For supply chains, it’s often knee-jerk reactions to the disaster-du-jour that point out the need for rapid, tangible change. But, as we’ve recently seen, disruption in the form of pandemics, natural disasters, and transportation woes are becoming the impetus for examining what the future has in store. Here we’ll discuss a few areas where change is warranted, as well as a few chain-gers to assist.
Supply Chain as a Service (SCaaS)
We’re no strangers to cloud services designed to eliminate each company tackling change, and Supply Chain as a Service (SCaaS) is gaining traction in this realm. SCaaS is a virtual option for end-to-end supply chain management enabled via cloud software that supports procurement, production control, manufacturing, quality, warehousing, and logistics projects and daily operations.
Its benefit for supply chains is to leverage available expertise at third-party service partners and access world-class capabilities that level the playing field for small to medium-sized operations. SCaaS also delivers immediate scalability by tapping into external supply chain talent as needed to expand more rapidly and does it at a lower price tag than alternative solutions.
It’s no longer about delivering goods on time and unscathed—it’s making sure that cyber threats don’t touch the goods at all. Threats today are digital, and sophisticated new ones pop up daily, looking for vulnerabilities. In the past, chips and components were intercepted in transit, and counterfeits would take their place. Today, however, hardware and software are used to exploit and compromise them.
Eliminating threats is impossible. Companies that use cutting-edge technologies, focused on automating the many manual processes of a supply chain, are likely to fare the best.
There are many types of risks, not just cyber threats. Risk is also ongoing. For all of the benefits of digitalization, there are also problems, including tons of digital waste, manually handling data, and not updating data rapidly. Optimization of data is still in the wish-list category rather than being a reality. Until we can leverage what we do have, clean it up and use it effectively, “future” becomes just another word. Items between today and effective mitigation include:
- Improvements in real-time data collection and analysis.
- Reduction of supply-chain suppliers and third parties.
- Increased screening, due diligence, transparency, and disclosure.
- Master supplier relationship management.
- Creation of regional sustainable supplier networks.
Weather, politics, war, economics, theft, and data breaches – they are factors that are here to stay. All we can do is create a sound approach for each and evolve it over time, always remaining flexible.
There are constant advances in supply-chain optimizing technology, and it is technology that will propel supply chains towards a better future. These include blockchain, artificial intelligence, and its subset machine learning, and, soon, quantum technology. Here’s why:
Blockchain’s decentralization, immutability, cryptographic security, and transparency deliver supply-chain redundancy, non-repudiation, and enhanced auditing and compliance. Blockchain, however, will need to be fortified against the threat of quantum computer attacks. Quantum computers will destroy some of blockchain’s cryptographic principles, breaking the security of the encryption. As a result, initiatives are underway to augment today’s blockchain infrastructures with cryptographic algorithms resistant to a quantum computer attack.
Artificial Intelligence/Machine Learning
Gartner projects that through 2024, 50% of supply chain organizations will invest in applications supporting artificial intelligence and advanced analytics. AI-based management systems will offer solutions in processing optimization, predictive maintenance, or mastering data quality. Especially when it comes to the analysis of vast volumes of data, AI can deliver greater operations visibility and play a huge role in improved decision-making.
AI/ML will continue to gain ground in boosting optimization, but the next disruptive advance is likely to implement quantum technology.
Quantum computing will streamline supply chain management and logistics with greater optimization in production, warehouses, and all the way through distribution. It’s important to note that quantum technology is in its infancy stage. However, as it evolves, it will provide a tremendous increase in computing power and ability to perform tasks previously considered impossible with traditional classical computers.
Quantum computers are exceptional at optimization problems where there are many possible combinations to consider. Logistics, inventory and supply chain management will be the beneficiaries. For example, quantum-powered supply chain optimization algorithms will mitigate costly downtime in the wake of natural disasters, political conflicts, and other disruptions.
To further the technology’s use, however, it will require a concerted effort of potential users. When asked how the supply chains will harness quantum-computing power, Celia Merzbacher, Executive Director of the Quantum Economic Development Consortium (QED-C), replied, “What I would like to see would be organizations that have similar problems getting together and describing them in such a way that they could identify them and begin to address them.” There is a huge number of applications. QED-C represents the whole supply chain from buyers to system developers, software to users. However, end users are sparsely represented. I would love to find a go-to group of end-users as everyone wants to know target use cases that solutions can be tailored for. “ Already, quantum techniques are emerging that can be harnessed to implemented solutions.
Of course, supply chains have evolved. However, there is a greater sense of urgency, greater potential for loss, and on the plus side, the possibility of competitive differentiation associated with expediting that change. Those smart enough to adapt and implement early will win.