to one study. Across a large organization, the source of outages or reason for downtime can also be obscure: 70% of companies lack full awareness of whether downtime is the result of replacement, upgrade or maintenance.

These costs are not necessary with a fully integrated asset management system capable of giving a holistic picture of asset health, detecting and flagging anomalies automatically and helping technicians prioritize and expedite repairs. To help gather data and make it actionable, an estimated 125 billion connected IoT devices are expected in the field by the year 2030. Organizations that don’t invest in gathering, analyzing and operationalizing their data will fall behind.

Many of the supply chain and operational issues organizations grappled with over the last year are not new. For reasons ranging from sustainability to increasing consumer expectations about ethical sourcing, manufacturers were already under increasing pressure to modernize and digitize their supply chain operations. What the pandemic made painfully obvious, however, is the lack of resilience that stretches across every supply chain in almost every industry. In the world of supply chain and global shipping, disruptions are the norm, whether it’s a pandemic or a bad hurricane season. Organizations that invest now in supply chain intelligence and digital transformation will be positioned to thrive in both good times and bad.


Author Bio: Joe Berti is VP product management, AI applications, with IBM Cloud and Cognitive Software.