Please introduce yourself and your role…
My name is Sunder Balakrishnan, and I’m a Supply Chain Analytics Leader at LatentView Analytics, where I focus on helping global organisations build resilient supply chains by helping drive a “connected supply chain” vision using the power of analytics, AI, and supply chain consulting.
What are some of the most significant challenges that procurement professionals are currently facing amidst the global supply chain concerns, and how can they overcome them?
Procurement professionals live in a world of a constantly oscillating supply chain that swings between supply shortages and excesses. There is an ever-growing need for resilience required to deal with disruptions to global supply chains from the pandemic, natural disasters, geopolitical tensions, and other factors.
These events have led to increased costs, supply shortages, and regulatory compliance concerns. A traditionally cost-minimization focused function is now shifting its operating principles to think about the balance between cost and supply performance.
The dependency on China has called on enterprises to think about a China-plus-one / alternate sourcing strategy and nearshoring opportunities. These challenges point to procurement being at the cusp of a transformation from a cost reduction philosophy to service-level maximisation lever.
The first step in this transformation journey has to be a thorough supply-side visibility using a quantitative approach to supply availability risk assessment, and the associated cost analysis.
Proactive steps to diversify their supply chain, renegotiate contracts, find alternative suppliers, and implement cost-saving measures such as automation and process improvements would be subsequent phases of this transformation based on every organisation’s unique situation and needs.
The role of data+analytics+AI and technology paired with good old supply chain thinking will help organisations unlock their true procurement potential.
Can you share any real-life examples of how supply chain analytics have helped companies to manage demand volatility and improve their procurement processes?
A leading toy manufacturer had an interesting problem where new product demand was highly unpredictable with poor accuracy leading to high demand planning bias and excess finished goods inventory.
For a toy to be launched 6 months from now, the procurement order for parts had to go out today, and the process was entirely based on heuristics. The power of supply chain analytics with internal and external data factors, coupled with our consulting prowess, helped the organisation bring down the predicted demand variance, provide improved explainability to the factors affecting demand, and allowed the procurement team to have higher level of confidence in the BOM volumes required.
How has the pandemic affected the supply chain, and what strategies can procurement professionals adopt to mitigate its impact on their operations?
The pandemic has caused disruptions to global supply chains, leading to shortages of critical goods and services. These disruptions, as a consequence, led to increased costs for raw materials, transportation and logistics.
As the pandemic caused a wave of remote work, consumer behaviour and demand patterns changed significantly, making it a challenge for procurement professionals to truly assess and anticipate these new patterns.
However, procurement professionals, if they develop data-driven contingency plans, can achieve insights into factors that can impact the supply chain. Again, it goes back to that connected view approach that we have developed for our clients.
With the supply chain becoming increasingly disconnected, what steps can companies take to ensure transparency and visibility across their suppliers and partners?
Companies need to be able to view demand forecasting, supplier management and logistics management in a single-pane-of-glass view, understanding how they work together to achieve a full supply chain picture. By bringing together data insights from these pieces, which rely on data individually, companies can experience more connectivity between these individual hubs of data.
This requires data engineering and an infrastructure that supports this mission. It’s important for leaders to think about the future and not a matter of if, but when, the next major supply chain disruption will occur. So a capital expenditure today will save money and contribute to customer satisfaction in the future. The companies that took this step years ago to invest in data analytics are reaping these benefits today.
Every event or risk in the supply chain has a cascading impact on some other event downstream, but due to organisational silos, lack of visibility, sub-optimal processes, and technology silos, modern supply chains lack a good way to understand the impact of these risks on the eventual on-shelf availability. This is a disconnected supply chain.
Catena-X is a great example of auto OEMs in Europe coming together to build a supplier data hub for greater visibility and transparency to the supply ecosystem. With everything being intelligent today – from watches and glasses to swimsuits and toothbrushes, supply chains have converged and connected more than we realise.
How can procurement professionals leverage technology such as AI and machine learning to enhance their supply chain operations and mitigate risks?
Companies today can use AI algorithms to analyse data from various sources, including social media, news outlets and even weather reports to identify potential disruptions, including natural disasters, political instability and future pandemics.
Additionally, these tools can help procurement professionals identify the right suppliers based on their capabilities, performance and compliance with a variety of regulations.
AI and ML can also be leveraged to extract vital information from contracts, including terms and conditions, pricing and performance. These measures can help procurement professionals to develop contingency plans and mitigate the impact of these risks.
What actionable insights can you provide to procurement professionals to help them navigate the current challenges in the supply chain and ensure a seamless procurement process?
Diversify your supplier base so you have ample backups to work with if one of your suppliers is experiencing challenges.
Leverage technology to help streamline the procurement process with automation tools that can help reduce manual processes. This should include using predictive analytics to anticipate and prevent supply chain disruptions and have a connected view of your suppliers.
Foster collaboration with suppliers by building strong relationships with them to both understand their challenges and to communicate your needs.
Conduct regular risk assessments to identify potential risks and disruptions and then develop contingency plans to mitigate them.
Unsilo data and prioritise transparency both with suppliers and internal stakeholders.
Monitor market trends, including news, regulatory changes and other factors that can impact your procurement process.