The Stream by River Logic

Transform Your Supply Chain or Lose Out to Competitors

September 7, 2017 | By River Logic

The business world is in a state of flux as new technologies continually change the way companies operate. The pace of innovation is fast. Those in the lead respond to changing market demands quickly and efficiently, leaving behind those who rely on inflexible and dated supply chains.

The bimodal supply chain is a key factor helping these leading organizations change direction quickly and adapt to new requirements. It combines the efficiency of traditional supply chains while possessing the ability to respond to business innovations. Critical elements of a bimodal supply chain include end-to-end visibility, the ability to cope with disruption, and the use of predictive and prescriptive analytics to guide business decisions.

Unanticipated Changes Bring Disruption

Companies are on the threshold of a business revolution brought about by the increasing ability to access customer data and quickly identify customer trends more accurately. The introduction of the Internet of Things (IoT), smart machines, and deep learning techniques create further business opportunities to be exploited. The major constraint facing organizations is the ability of their supply chains to respond to disruptive market dynamics.

As competitors are finding better ways to take advantage of business opportunities, companies must respond positively to disruption or risk losing out. They need better access to information and the ability to process information that helps anticipate potential disruptions. Business supply chains should have the capability to handle both the predictable and the unpredictable.

Inflexibility of Conventional Siloed Supply Chains

Conventional supply chain technology focuses on ensuring the predictable supply of components in response to a carefully constructed long-term plan. These supply chains excel in reliable delivery at a very low cost. Companies are very efficient when they are predictable with supply and demand matched.

Unfortunately, conventional supply chain technology is ill equipped to handle disruption of any kind because it is too inflexible. It aligns around centers of excellence within the supply chain function. Organizations often have similar centers of excellence for sales, marketing and manufacturing. Information is tightly held within organizational silos, and information exchange is slow, selective and cumbersome. It represents a major constraint when there needs to be a quick response to disruption.

The Need to Transform the Supply Chain

Those companies leading today's market are the ones that recognize the need to transform their supply chains. Their structures have been rationalized with organizational silos broken down. More importantly, they have learned to expect disruption to both supply and demand. They have business models which have evolved and are responding effectively to disruption.

Corporate executives need to understand the future of their organization depends upon the free flow of information across all functions and an integrated approach to disruption. Supply chains need to be transformed from solely focusing on continuous improvement to one that boldly embraces change with an element of risk.

Bimodal Supply Chain

Traditional supply chains are very good at managing supply and demand that is predictable, but there is a need for supply chains that can cope with disruption. The solution is the bimodal supply chain. In effect, they are two divergent supply chains working side by side. Gartner refers to the bimodal supply chain as having two modes. Mode 1 focuses on predictable supply and demand and concentrates on the accurate and reliable supply at the lowest cost. It should be noted that Mode 1 is more than a traditional legacy application in which it is a revitalized application fit for a digital world. Mode 2 differs in that it concentrates on divergent, agile, and adaptable thinking. It adopts a nonlinear approach using algorithms and big data to identify innovative supply chain answers.

Supply Chain Visibility Is Key for Success

One of the greatest disadvantages of the silo mentality is information is closely held and shared grudgingly. This is often aided by archaic and fragmented software solutions that inhibit visibility.

This is why it is so important to have full visibility from end to end of the organization, a feature that exists in many but not all cloud-based enterprise resource planning (ERP) solutions. In this context, visibility means more than simple access to information. It also means data held within the system can be accessed by powerful analytical software.

Supply chain visibility entails the transparent access to data and information right across the organization. This includes access to actual sales, marketing information, manufacturing plans, and strategies to obtain a full and comprehensive picture of business direction.

Using Advanced Analytics to Enhance Supply Chain Planning

Corporate databases hold a great deal of untapped information related to the business. The use of advanced analytics software such as predictive and prescriptive analytics is key to revealing insights into the business and for effective supply chain planning.

Interactive supply chain models constructed using such software can help executives analyze the potential effects of disruption and zero in on the best response. Using these tools, it is possible to evaluate a developing situation and, in near-real time, come up with a proactive solution based on real information.

Leading companies are turning to such solutions because of their flexibility and relative ease of application. Predictive and prescriptive analytics are tools that mature organizations can readily apply to solving supply chain planning problems.

Supply Chain Priorities

The rate at which commerce is changing means all businesses need to consider transforming their supply chains to be more in line with current needs. Companies need to migrate from legacy supply chain solutions to the more flexible and adaptable bimodal model. Although this brings with it uncertainty, the use of readily available prescriptive and predictive analytical software means that businesses can, with minimal help, construct their own supply chain models that will provide real-time answers in unpredictable and dynamic markets.

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