Building visibility in supply chains

In today’s rapidly changing economy, it is important for retailers to manage their supply chains effectively and mitigate risks. Jason Tai, head of Analytics Services at Y3 Technologies, tells Muneerah Bee how this can be achieved.

Why is it important to understand what risks exist in the supply chain? 

Jason Tai: Supply chain disruption can not only severely damage a company’s financial standing but also hurt its brand equity and reputation to unimaginable levels. In fact, a recent report published by the British Standards Institute (BSI) found that global supply chains gained a combined US$56 billion in extra costs in 2015 due to supply chain disruption.

Many times, the absolute dollar amount does not matter as much as the relative amount compared to the organisation cash flow. Once the damage incurred crosses a certain threshold, it can cripple a company and the livelihood of its employees. Depending on the type of risks, it can even endanger the well-being of our customers. Hence, we should see supply risks being interwoven into our lives and incessantly seek to weave them out.

How can the information be delivered at the right time so that informed decisions can be made? 

Tai: Today, there is a plethora of different cutting-edge technology solutions in the market that facilitate delivery of information with a supply chain ecosystem at unparalleled speed without the need for exorbitant upfront investment.

The real challenge lies in the fact that many organisations have not “peeled the onion” sufficiently to understand how these solutions can be leveraged effectively in the context of their environment.

Blockchain, which can disseminate information instantly through distributed database technology, is one such example. Triggered by a business activity such as a transaction or delivery, blockchain uses business algorithms that simultaneously update multiple, disparate databases of participating
organisations such that supply chain managers can track their cargo delivery status while consumers can trace the origin of their food in real time.

What are some strategies that can be implemented to improve supply chain predictability?

Tai: End-to-end supply chain and omni-channel retail visibility are two of the “low-hanging fruits” in terms of strategies that organisations can readily implement today and reap immediate benefits.

For instance, with the advent of endto- end visibility, if a manufacturer found out that a particular model or make of shoe based on colour or size, also known as a stock-keeping unit (SKU), was selling exceptionally well in a market located in a remote part of the world barely one hour ago, the firm would then be able to leverage that insight to start producing more of that popular SKU rather than making blind decisions based on heuristic guesses or assumptions.

Similarly, if an SKU is not selling well, the manufacturer would then be able to scale down the production quantity and pre-empt over-stocking and incurring excessive inventory holding costs. Within the context of our organisation, we have found that clients who adopted this technology have derived multiple benefits, most notably the ability to reduce the “bullwhip effect” in supply chain management and maintain high operational responsiveness, akin to our human bodies responding to cold or hot weather in real time.

Another strategy that is gaining popularity is leveraging artificial intelligence (AI) to achieve unprecedented levels of predictability in supply chain management. AI works by letting specialised algorithms in the computer to discover hidden cause and-effect relationships within a large amount of data, so that organisations can use them to predict the future behaviour or performance with high accuracy.

For example, we use AI to help our customers predict individual consumer demand, so that they can recommend certain products before the consumer realises he/she needs it. We call this “demand shaping”, which helps organisations to grow the top line while improving the bottom line through accurate demand and supply planning. The application areas are wide, the return of investment is tangible and the implementation process is fast, if organisations engage the right partners with the right mastery.

What must retailers take note of when collaborating with other companies for warehousing and transportation needs? 

Tai: Retailers should seek out worthy partners who can provide an integrated technology-based warehousing and transportation solution so that information flows can be seamless and not slowed down by man-made silos. A highperforming partner can provide a supply chain platform that connects to multiple service providers, including financial services, so that retailers can orchestrate all activities in one application.

More importantly, retailers should ensure that their partners’ technologies are future-proof or able to tap emerging, complementary innovations. For example, some retailers may want to look out for transportation and warehouse management systems that have embedded AI or able to communicate with robots such as drones and automated guided vehicles.

How can communication channels be improved both upstream and downstream for better predictability?

Tai: Enterprise social media messaging platforms have proven to be an effective tool to manage information flow in multiple directions. However, there is a limit to how much information an individual can consume and act on a daily basis. We used to have overdue, unread emails in the past, but today, we have overdue, unread enterprise social media messages as well. The solution is to delegate some of the routine communications to a virtual assistant, which we have implemented and has proven to accelerate information flow for predictive insights. ra