IT Matters: 2021’s Supply Chain Challenges Lead to New IT Demands

As the pandemic stretches into its second year, supply chain priorities have shifted significantly. Consumer and business usage models, which were originally planned for temporary change, have changed permanently. In-store retail has taken a big hit and several supermarkets which we might have headed out to, are no more. For businesses, it is now preferable to work with suppliers and distributors with a robust digital capability even at a high cost. This allows them to maintain a highly automated, low manual work supply chain.

Supply chains have a new model now, imposing new complications. As always, it is IT that is challenged with enabling the change.

Challenge 1: Digitization of the Supply Chain – From Highly Manual to Highly Automated

For nearly every industry, the buying and selling model and by extension, the supply chain, have changed. Every process that was human driven or needed manual intervention has become difficult due to the reduced manpower, social distancing and contact avoidance.
These changes have accelerated the need for digitization and automation of the supply chain, raising sudden IT demands. The demands are also expected to be long term, as businesses have also realised significant cost benefits with increased automation and digitization.

1. Automation of transport, procurement and management processes – The potential for human interaction driven manual processes (due to isolation and social distancing requirements) has reduced significantly. This has led to the rise of automated transportation, procurement and management processes, These automations are driven by advances such as automated car and drone technology, blockchain-based information gathering and supply management systems that utilize AI/ML to automatically detect possible shortages or supplier issues and managing alternative supplies on priority.
2. Creation of transparency in supply chain information sharing (McKinsey) and Integration of trust systems (such as blockchain) – Transparency is a key requirement for supply chains today. With limited manual interactions and information flows, transparent and trusted information sharing systems are critical for supply chain success. Reliable blockchain based track and trace platforms will play a key role here. Traditional track and trace systems have several glaring design flaws, such as the need for users to add information manually and allowing a central authority to make changes at will to the system, making it unreliable for stakeholders. IT will be tasked with implementing the modern track and trace system.
3. Integrating with emerging supply chain alliances: In the absence of structured, reliable supply chain service providers, vendors have started to consolidate their supply chain services into alliances. Integrating with these alliances will provide both scalability and reliable services for supply chains. These alliances can provide information on local, vetted suppliers as well as logistics and distribution partners, while introducing a standard service level for supply chains to adhere to. Integrating with these alliance networks will be an IT challenge.
4. Digitizing archaic, manual processes and a focus on integrated, long term business planning – With heavily manual processes, supply chains were prone to stop-gap arrangements when issues developed. The pandemic has shown a clear need for long term planning and digitization to work in circumstances when such stop-gap arrangements are not possible due to unavailability of manpower. Supply chains are now planning long-term, dependable processes and avoiding stop-gap arrangements as standard policy – which will need IT support for implementation.
5. Move from just-in-time inventory and least-cost supplier models and implement accurate inventory estimation processes. To help the overall business develop new approaches to procurement and better processes, supply chains need AI-driven inventory estimation processes, which IT will need to develop.

Challenge 2: Health and Welfare Management for Supply Chain Security

• Comprehensive tracking and tracing of employee health: Businesses hitherto avoided tier 2 and tier 3 supplier inspection,but avoiding these checks may cause problems across the supply chain. Using automated checking systems such as IoT based temperature measurement and testing machines can prove vital to keeping the supply-chain infection free. IT, however, must not only implement IoT devices, but also IoT security to avoid cyberattacks on vulnerable IoT devices. Keeping a running list of approved IoT devices would help standardize the IoT environment.
• Ensure proper supplies of safety materials (such as masks, PPE and sanitizer fluids) for safe operations and identify the risks in your supply chain with thorough risk analytics. (HBR) – AI-based tools can now detect whether employees are using the correct PPE at work, and risks in the supply chain (where your product may be exposed to contamination, such as an open-air storage area, can be analyzed efficiently by risk analytics tools. IT can help put these in place.

Challenge 3: Successful Pivoting to Online Supply Chain Models and Online Vendor Integration

• Guaranteeing end-to-end supply chains for online procurement and e-commerce systems, along with integration of track and trace verification systems: Integrating automated blockchain-based track and trace systems and putting together an end-to-end supply chain inventory can help businesses avoid uncertainty. Choosing trusted suppliers over low-cost ones may prove more efficient in the long run, and IT needs to help with the integration.
• Successfully integrating vendors and suppliers remotely and leveraging direct-to-customer communication channels for demand assessment are two other key areas for IT to contribute for an effective shift to online integration. IT must give supply chains the ability to remotely verify and on-board vendors and suppliers seamlessly without manual intervention as far as possible. Another key challenge for IT to address is the supply chain’s requirement for direct-to-customer communications channel implementation, such as link-based surveys sent to phone numbers.

Challenge 4: Being Better Prepared for Future Crises

• Integrating AI/ML/Advanced analytics on supply chain data to help predict or plan for future crises and maximize outputs from current supply chain operations. With the volume of data produced by supply chains, integrating scalable storage systems that use big data technology for fast analytics and data search is essential for enabling this demand. IT will need to integrate modern data systems such as MapReduce, Apache Hadoop and allied technologies and fast storage systems.
• Work on improving track and trace and verification systems to ensure minimal impact in cases of other supply chain disruptions (such as blockchain track and trace) – Track and trace systems must also be integrated with dependable and fast verification systems, such as QR code based verification systems, to ensure verification of information across the supply chain is seamless.
• Diversify supply centers to other geographies (EU etc.) from APAC (China) to avoid regional dependencies and avoid disruptions when supply lockdowns happen. This requires IT integration with cloud based systems for enabling geographically distributed supply chain coordination.
• Evaluate supply chain vulnerabilities and plan for them. (McKinsey) Organizations need to map their entire supply chain, identify vulnerabilities and plan alternative processes. IT will need to be on hand to help identify these alternatives.

These supply chain challenges do present some taxing questions for IT, but modern IT teams are well equipped to handle such issues. Today’s technologists have a wide array of skill sets that can be used effectively to drive solutions for these challenges. The best way forward is for organizations to put together a detailed plan with IT that includes the measures required to be taken for all these challenges in one single effort, allowing planned and effective supply chain improvements.

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