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The Cause and Effect of Supply Chain Fragility, and How to Fix It

The Cause and Effect of Supply Chain Fragility, and How to Fix It
The recent pandemic raised the profile of supply chain fragility. What we are actually seeing are not new issues but a magnification of the issues supply chain professionals deal with on a daily basis.

Supply chain’s salvation comes through the ability to operate with more agility, responsiveness and flexibility. Businesses need to respond quickly to supply interruptions at any point in the chain, and to rapidly changing demands. After all, speed matters. An agile and flexible supply chain provides far greater resilience than the traditional approach of buffering stock. This approach doesn’t have to be expensive. In fact, when done right it can lead to significant cost reduction.

Lower costs and better customer service, what’s not to like?

The agile and flexible supply chain

Think of the supply chain as a living, breathing eco-system, rather than a collection of individual nodes. Our objective is to satisfy the end customer in the most effective and efficient way possible, not to simply shift products to the next node in the chain.

The key is to achieve visibility of the entire end-to-end supply chain, with the ability to focus on the detail at specific nodes while maintaining an understanding of how they fit into the bigger picture. For the best end-to-end performance, some nodes might need to run in a sub-optimal way. This sounds counter-intuitive, but by modelling the complex interactions and interdependencies between nodes of the physical supply chain and combining this with the ever-changing demand signal, you can start to truly understand how to optimise the overall eco-system for performance. You can focus on the essential complexity and avoid accidental complexity.

This more holistic approach helps highlight the best courses of action when things change or go wrong. Perhaps one node could perform better individually, but that could be to the detriment of the whole chain. You won’t know unless you’re able to see the bigger picture.

The challenge we face is the sheer volume of interactions between nodes:
 
  • What actually happens at each node? And what could happen?
  • What actions could be taken?
  • What is the impact of those actions for that node? What about for all nodes?
The permutations of possible answers to those questions is simply mind boggling – too difficult to comprehend and manage effectively. This has led to a disconnected focus on individual nodes.

The answer is to move to a digitally advantaged supply chain – one driven by data and analytics.

We need to be able to ingest and integrate vast amounts of data from disparate sources across the full breadth and depth of the supply chain. We need to visualise what’s happening across the whole supply chain, with the ability to drill down to a granular level, enabling the business – and your customers – to see what is really happening now and in what context. This transparency, while potentially painful at first, builds the trust and agility that is demanded by today’s customers.

The snowball effect.

With a new command over your data, you can see the combined effect of multiple exceptions to normal operations, helping you understand broader implications. What you see today within supply chain is the figurative snowball effect. Small issues early in the chain can have a knock-on effect within proceeding nodes – so a few minor issues build to become something far larger when multiplied together. When considered sequentially, a talented supply chain professional would probably be able to identify these snowballs and take action.


Where analytics really shows its worth is in the ability to find disparate issues that actually have a combined effect when it comes to the bigger picture. Think of it as metaphorical snowballs building on different sides of a mountain – ones that can cause an avalanche when they come together. For a human alone, it would be practically impossible to compute these implications, but even minor issues across apparently disparate nodes can have a catastrophic effect on the bigger picture.

By utilising and managing your data expertly, the supply chain can evolve. Evolve from slow, reactive reporting to a sophisticated ecosystem that predicts what will happen, and responds with appropriate action pro-actively and with agility. One example is that by adding external data such as weather, we understand the impact and act to resolve logistics issues before they even occur.

All of this activity needs to take place in near real time, reducing the magnitude of supply chain shocks by responding rapidly to the changing environment with minor corrections. Latency is effectively removed from the picture thanks to your ability to act fast; dealing with individual snowballs as they form, rather than realising too late and attempting to combat that avalanche.

More than a future vision; a reality for our customers today

Every enterprise is different. As are the opportunities for supply chain optimisation within them. Whether you’re looking to reduce inventory, identify and address bottlenecks, or even need to redesign supply chain procedures and systems, Teradata can help.

We build data-driven solutions that not only provide the resilience necessary in today’s rapidly changing world, but that optimise the business, solving supply chain fragility by bringing the integration, simplification, speed and agility needed in today’s fiercely disruptive environment.

Integrating large volumes of data, simplifying it and identifying what’s important is precisely why we exist. Helping you to do it all at a speed that means the results are actually useful to the business; that’s Teradata’s specialty. We are expert in the field, and I’m available to demonstrate how. Get in touch to explore further.
Portrait of Niall O'Doherty

(Author):
Niall O'Doherty

Niall O'Doherty leads a team of business and industry focused consultants that are helping leading global companies to do more with their data and drive value through analytics.  Niall has responsibility for entering and growing new industry, markets and customers for Teradata, in industries as diverse as Energy,  Oil & Gas, Automotive, High Tech, CPG and Industrial Manufacturing. He is very focused on the value of detailed and complex data and especially the proliferation of the “Internet of Things”, Digitalisation and the associated analytics that are required. Before joining Teradata in early 2002 Niall worked for BearingPoint (KPMG Consulting), Johnson & Johnson and E&J Gallo Winery.
 
Niall holds a B.E.and an M.Sc.(Eng) from University College Dublin.
 
He is married with two young children and is a fully signed up supporter of Leinster Rugby.
  View all posts by Niall O'Doherty
Portrait of Paul Taylor

(Author):
Paul Taylor

Paul has over 20 years of experience in the aerospace and automotive industries. His career started at Rolls-Royce Aero Engines in manufacturing and engineering, broadening his experience through a series of customer facing, programme management and business orientated roles before moving into supply chain. Most recently Paul has worked with Jaguar Land Rover to manage their Connected Supply Chain programme. This programme aimed to drive a step change in how the OEM collaborates with its suppliers, to optimise inventory levels and to provide visibility, tracking and issue alerting for long distance supply chains. 

Paul has a degree in Aerospace Manufacturing Engineering from the University of the West of England. 
He has a passion for motorsport, in particular MotoGP, and has built a replica AC Cobra kit car which he now enjoys driving whenever time and the weather allow. View all posts by Paul Taylor

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