When it comes to tackling global supply chain challenges, having the data, insights and visibility to respond faster helps companies gain a competitive advantage, according to speakers at the conference. a session on the power of intelligence on the first day of Digital Procurement World in Amsterdam on Wednesday.
Using artificial intelligence to transform supply chains
Supply chain transformation at Technicolor Connected Home, a provider of audio and video products, began before the pandemic, said Eve Abensour, director of digital transformation for global sourcing.
It’s not enough to prepare for the short term, Abensour said. Technicolor Connected Home focused on long-term planning so the business could better forecast with greater supply chain visibility. “We had to go further and have a plan ready to mitigate risk,” she said.
Another speaker, Rajesh Kalidindi, Founder and CEO of LevaData, said that when the pandemic hit, companies were unprepared for component shortages and increased product demand. Supply chain visibility and determining the next problem in the flow of goods have become challenges. “Everyone was caught with their pants down,” he said.
In the past, procurement specialists focused on their top-tier vendors, Kalidindi said. They had to start thinking more broadly and getting the right depth of information to make decisions faster.
Humans just can’t take large data sets and make decisions from them to see what impacts their product portfolio, especially in companies that have thousands of parts and suppliers, did he declare.
Traditional procurement techniques need to change, and organizations need to leverage AI capabilities so they can proactively and continuously detect opportunities, Kalidindi said. This way they can understand how to make changes and take action.
“That’s what we’re up against today,” he said. “You go from cadence-based engagement to source-based engagement.”
Because remote working has become so prevalent, organizations must also have more agility in their on-demand manufacturing processes, Abensour said. They must practice CART – continuity, agility, resilience and transparency, she said.
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Today’s economic challenges
The focus has been on managing suppliers and reducing disruption through long-term planning, but the economy is slowing, leading to reduced demand, Kalidindi said. Meanwhile, even though there are talent struggles, layoffs have also started, he noted.
LevaData also saw companies that were focused on managing inflation and accepting the price they had to pay for supplies now having to prioritize cost reductions, he said. This transition has become a new challenge as organizations must balance inflation while mitigating liability, Kalidindi said.
“That’s where the combination of the human part and the technology to make some of these decisions and trade-offs and make some of these calls is needed,” he said. “It will be an intense race for next year.”
But Abensour said cost versus supply has always been an issue. She stressed the importance of determining how to balance risk and supply. “It’s how you anticipate the risk and what mitigation plan you have,” she said.
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Get ahead of the new volatility and create a competitive advantage
Technicolor Connected Home leverages smart technology and data to make real-time forecasts in supply planning, Abensour said.
It’s important to be able to contact your manufacturers early on in the design and tell them they’re selecting the wrong parts and suppliers, she said. Technicolor Connected Home is able to do this “because we have analyzed patterns regarding vendors and components”.
Kalidindi said organizations need to be proactive using analytics rather than reactive and waiting for things to happen. The competitive advantage comes from the fact that you can’t predict every problem that will occur, but have rapid response capabilities that will process information about the potential impact, he said.
Then they can discuss other ways to mitigate risk and take steps to build agility and rapid response. “Competitive advantage is how you go from event [to] the speed at which you act,” he said.
Competitive advantage also comes from doing things proactively by having a good map of potential risks and working to mitigate them.
“The main thing that really impacts the pipeline is when designing a product, that’s when you influence [it]and that’s how you build resilience, Kalidindi said. “And if you don’t do it effectively, you’ll have a tail wagging dog.” This is an opportunity for companies to prepare.
Abelsour added that companies need to reduce their time to market and use data for insights to act quickly and be able to innovate. If pricing for something takes six months to negotiate, your competition is already over, she said. But other data should also be included such as financial data, stocks and geopolitics.
Even if you have the technology, don’t automatically expect things to work. It also depends on people and their motivation and ability to use new technologies, Kalidindi said. It is up to leaders to drive this, he said.
In response to a question from the audience, Abensour said agility in the supply chain means flexibility and having alternative plans ready for any disruption that occurs, whether large like Covid or small like a component shortage. .
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