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Enterprises are looking to shore up their supply chain resilience by using data to improve visibility over and connectivity between disparate links, say data management and supply chain experts.
Decades of globalisation mean supply chains have become increasingly complex, but the onset of the Covid-19 pandemic prompted sustained disruptions that led many to abandon their prior laser focus on efficiency and “just in time” to also consider building in resilience and reliability.
To achieve this heightened resilience in the context of increasingly complex and globe-spanning supply chains, many enterprises have therefore sought to increase their visibility over and connectivity with suppliers through improved data flows and integration.
The importance of gaining visibility and connectivity is highlighted to Computer Weekly by Henrik Smedberg, head of intelligence spend management at SAP, who relays the story of an unnamed SAP customer finding out two weeks after the fact that one of its pallets was on the container ship that blocked the Suez Canal in March 2021.
A chief procurement officer told him: “Had we known sooner, we probably would have sent someone to get another pallet of these goods.” The problem was not an inability to source from elsewhere, but the fact the company did not even know it had cargo on the ship.
“Had they known, they could have redirected other traffic – that pallet would have been stuck, but their production wouldn’t have stopped, which it did [as a result of the stuck pallet],” he says.
Tom Fairbairn, an engineer and supply chain expert at software firm Solace, says supply chains over the past two years have had significant pressure placed on them by a mixture of intermittent lockdowns resulting from the pandemic, general geopolitical instability, and increasing consumer demand for more complex and personalised products.
“The key message here is that these instabilities aren’t getting any better, that there’s going be future supply chain shocks coming down the line. What we’re seeing, especially from our advanced customers now, is that visibility only gets you so far,” he says, adding that many businesses are moving to a more real-time data sharing model to communicate things as they happen.
Monitor and react
While modern supply chains have been designed for “just in time” production, says Fairbairn, the IT that sits behind it has been batch-based, “so you run a report every night and tweak things accordingly”.
Unlike batch processing – where the data collected and stored is processed at a particular time – the event-based architecture of Solace’s software allows its customers to monitor and react to “events” that affect the business as they occur.
“Visibility gives you the ability to see what’s going inside the supply chain, and without that visibility you’re not going to be able to react [to changes]… but there’s no point in being able to say ‘my shipment isn’t going to arrive on time’ or ‘my factory production is going to be delayed’ if you can’t do something about it,” he says, adding that integration between systems, including with those operated by other suppliers, is vital to communicating between links in the chain.
“The ability to tie all these different systems together while enabling this real-time, event-driven capability is key, especially for large, global enterprises. But it’s difficult because you’ve got to be able to talk in lots of different kinds of protocols – you can’t use one integration standard, you’ve got to be able to talk about lots of different ones.”
Henrik Smedberg, SAP
Smedberg adds that many of SAP’s customers have also worked to gain better insights into their supply chains by more closely integrating with trading partners throughout the chain.
“Digital dialogue between trading partners is crucial, not just for those two [direct trading partners], but also for the downstream effects,” he says, adding that when it comes to supply chains and procurement, SAP’s focus is on helping its customers ensure that the data “flows to the right trading partners so that they can make proactive decisions in moving assets, logistics and doing the right purchasing”.
He further adds that where supply chain considerations have traditionally been built around “cost, control and compliance”, companies are now looking to incorporate “connectivity, conscience and convenience” alongside those other factors.
On the last point regarding convenience, Henrik says this refers to having “information at my fingertips when I need it”, meaning it is important for companies to not only collect data on their operations, but to structure it in a way that drives actionable insights. “Once you have actionable insights from the data, then real change happens, and that’s really what companies are looking for,” he says.
A tale of two supply chains
According to Leo Bonanni, co-founder and CEO of supply chain transparency firm Sourcemap, companies that had already invested in creating these digital connections between links in the supply chain fared much better during the pandemic as they were able to be more responsive to unexpected changes.
“The pandemic was really a tale of two supply chains. Those companies that have been mapping supply chains down to the raw materials – what we call end-to-end visibility – were immediately able to check in with people around the world who they depend on for raw materials,” he says.
Leo Bonanni, Sourcemap
Bonanni adds that Covid prompted a lot of companies to start digitising their supply chains to avoid similar disruptions going forward. “We saw five times growth in the last two years. A lot of companies realised that, for a very small cost, they could save enormous headaches,” he says.
On top of the visibility provided by digitally linking every tier of the supply chain down to the raw materials, Bonanni says the data collected through this process also helps to anticipate risks, whether that be operational, regulatory or sustainability related.
“If you have mapped your supply chain early enough, you can find where your weaknesses are and start to scout alternate regions to source from, alternate suppliers, alternate routes to get the goods to market,” he says.
“It’s really just a question of time. The worst case is to find out that you needed to have your supply chain mapped to solve the current crisis; the best case is when you’ve mapped your supply chain, identified the risks and put the contingency plans in place in the event something happens, and something happens.”
However, a major barrier to achieving this level of integration, according to Bonanni, is the sheer volume of data that enterprises have to verify and analyse, as well as the need to build new business processes around that capability.
Mastering the data
Mike Kiersey, principal technologist at data management firm Boomi, adds that to have high-quality and trustworthy data insights, organisations need to scope out their own digital estates as well as those of their partners – which, when it comes to larger providers, is likely a mixture of legacy and cloud-based technology – before integrating, so that all parts of the chain are communicating effectively.
Using a mixture of out-of-the-box connectors and bespoke application programming interfaces (APIs), Boomi is able to help customers integrate with a range of software providers and hardware manufacturers so that its clients can manage data at a “master” level.
“They’re going have a mixture of legacy technology, a mixture of legacy integration technology, there’s probably point-to-point and hardcoded, and probably built on a set of legacy APIs,” he says. “Being able to connect to those various different systems… allows customers to speed up the fault resolution that they might have around a particular order.”
He adds: “You can’t take reactive, proactive or corrective action if you’ve got no insight into that data.”
Pointing to how consumers are updated on the progress of deliveries by companies such as Amazon, Smedberg says “the way we transact at home on a Sunday is what people are now expecting to have on a Monday”.
He adds that, ultimately, the use of data to enhance connectivity and visibility is part of a wider trend “to consumerise the behaviour of businesses”.