Covid-19 crisis shows supply chains need to embrace new technologies

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This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Frederic Laluyaux, president and CEO , Aera Technology.

Hospitals desperate for supplies and empty supermarket shelves have become hallmarks of the coronavirus pandemic worldwide. While governmental decisions and factory shutdowns have attracted most of the blame, the crisis has thrust the widespread confusion that plagues global supply chains throughout the year into the global spotlight.

Put simply, entities throughout a supply chain, from manufacturers to retailers, all too often don’t have a firm hold on just how much they need to be ordering, creating, shipping, and selling. Yet they’ve shied away from technologies that could help turn this around.

“Many companies have yet to leverage big data analytics to transform their supply chain operations,” Professor Nada R. Sanders of Northeastern University wrote in her book Big Data Driven Supply Chain Management. “Many are awash in data but are unsure how to use it to drive their supply chains.”

Through my work helping Fortune 500 companies improve their operations through new technologies, I see these problems at play all the time. But the coronavirus crisis has magnified these problems to a massive scale – and made solving them more urgent than ever.

I’ve heard from leaders of manufacturing companies who are unclear whether a business, such as a hospital system or grocery chain, has made one order for something or three different orders for the same thing. Amid the panic, some organizations are mistakenly putting in multiple orders without realizing it – and are unprepared to pay triple the cost.

Other manufacturers are unclear as to whether some vendors have been hoarding materials such as hand sanitizer or masks and storing the excess in warehouses. Some vendors are hoping to drive up prices for desperately needed goods, while others are simply doing the same things consumers do – “panic buying” things they fear they’ll run out of. Some manufacturers have little sense of whether the amount vendors have ordered matches the amount the vendors are selling to consumers.

This problem isn’t driven by human error. Supply chains have become so complex that only machines can do the work of keeping track of all this information. To ease the burden, supply chains need to leverage key technologies. Among them? Cognitive technology.

How exploring new technologies solves these problems

Cognitive technology is defined by one source as “a field of computer science that mimics functions of the human brain.”

Here’s a simple way to think of it: Pull together as much data as you can from your company and other companies in your industry. Then, apply artificial intelligence to that information in a way that approximates what you, as a human being, would want to do with it. (This is why cognitive automation involves a combination of “big data” and AI.)

With cognitive technology, supply chain data and transactions from some of the world’s largest corporations can be loaded up to a single place in the cloud. There, the numbers can be crunched and key lessons derived, such as:

● Exactly how many orders anyone in their company has put in for any good or service

● How much of what they need is being manufactured, how much is on the way, and where it is in that journey

● Whether the amounts of products being ordered match the amounts people are buying

These results can revolutionize operations. Throughout this crisis, I’ve seen companies with cognitive technology in place be able to make better, quicker decisions. They have the information they need to adjust their strategies in real time.

Such technological readiness is essential for agility – which, in turn, is essential for building strong industries and a strong economy.

How to advance operations now

Amid the ongoing crisis, business leaders have a great deal on their plates. But adopting new technologies will be important to weathering future disruptions.

For some, this may require a mindset shift. Far too many businesses have avoided taking advantage of new technologies because leaders are confused or overwhelmed by them. This is understandable. But as experts note, new mindsets that embrace technology are important to keep businesses on the cutting edge.

Businesses should ensure that someone on their team is always keeping abreast of new developments disrupting their industries, in order to stay aware of the opportunities available.

The key is to build a business culture in which an organization is always willing to change and embrace new technologies – even those that may make some people uncomfortable.

The time we’re living in is filled with confusion. But it also offers unprecedented ways to cut through some of that confusion. The more businesses seek clarity, the more prepared the world will be to face the many challenges that lie ahead.