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In a fog of war, trusted real-time data can boost global supply chain resiliency
War in Europe is surfacing new supply chain concerns as global logistics and freight transportation providers cut service into and out of Russia and Ukraine. Global turmoil is expected, driving a blow to the automotive industry and disrupting shipment of critical food and fuel supplies. Today 80% of the world’s sunflower oil and one-third of the world’s wheat are at risk of not reaching markets that depend on them.
Bracing for a longer recovery on uncertain terms
IBM added itself to a growing list of companies suspending operations in Russia. A ban on oil imports into the U.S. is also expected to shake transportation operators and consumers alike. With sanctions-driven inspections of cargo causing more port congestion, stalled deliveries and higher prices, supply chain leaders are looking for new strategies to cope with this recent onslaught of geopolitical unrest. The problem is magnified by labor challenges, inflation, climate change, supply challenges and cyber-attacks.
Compounding obstacles demand new approaches in the supply chain. Aspirations of perfection are now giving way to goals of resilience and agility. Those leaders who got a head start on digital acceleration are in no position to lose focus. They need to aggressively build operating models that are both predictive and proactive to anticipate and prepare for issues seen and unseen.
From planning and risk mitigation to value creation, cloud and AI are key to transformation
Shipping giants such as Maersk already benefit from hosting business applications like container trackers on cloud. For supply chain leaders, it’s no surprise that AI applications will also be the biggest areas of investment in digital operations over the next three years, reports IBM’s Institute for Business Value. Supply chain leaders know AI is the key to their future, but according to a recent McKinsey study, three-quarters of their business functions still depend on spreadsheets, with only a quarter now using AI in some areas of planning. But urgent matters of chaos and volatility have no clear end. And that means traditional planning applications are not enough.
Virtuosos are looking to implement full scale digital transformation across all functions to manage demand volatility and supply constraints, even production scheduling and distribution. With today’s AI tools, allocating labor resources can be done much more efficiently and effectively — even paired with “cobots” to interpret data from risk-prone environments so humans stay safe on the job.
Trusted data to better model risk and opportunities
A recent IBV benchmarking study revealed that 71% of organizations shared supply and demand data in real time to a significant extent. In other words, as supply chains transform, their need for available trustworthy data used in machine learning models will become even more critical. An integration of a trusted and secure data fabric that brings together people, data processes and tools is a way forward for organizations digitizing their supply chains.
With more trusted data available to build models, machine learning can unearth powerful insights from operational data, weather, and news updates to track and predict supply chain disruptions. They can also recommend alternative actions, such as new transportation routes that cut through the fog of war or the chaos of weather.
Visualization and digital twins can help operators orchestrate execution by simulating models of the extended supply chain and showing more clearly where bottlenecks and risks reside. Process mining, too, can discover inefficiencies and optimize supply chain processes when integrated across multiple data models. With the cloud, organizations can extend those benefits to all supply chain partners, not just those in the enterprise.
Learn about five essential strategies to build more resilient supply chain, including digital transformation, improved sustainability, and workforce evolution. Download “Forging the future of supply chains: A playbook of 5 essential strategies.”
Businesses everywhere have entered a new era of digital reinvention, fueled by innovations in hybrid cloud and artificial intelligence. IBM is uniquely positioned to help our clients succeed in this radically changed business landscape by partnering with them to deliver on five levers of digital advantage: shape and predict data-driven outcomes, automate at scale for productivity and efficiency, secure all touchpoints all the time, modernize infrastructures for agility and speed and transform with new business strategies, open technologies, and co-creation.