When it comes to dealing with global supply chain challenges, having data, insights and visibility to be able to react more quickly are helping companies gain a competitive edge, according to speakers during a session on the power of intelligence at the first day of Digital Procurement World in Amsterdam on Wednesday.
Using artificial intelligence to transform supply chains
Supply chain transformation at Technicolor Connected Home, a provider of audio and video products, started before the pandemic, said Eve Abensour, director of global sourcing digital transformation.
It’s not enough to prepare for the short term, Abensour said. Technicolor Connected Home has shifted its focus to planning for the long term so the company can forecast better with greater supply chain visibility. “We needed to go deeper and have a plan ready to mitigate risk,” she said.
Another speaker, Rajesh Kalidindi, founder and CEO of LevaData, said that when the pandemic hit, companies were not prepared for component shortages and increased demand for products. Supply chain visibility and figuring out what the next issue would be in the flow of goods became challenges. “Everyone was caught with their pants down,” he said.
In the past, procurement specialists were focused on their top-tier suppliers, Kalidindi said. They had to start thinking more broadly and get the right depth of information to make decisions more quickly.
Humans simply cannot take vast sets of data and make decisions from them to see what is impacting their product portfolio—especially in enterprises that have thousands of parts and suppliers, he said.
Traditional procurement techniques must change and organizations must leverage AI capabilities so they can sense opportunities proactively and continuously, Kalidindi said. That way, they can figure out how to make changes and take action.
“That’s what we’re facing today,” he said. “You’re moving from cadence-based engagement to source-based engagement.”
Because remote work has become so predominant, organizations must also have more agility in their demand manufacturing processes, Abensour said. They must practice CART—continuity, agility, resilience and transparency, she said.
SEE: Artificial Intelligence Ethics Policy (TechRepublic Premium)
Today’s economic challenges
There has been an intense focus on managing suppliers and reducing disruption with long-term planning, however, the economy is slowing down, causing a reduction in demand, Kalidindi said. Meanwhile, even as there are talent struggles, layoffs have also started, he noted.
LevaData has also seen companies that have been focused on managing inflation and accepting whatever price they needed to pay for supplies now having to prioritize cost reductions, he said. That transition has become a new challenge because organizations have to balance inflation while mitigating liability, Kalidindi said.
“This is where the combination of the human part and technology to make some of those decisions and tradeoffs and make some of those calls are needed,” he said. “It will be an intense ride for the next year or so.”
But Abensour said cost versus supply has always been an issue. She stressed the importance of figuring out how to balance risk and supply. “It’s how you anticipate the risk and what mitigation plan you have,” she said.
SEE: Metaverse cheat sheet: Everything you need to know (free PDF) (TechRepublic)
Getting ahead of new volatility and driving competitive advantage
Technicolor Connected Home is leveraging technology and intelligent data to make real-time forecasts in supply planning, Abensour said.
It’s important to be able to go to your manufacturers early in the design stage and tell them they are not selecting the right parts and suppliers, she said. Technicolor Connected Home is able to do so “because we have analyzed patterns about suppliers and components.”
Kalidindi said organizations must be proactive using analysis rather than reactive and wait for things to happen. Competitive advantage comes from realizing you can’t predict every issue that will happen but having rapid response capabilities that will process the information on the potential impact, he said.
Then they can discuss alternative ways to mitigate risk and take action to build agility and rapid response. “The competitive advantage is how you go from the event [to] the speed at which you take action,” he said.
Competitive advantage also comes from doing things proactively by having a good mapping of where potential risk is and working on mitigating it.
“The main thing that really affects the pipeline is when designing a product, that’s the time to influence [it],” and that is how to build for resilience, Kalidindi said. “And if you don’t do that effectively you’ll have the tail wagging the dog. That’s the opportunity for companies to be prepared.”
Abelsour added that companies need to reduce their time to market and use data to get insights to act quickly and be able to innovate. If pricing something takes six months to negotiate, your competition is already done, she said. But other data should also be included such as financial, inventory and geopolitical.
Even if you have the technology, don’t automatically expect things will work. It also comes down to people and how motivated and enabled they are to use new technologies, Kalidindi said. It is incumbent upon leaders to drive this, he said.
In response to a question from the audience, Abensour said that agility in the supply chain means flexibility and having alternate plans ready for any disruption that happens, whether a big one like Covid or a small one like a component shortage.