From siloed to connected – The future of intelligent supply chain

Businesses across the globe have been challenged by unprecedented disruption in their supply chains in recent years, resulting in several ad-hoc strategies and investments that have helped mitigate the impact and maintain operational momentum. However, organizations now must transform their supply chains as the traditional network may not bode well with the current-day requirements of globalization, focusing on sustainability, changing socio-economic dynamics, and shifting customer demands. But how can companies redefine their supply chain priorities, especially when cost optimization while improving efficiency and achieving sustainability goals are integral to modern business strategy?

Companies can modify business and IT processes rapidly with hyper-automation 2.0, which includes new-age tools such as artificial intelligence (AI), cloud, machine learning (ML), and more. A Gartner Inc. report states that hyper-automation 2.0 will support supply-chain initiatives in warehousing, transport, production, and others during the next five years. Enhanced data intelligence will help manage supply chains better by gathering relevant data, finding correlations, and providing valuable insights for decision-making.

The new supply-chain paradigm

The architecture of the new supply-chain paradigm is based on four pillars—a) customer experience, b) global value chain, c) greater resilience, and d) sustainability. While the old regime has been driven by forces of customer experience and a global value chain, resilience and sustainability are today’s imperative. Organizations with their stakeholders are taking active measures to reduce carbon footprints and improve labour practices along their supply chains. Resilience is essential for organizations to bear and overcome global crises that may lead to a resource crunch and hit the top and bottom lines. These two aspects have led to higher supply-chain costs, and companies have absorbed a significant portion.

The massive rise in e-commerce or online purchases has also affected supply chains. According to a recent report, 90 percent of organizations say growth in the volume of online purchases will impact them. Still, only 16 percent are well equipped to handle the demands of hyper-personalized products and services and shorter order-fulfillment durations.

From global to local

Globalization and augmented cross-border trade in the past few decades have increased dependency on other nations. The pandemic disrupted this dependency and reinforced localization, with organizations pivoting their supply chains towards more regional suppliers and manufacturers. Evolving consumer preferences and a societal push for locally sourced raw materials added to this sentiment. A recent industry survey showed that the share of regional or local suppliers is set to increase from 43 percent to 57 percent and manufacturers from 43 percent to 56 percent between 2022 and 2025.

Localization and resilience have become the topmost priorities for large retailers who are re-evaluating their manufacturing and distribution channels to personalize the customer experience and drive e-commerce profitability. Walmart Inc. has automated its existing facilities to achieve maximum efficiency in product transportation to outlets handling freight at its regional distribution centres.

The launch of the government’s ‘AatmaNirbhar Bharat Abhiyan’ or Self-reliant India campaign shows a renewed focus on localization and independent supply chains. Deep industry expertise combined with cutting-edge digital technologies will help drive this focus, creating an intelligent industry and interconnected ecosystem of products and services.

Sustainability – challenges and opportunities

It’s a two-way street—supply chains account for 60% of the world’s carbon emissions, leading to climate change, which poses significant risks to the chains. However, climate change also creates opportunities as consumer preferences for products and services shift.

Digital technology and data empower companies to develop resilient and responsible supply chains. Leaders supported by a more diverse workforce can strategize businesses for the future. The digital-twin technology enables real-time virtual mirroring of supply chains, providing insights on how to increase efficiency and reduce emissions.

Building intelligent supply chains

Chandra Reddy,
Executive Vice President &
Managing Director,
Capgemini Engineering, India

A holistic approach that balances all aspects of a supply chain will go a long way. Reinventing the supply chains will break down silos, optimize resource consumption—especially amid high inflation—and boost resilience while enhancing sustainability and customer experience. A successful intelligent supply chain must address the new business challenges of design, systemic risk management, forecasting and planning, and execution and control.

Blockchain technology is one of the most crucial drivers of intelligent supply chains. According to an IDC report, blockchain, with other innovative technologies such as ML and the Internet of Things (IoT), has the potential to completely transform supply chains by providing a powerful approach to information, data integrity, higher visibility, and traceability. Intelligent global supply chains will also require more innovative cybersecurity systems due to more significant risks of data leaks, breaches, and malware attacks.

The future success of organizations will depend on intelligent supply chains that predict disruptions, prepare businesses to operate and innovate in challenging economic times and stimulate growth and profitability with customer-centricity and a sustainability mindset.


Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

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