From Disruption to Adaptation: The Need to Evolve Your Supply Chain Thinking Today
Written by Glen Lawson Account Director - Transportation, Logistics & Supply Chain, Appian
The past few years have exposed the fragility and complexity of global supply chains. With disruptions ranging from pandemics to geopolitical tensions, the business landscape has been irrevocably changed. This has compelled Australian organisations to reevaluate their supply chain strategies and incorporate lessons from industry leaders to help build more resilient futures.
In our quest to understand these shifts, the team at Appian (a software company that automates business processes) recently consulted with leading experts from Tata Consultancy Services, KPMG, Deloitte, and Spark Equation, who shared their insights on adaptation strategies, the role of technology, and the emerging trends in supply chain management.
The Art of Adaptation
Adaptation is crucial for supply chain resilience. It enables companies to respond effectively to disruptions by adjusting their operations, sourcing strategies, and logistics in a responsive and efficient way. In transport and logistics settings, adaptive processes can lead to significant cost savings by optimising routes, reducing waste, improving supplier negotiations, and utilising technology to automate and streamline operations.
“Almost no companies have been left untouched (by the previous few years). But the concept of resilience shouldn’t assume that you won’t fail, but rather that you should be able to get back up fast.”
Deepak Mavatoor, Managing Partner, Tata Consultancy Services
Deepak Mavatoor, Managing Partner from Tata Consultancy Services highlights the importance of proactive scenario planning to support adaptive supply chain processes:
"Almost no companies have been left untouched (by the previous few years). But the concept of resilience shouldn’t assume that you won’t fail, but rather that you should be able to get back up fast. When you think from that angle, you notice the best companies have focused on scenario planning. In our personal lives, we think about contingencies—what happens when the kids aren’t on time, or your alarm clock doesn’t go off? In the professional world, we always plan for an ideal scenario. It’s hard to fathom when wars break out, but we must consider them."
“Today, companies have started to adapt by right-sizing their supply chains. Many are looking at different sourcing methods and revisiting where they do their manufacturing.”
Peter Liddell, Partner, KPMG
“Some of the best companies have run more “what if” scenarios so they don’t fall into the trap of thinking “this worked for the last eight years, so I’ll continue to do this.” They have the tools, processes, systems, and culture to handle these what-ifs. Some companies do sales and operations (S&OP) planning far more frequently—sometimes two or three times a week—which shifts the culture to be more scenario-planning-oriented.”
Peter Liddell, Partner at KPMG adds that organisations who focus on inventory management have a better understanding of their supply chain risks, which allows them to adapt to changing operating environments:
"If you peel the onion down a layer, you see that the companies that did well (through recent disruptions like the pandemic) likely had a lot of safety stock or inventory stockpiles. Many also turned to premium freight for faster deliveries, however these strategies are not sustainable. There was a lot of luck for many of them, to be frank. Today, companies have started to adapt by right-sizing their supply chains. Many are looking at different sourcing methods and revisiting where they do their manufacturing. For example, they may look at suppliers with really long, in-transit times that they’ve always done business with and try to find a closer supplier in order to reduce lead time. It allows them to be much more agile, often waiting only 3 – 4 weeks instead of 12 for critical supplies.”
The Role of Automation in the Supply Chain Sector
Automation plays a pivotal role in enhancing the efficiency and resilience of supply chains through streamlining processes, reducing manual errors, and expediting decision-making. By integrating automated systems, companies can improve the adaptability of supply chains by allowing organisations to adjust more fluidly to changes in market conditions or demand spikes without a proportional increase in labour costs. Automation tools such as robotics in warehousing, AI-driven demand forecasting, and autonomous transport technologies significantly decrease operational bottlenecks and improve accuracy in inventory management and logistics. For instance, automated sorting systems in warehouses can increase order fulfillment speeds and accuracy, while AI algorithms can predict fluctuations in demand to optimise stock levels and avoid overproduction or shortages.
Joaquim Duarte Oliveira from Deloitte highlights the organisations need to investigate digital tools that bolster agility:
“Many technologies, including AI, machine learning, IoT, cloud computing, and data availability, are maturing and offer more capabilities at a lower cost than before.”
Joaquim Duarte Oliveira, Deloitte
"Current technology is better able to support agile and resilient supply chain processes. Many technologies, including AI, machine learning, IoT, cloud computing, and data availability, are maturing and offer more capabilities at a lower cost than before. For instance, scenario planning, which requires handling an enormous amount of data, used to be an issue. The expansion of computing power and flexible visualisation now enables both exception management and near real-time scenario planning. In the near future, the vast majority of activities in supply chain planning will be handled by digital solutions, where predictability, scenario planning, visibility, and agility are the key elements, leveraged through decision intelligence and automation."
Mavatoor goes further, arguing the benefits of a technology-first model in the supply chain sector:
"There’s a lot we do that doesn’t require a lot of discretion like basic planning or forecasting. You can use automation to collect the data, refine the data, and come up with intelligence so a human can make the final decision. At TCS, we have a concept called the 'Machine-first Delivery Model.' Only if a machine cannot do the work do we send the work to a human."
Navigating Supply Chain Complexity
A primary reason that supply chains break down is due to the nature of how complex they are. Supply chains are intricate networks involving multiple stages of production, handling, and distribution, each with its own set of challenges.
Vlad Filippov, Founder and CEO, Spark Equation says that more understanding at a public level around the way supply chains work could help the industry.
“The public, for example, may want to move to electric vehicles, but it’s a complex move - you can’t just switch them overnight.”
Vlad Filippov, Founder and CEO, Spark Equation
“Logistics is one of the most complex disciplines. I wish the general public knew how many pieces were involved, so they knew that if something happens in one given part of the supply chain, it’ll affect everything else. The public, for example, may want to move to electric vehicles, but it’s a complex move—you can’t just switch them on overnight.”
Filippov goes further to highlight a pressing concern around skilled labour in the transport field and how that could impact supply chains in the future:
“We also need to talk about how we’ll solve the shortage of truck drivers. How do you solve that problem? Autonomous vehicles? Training and incentives? If I’m not mistaken, many truckers today are above 40 or 50. The industry is not getting younger, and they’ll be exiting the workforce.”
Oliveira echoes this, adding a critical viewpoint on the human aspect of technology implementation:
"Among organisations, talent is already hard to find and attract. While technology has advanced, supply chain teams need talented people with skills fundamentally different from those expected of planners in the past. New hires must be able to think on a strategic and tactical level about scenarios and risks, must have analytical as well as communication skills, and be heavily market-oriented. With skills like these, they might just as well work in marketing or R&D."
The Need for Supply Chain Orchestration
Supply chain orchestration can help organisations navigate disruptive forces and respond faster to volatile international supply and demand. A wide range of complex but repeatable tasks require large amounts of data at all stages along the supply chain. This is where an enterprise-grade automation platform can help with capabilities such as data fabric to help unify data across multiple sources quickly, process automation to connect people, AI, bots and business logic, and process mining tools to identify bottlenecks and root cause issues using real world data.
The integration of new technologies and automated processes will enable Australian organisations to better manage global supply and demand fluctuations, enhance operational efficiency and transparency, and become more adaptable and resilient overall.
For more information on how your organisation can navigate supply chain disruptions and adapt for the future, please visit: https://appian.com/industries/broad-markets/supply-chain-orchestration.html
