How does your organization manage supply chain disruptions? Supply chain disruption is at its highest rate in three years, and while it's not always possible to predict every interruption in procurement, it is possible to plan ahead for them. Through advanced technology, organizations can improve their agility and better respond to disruptions as they occur. The faster a break in the supply chain can be managed and mitigated, the less likely it is to have widespread consequences for the business.
The Many Types of Business Disruption
Supply chain disruptions are growing on multiple fronts—and it makes sense. As supply chains become more complex, there are more opportunities for disorder across the board. The past few years have seen multiple notable types of catastrophes:
Floods, earthquakes, wildfires, and other natural environmental crises
Many businesses cannot predict a fire or a tsunami, but they still need to be able to function after one occurs. Natural disasters can disrupt an organization's supply chain in a multitude of ways, wiping out inventory, rendering inventory inaccessible, slowing down delivery, and leading to data loss.
Factory fires and factory-related issues
Separate from natural environmental events, there are also setbacks that can occur in factories and warehouses as well. Factories and warehouses are often not in the control of an organization but can still lead to a loss of available inventory and failed product fulfillment.
Cybersecurity has become a significant issue for all areas of a business, including supply chain management. Security-related disruptions can halt an entire supply chain operation because many companies manage their data through the cloud. A data breach could lead to lingering consequences for a business, for example, if data is stolen or lost.
Tariff and tax disruption
Political changes over the last year altered the landscape for companies in some industries, and they are not always changes that could have been predicted. Of all the types of disruption, this is one type that is extremely difficult for a company to overcome—though they can do so through multiple, global sales and vendor channels.
As you can see, many of these disruption types of wildly unpredictable—it’s the erratic nature of these events that presents the challenge. However, operations can continue running smoothly through appropriately managed risk.
Solutions for Supply Chain Disruption
The key to continuity in supply chain management is a backup plan. Here are a few technology-based disaster solutions:
Creating simulation models
Simulation models, such as "digital twins," create a digital model of the physical supply chain of an organization. Through this digital model, organizations can experiment with scenarios showing how disruptions could potentially impact their business. Decision-makers also have the chance to create ways to deal with disruption before they occur.
Tracking an organization's inventory and assets in real-time provides faster notice when a disruption does occur. An organization will be able to track product and inventory bottlenecks, and can use this information to address day-to-day disruptions such as highway closures, delayed flights, and canceled shipments.
Using AI and machine learning for predictions
Artificial intelligence, when given the data to do so, can predict even complex future occurrences. AI and machine learning can be used to identify the demand for products, thereby making it easier to manage the supply chain as a whole. The better the supply chain operates; the less disruption will impact it.
Blockchain and other visibility technologies
Blockchain technology and other similar technologies create transactional records, increasing accountability over larger supply chain networks. These records produce an accessible and consolidated system of transactions, like a digital paper trail. In terms of disruption, the blockchain could make it easier for organizations to track the location and cause of unexpected events and identify issues of fulfillment.
Poorly handled supply chain disruptions can ultimately lead to trouble for an otherwise well-prepared business. Small-to-mid-sized businesses are particularly vulnerable to the impact of the unpredictable—but technology can help. By improving your organization's technology now—and building out your disaster preparedness plans—you can reduce the potential consequences of a disruption before it even occurs.
About Michael Wilson
Michael Wilson is AFFLINK'S Vice President of Marketing and Communications. He has been with the organization since 2005 and provides strategic leadership for the entire supply chain team. In his free time, Michael enjoys working with the Wounded Warrior Project, fishing, and improving his cooking skills.