Archaic legacy systems can point operators to inventory locations and provide advanced shipping notices (ASNs). That used to be enough when bills of materials (BOMs) were less complicated and material flow was more predictable.
Now, supply chains are stopping because more complex products require a wider array of parts from a more diverse set of suppliers who face new and neverending challenges. Additionally, everything from global conflicts to transportation shortages to a lack of labor availability is causing havoc across multiple supply chain tiers. As a result, knowing where any item is at a given moment is incredibly difficult.
The challenges are not going away; Intel’s CEO says that the semiconductor chip shortage will last until 2024! So rather than fighting the inevitable, it’s time for industrial supply chains to invest in the capabilities that enable them to combat global shortages.
Invest in advanced supply chain planning
AlixPartners surveyed over 3,000 CEOs for their Disruption Index 2022. Among those surveyed, 69% are concerned about the impact of supply chain disruption, with material shortages being the most commonly cited challenge.
While the index suggests that most CEOs focus on short-term resolutions, 25% prioritize the long-term solution of building supply chain resilience. Supply chain resilience creates the ability to visualize the state of the business, anticipate disruptions, and respond with agility. Whereas these may have been nice-to-haves, they now require advanced planning capabilities for when supply and demand discrepancies are inevitable.
As a global technology leader of configure-to-order (CTO) products, Hewlett Packard Enterprise (HPE) understands the need to deliver to customers, even as supply lead times grow. Joanna Kosteca, HPE’s VP of Global Operations Planning and Materials Management, spoke to the size of their challenge in the aim10x global 2022 session HP Enterprise: The VP of Operations’ Story of their Digital Transformation Journey. She said,
“The speed of change is increasing. So, the business needs to adapt. As the business adapts, you need to adapt the supply chain. Your environment needs to become one, faster, and two, more agile.”
Critical to HPE’s approach to addressing global shortages is its investment in next-generation planning technology. Kosteca described the need as such:
“You really have to have a system, a planning platform, that is going to be one source of truth, that will be intelligent, write the data, have AI and machine learning, have flexibility, that will be fast and that will allow you to do scenario planning.”
Build intelligent supplier collaboration
Companies with advanced planning capabilities repeatedly ask two critical questions: 1. “Where’s my stuff?” and 2. “How do I allocate constrained supply?” Digital planning platforms enable visibility of product flow, match it to anticipated demand, and support supply allocation decision-making that drives enterprise-wide value.
The opportunity extends to suppliers. HPE talked about the need to understand several layers of suppliers, not just their source of materials. Suppliers and customers can build collaboration intelligence with a common data language. Sharing updates throughout the value chain creates a better view of the supply network.
The method of supplier collaboration depends on the maturity level, size of the business, and the nature of the relationship. Segmenting suppliers using these criteria creates different options for customers and suppliers to share data. For example:
- Large, mature suppliers have direct access to the planning platform to collaborate on forecasts, orders, inventory, and capacities.
- Less mature suppliers populate excel templates for direct upload to the platform.
- Lowest maturity suppliers can provide information, as is, to be scanned into the platform using natural language processing.
The result is an end-to-end supply chain network platform that models the entire supply chain and flags issues at each level, using internal and external indicators.
Let us tell you more about how advanced planning technology makes a difference in your industry, by requesting a free 30-minute consultation at o9 Solutions. To read our white paper on global shortages in Industrial Manufacturing, go here.