In the years following the COVID-19 lockdowns, more companies focused on combating supply chain disruptions. External events such as extreme weather, war, pirate attacks and economic downturns can disrupt global supply chains and force companies to look for solutions. But what is important for companies to remember is that disruptions of this nature are neither new nor temporary. There have always been and will always be threats to the supply chain, and companies will always have to cope with constant changes in the economic environment.
It can be tempting to solve disruption-related challenges by reacting to each problem individually, especially in a world where it is nearly impossible to predict every unexpected surprise with absolute accuracy. But as many companies have learned the hard way, this approach is short-sighted and fails to address the underlying issues that make companies vulnerable to the worst effects of supply chain disruptions. The best way to build a truly resilient supply chain is to develop long-term, holistic solutions that recognize the inevitability of disruption. Collaboration, transparency and digitization are all important tools in this endeavor.
One of the most important actions a company can take to achieve this holistic solution is to break down its silos, both within the organization and across the supply chain, to enable continuous, end-to-end flow from one stage of production to the next. When each department or supply chain partner operates independently—making its own decisions, using its own data, and failing to communicate information outside of its own silo—the entire supply chain is vulnerable. In today’s highly interconnected world, it’s nearly impossible to isolate disruptions. If one link in the chain is broken, all are at risk. Failure to account for this interconnectedness only makes it harder to respond to disruptions quickly and accurately.
Instead, companies should consider the entire supply chain throughout the production process, even before the product enters the physical supply chain. From initial product design through to delivery, the entire product lifecycle should be considered. This doesn’t mean that everyone needs to be an expert in supply chain management to build resilience, but that each unit should consider the bigger picture in their individual decision-making processes. For example, as a product is being developed, the company should think about how those design decisions will impact manufacturing and distribution further down the chain, leveraging data and logistics insights available to all relevant parties. Silos within the supply chain make it very difficult to achieve this level of visibility and flow. But by breaking down these silos, companies increase both their resilience and their competitiveness in the market.
Technology also plays a crucial role in this endeavor. As companies make their supply chains more transparent, it is important that they bring the digital and real worlds together through digitalization and AI. In particular, the use of digital twins (virtual models of real products or processes) can help a company visualize the supply chain from start to finish throughout the planning process and optimize each phase accordingly. Companies should create digital twins of each individual phase right from the start. This way, they can collect robust data, optimize their processes, and prepare to bring AI into play.
Although AI has gained more attention in recent years, particularly with the launch of ChatGPT, it is not exactly new. Machine learning, for example, has been a key part of supply chain managers’ toolkits for some time. AI can help companies optimize their data and make better decisions based on that information. And as companies work to break down their silos, AI can help connect different parts of the process so everyone is working from the same information in real time.
However, like any technological support, AI alone will not solve a company’s supply chain problems, nor should it be used to replace human labor, which, despite some unfounded fears, remains an essential part of business success. Implementing and implementing AI-powered solutions requires strategic thinking, hard work, and human thinking. While AI can certainly help companies become more efficient and resilient, it is not a panacea.
To combat disruption in today’s highly unpredictable environment, companies should prioritize eliminating silos above all else. They can incorporate digital twins to assist them in this process. And as a final tool, AI can help optimize their data and decision-making processes in real time. Disruption is inevitable now and in the years to come, but companies that accept this reality, encourage collaboration, and use technology to their advantage will be best equipped to meet the challenge.
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