Supply chain

The “Shattered” Supply Chain in the Age of COVID-19

April 16, 2020
IBM says pandemic pointed to the need for a more agile, AI-driven network.

A new report from the IBM Institute for Business Value, COVID-19 and Shattered Supply Chains,” discusses what the company called “vulnerabilities in global supply chains, causing unanticipated chaos while emphasizing a need for resilience and smarter systems based in AI, automation and blockchain technologies.” Jonathan Wright, global head for cognitive process re-engineering at IBM, spoke with Machine Design about some of the early lessons from the pandemic and how the lessons of the pandemic will have an impact beyond a return to a more normal operating system. 

Machine Design: What has the coronavirus pandemic already taught us about the global supply chain? 

Wright: The pandemic has highlighted cracks in today’s supply chains [and] organizations need to have the agility to quickly respond to such disruptions, whether it is changing demand forecasting models, visibility into their supplier base or simply how to pivot for optimal fulfillment. We now need to focus on how we can immediately respond to ensure a successful transition into our “new normal.”

Right now, it’s important to have a solid understanding of customer and supplier needs down to the local level to manage available inventory. That’s key in making sure that critical needs are being met, and that the right product is available when and where it’s needed most. Companies also need to do a better job of mitigating risk moving forward, to sustain the health of supply chains and the people running them.

Once folks have a better understanding of where their supply chains are most vulnerable, they can plan better against future disruption. Most importantly, they can help better protect workers on the front line keeping everything running.

MD: Why did it take a pandemic to teach us these lessons?

Wright: We have hit a pinnacle of complex, global supply chain systems. Supply chains are spread across many players and countries that leave them vulnerable to such disruptions if the necessary visibility is not there.

Supply chain professionals have been talking about a need for more synchronization and automation for a while. As businesses look at what’s happening now, they’re going to realize how important smarter supply chains are to their overall growth and continuity. Many of these organizations have never been in a position quite like this, where in some cases they’re essentially required to shift operations and how they do business overnight.

The key is to view this as a massive opportunity to better understand and respond to new demands, and then to act on that need to avoid this happening again down the line.

MD: Do you expect that once we get back to a more normal operating structure, more supply chain managers and operations leaders will be looking to new solutions such as AI to better prepare for the future? And what should that future look like? 

Wright: Absolutely. Once we start entering the “new normal,” we’ll likely see an acceleration of investment in hyper-automation and digitization to help organization be more nimble and proactive instead of reactive. Right now, IBM is offering a number of tools to help get supply chains up and running in the immediate term. But as we move through this transitional phase, businesses will likely move away from legacy models. Instead, they can emerge from this better and stronger by adopting next-generation technology like AI and data visualization to regain control of their supply chains.

Legacy upgrades can be leveraged as an opportunity to transform processes to be more efficient and innovative thanks to these technologies. Protecting people is another issue. The workers keeping things running right now can’t continue at this pace. Technologies like AI and automation should do more of the hard work, freeing up time for people to think about what the future looks like so that supply chains can operate more strategically. IBM is uniquely positioned to immediately help supply chain management pressures. In the first days of the outbreak we helped our clients with tools and services to support remote working and collaboration and stabilize …operations to ensure supply of critical products.

MD: There’s a debate on how much we need a truly global supply chain—that we need to be somehow less dependent on globalization. What’s IBM’s view on this?

Wright: I mentioned that it’s important for supply chains to understand different needs at the state and local level. Real-time data can help organizations understand those demand curves—nationally and globally—which is critical to operating in a customer-centric way. Understanding what customers need now, and what they will need in the immediate future, is critical to ramping up supply chains to meet those needs.

It’s all about sensing and responding to that new demand. Organizations will have a higher focus on risk management. It will be hard to forget the recent pain, and in doing so [they] will look to balance their supply base, whether global or local, to provide the necessary agility and meet their customer needs.

MD: What should the smaller manufacturers know about this supply chain innovation? 

Wright: They need to be nimble enough to quickly respond to new demands. First, these businesses need to focus on products that consumers need the most. Then they should prioritize key customers, while building out strategic partnerships to meet those needs.

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