Jordan Griffiths, Accenture Operations Lead, Australia and New Zealand & Scott Hahn, Accenture Technology Lead, Australia and New Zealand.
The arrival of COVID-19 has forced many Australian organisations to rapidly adapt and manage change. As witnessed in almost every suburban supermarket, one of the most significant lessons has been around the need for building and maintaining an agile supply chain and network that is able to move quickly and flexibly.
As a lifeline to humanity, the supply chain is critical at the best of times and even more so during a global pandemic when organisations are faced with increased consumer demand, inventory depletion, labour shortages and logistical roadblocks. We’ve seen how some businesses have responded, pivoting their supply chains entirely: in Australia, a number of distilleries such as Bundaberg Rum switched to manufacturing hand sanitiser as consumer demand soared and in France, LVMH converted three perfume facilities to make hand sanitiser for French hospitals.
With 94% of Fortune 1000 companies experiencing supply chain disruption as a result of COVID-19, it’s clear the supply chain is evolving. So, what is top of mind for Australian organisations right now?
- Future supply: how to predict future supply and demand in a highly volatile world;
- Cost increases: how to protect against future cost increases driven by supply shortages, as well as operators that are emerging bigger and more dominant; and
- Survivability: how to manage key suppliers who may find this period financially harder to overcome and who may not survive this crisis.
While some organisations are trying to fend off disruption – largely brought about by external factors outside their control – others are already working to emerge stronger and more resilient than before. They are using technology to reshape their supply chain for greater agility, responsiveness and resilience, and ultimately be better prepared for the future.
Embracing digital transformation to manage future supply
To be sustainable in a post-COVID economy, Australian organisations need to realise the value in embracing digital practices to drive smarter decision-making in complex global supply chains.
At a time when understanding your levels of supply and demand is critical, digital technologies such as artificial intelligence (AI), machine learning, predictive analytics and cloud-based platforms can enable greater efficiency and accuracy in areas such as demand planning and forecasting.
Relying on historical data alone is insufficient to rapidly adapt to changing circumstances. For example, with the insights gathered from AI and social media analytics, Accenture equipped a grocery chain to swiftly respond to increased demand of certain products—and react to timely customer issues, such as production delays and availability of items across local suppliers. Organisations must be able to understand movements in real time – both up and down the supply chain.
Establishing an ongoing operating capability that is intelligent, flexible and resilient can be achieved through leveraging platforms that support applied analytics and digital capabilities. Automotive tools and technology have seen success in improving workflow efficiencies and warehouse management, using robotic process automation to identify and evaluate risks to assess and improve end-to-end supply chain performance.
Real-time visibility has never been more important for suppliers as they continue to grapple with unprecedented disruptions. For data to be effectively communicated and utilised, it requires a strategic approach to infrastructure that supports collaboration and fuels future operational growth and efficiency. Research by Accenture has shown supply chain and operations leaders who deploy digital services platforms and analyse data in real time enjoy a 27% return on digital investment, compared to 21.8% for those who don’t.
Organisations investing in the future-proofing of their business are those implementing cloud-based infrastructure and digital platforms. These platforms house core enterprise functions and can easily integrate new capabilities, combining data from multiple sources and generating valuable new intelligence critical to understanding performance across various elements of the supply chain. Such platforms enable greater visibility to help protect organisations against future cost increases driven by supply shortages.
Orchestrating the supply chain ecosystem for cost containment and survival
In addition to embracing digital technologies, building innovative partnerships within supply chain ecosystems is imperative to minimising financial and operational costs and ensuring the longevity and success of the entire ecosystem.
Effective supplier relationship management (SRM) can bring cost savings across the supply chain and ensure the appropriate government and compliance controls are in place. Applying these leading practices also drives stronger collaboration and innovation with suppliers, protects committed savings targets and reduces invoice leakage.
For example, Accenture worked with a leading global airline to improve how they manage their suppliers across three workstreams: performance management, finance management and contracts administration. By aligning to their organisational strategy and clearly identifying case-specific operational risks and objectives, Accenture was able to help the airline achieve $6 million in cost recovery opportunities —as well as eliminate 30% of manual effort in contracts management using AI.
Today, the most competitive supply chains are built on ecosystems of cross-industry players working collaboratively to define, build and execute customer solutions. However, simply being a player within a larger ecosystem is no longer enough for organisations to create and sustain a competitive advantage. Instead, leading organisations are those participating and orchestrating across the ecosystem – the main connectors facilitating and enabling best practices and standards.
Additional research by Accenture shows that 78% of leading supply chains are ecosystem orchestrators, widening their innovation net and moving to create new partnerships built on driving innovation.
For example, HP Inc. have linked manufacturing and logistics partners and customers in its supply chain ecosystem with the Hawkeye Control Tower to provide almost real-time visibility to global shipments and predicting customer delivery dates. When combined with advanced analytics, this wealth of data collected has also helped identify issues as well as opportunities for operational improvements which is crucial for any organisation, established or emerging.
Supply chains around the world will continue to feel the effects of COVID-19 long after international borders are reopened, and workforces are back in action. As we’ve seen, the risks organisations are exposed to today are very different from those just months, a year, or a decade ago.
In times of uncertainty, maintaining relationships with key suppliers and partners is imperative to ensuring the longevity and success of the entire ecosystem. Technology will also continue to play a pivotal role in establishing transparency and improving accuracy and responsiveness to improve the overall performance of the supply chain.