Unexpected circumstances and highly complex supply chains are forcing a rethink of supply chain planning. Resilience and agility are central to future supply chains being resistant to this chaotic nature of our world. Decision support technology can help foresee potential scenarios and enable supply chain planners to achieve the perfect balance of investment and strategy.
Globalisation has drastically changed the make-up of supply chains. With competitive and cost saving advantages of moving workloads around the world, they’ve developed into complex, interconnected networks. All of this is occurring alongside continuous trade disputes and fluctuating relationships, unexpected political decisions such as Brexit, and of course, the shock caused by the pandemic still resonating. While they may be achieving cost reductions, complex supply chains can be more vulnerable to an increasingly volatile world.
Alongside this globalisation, ‘just in time’ production has remained the dominant thinking around supply chains, where cost saving is the number one priority. But this unwavering commitment to ‘lean’ production is causing bottlenecks, losses in efficiency and even complete failure of customer delivery. A changing world requires supply chain planning to change with it.
Adding more links into your supply chain can increase the number steps at which it can break down. Similarly, having little to no extra inventory might reduce storage costs, but what happens if you suddenly require some backup supply? One of the key effects of the pandemic was the resulting ‘stop-start’ economic demand. ‘Just in time’ often means making just enough to meet the expected demand, meaning it cannot respond to sudden surges that have been more common. Giving a systematic response to a change along a supply chain is also increasingly difficult when supply chains become more spread out.
These issues have driven a resurgence in the importance of flexibility and resilience. ‘Just in case’ planning is now more important than ever, where being prepared for the chaotic events that can ensue will reduce potential losses. Similarly, the benefits of utilising more local supply chains are coming to fruition. Going local can give much greater transparency and control due to a smaller operating area. On top of this, they have the added benefit of almost always providing more sustainable routes.
Of course, we don’t need to throw the book out in regard to lean production, as it still holds the many of the benefits that led it to such widespread usage. Future planning will be about incorporating the ‘just in case’ and local approaches, so that supply chains can achieve an adaptability to the situation. Achieving this balance is where the key challenge is, but decision support technology is giving us the solution.
Previously, supply chain simulations have been limited to small subsets of historical data. They show single inputs, the small number of potential scenarios and the single output for each one. This outdated system is simply unsuitable for supply chains that want to make use of more strategies, as you can’t have visibility on all the various potential combinations.
This is where supercomputing is changing the game. By providing highly scalable, live simulations, an unlimited number of ‘what if’ scenarios can be explored at a fast pace and the most optimum decision balancing all the factors can be quickly reached. Achieving this requires sophisticated usage of the mountain of data available as well as solving the computational challenge that means resources need to be available on demand. Striking the perfect balance of strategy is only possible if you can see every way a situation may turn out.
If done accurately it will minimise tied-up cash and prioritise high-value investments, allocating resources more efficiently and quickly generating data-driven responses. Ultimately, risks will be better foreseen and avoided, with KPIs being better fulfilled through focus and investment on the most impactful areas.