Volatility, Uncertainty Can Disrupt the Supply Chain

Take a look at the news headlines today and you’ll find volatility is a trend across the globe.

Consider Brexit or the trade wars between the US and China or even, more recently, trade wars between the US and Mexico. All of this uncertainty leads to anxiety and never more so, at least for the purposes of this talk, than within the supply chain.

So said Hans Thalbauer, senior vice-president, digital supply chain and industry 4.0 at SAP, during his talk entitled “Building a winning digital supply chain strategy for Industry 4.0” at Saphila 2019, the African SAP User Group’s (AFSUG) biennial conference for SAP users.

“The fact that the UK is just kind of hanging around with no clear plan for exiting the EU has left a lot of companies in limbo,” he says. “From a supply chain point of view, warehouses have built up safety stock, effectively running out of warehouse space, while increasing inventory carrying costs with the objective of avoiding import duties in case of a hard Brexit.

“There are, quite literally, ships floating around the island full of medical products with nowhere to go. The supply chain is very concerned and even Europe is rethinking the network. ‘Should we produce in the UK or other countries?’ they’re asking. There are big conversations that must be had.”

Where the trade wars are concerned, with new tariffs being proposed on both sides of the fence, you’re faced with a supply chain that is really difficult to manage. Thalbauer says a week before the Mexico tariffs kicked in, companies brought many products in, again filling up warehouses because the uncertainty had the potential to cause major challenges should they stretch out too long.

“On the good news front, a volatile economy and environment can prove the perfect breeding ground for new thinking, for disruption, and for embracing digital innovation to help better compete during the tough times,” he says. “There are, in fact, a few SAP customers implementing Industry 4.0 technologies that enable a perfect experience for their customers, and drive sustainable practices and growth through business innovation at the same time.”

Global uncertainty will increase the need for resilient supply chain operations, and those that are already robust and showing growth in spite of economic pressures are the organisations that have a winning digital supply chain strategy.

Thalbauer says that, by leveraging the SAP Intelligent Enterprise digital core, companies gain improved operational visibility and customer intelligence to manage the entire supply chain digitally and execute flawlessly, while transforming their business.

He says a winning strategy is one that results in a digital supply chain that is connected, predictive and intelligent, and all of these demands can be realised through the deployment of SAP Leonardo as part of an integrated business planning campaign by those wanting more stability within their own supply chains.

There are a number of technologies available to local businesses operating in this industry right now, including SAP Intelligent Asset Management, a set of solutions that provide a 360° view of asset management – bringing collaborative asset intelligence, planning, prediction and simulation to equipment maintenance and operations.

“Powered by SAP Leonardo, Intelligent Asset Management is a solution that delivers on our Industry 4.0 vision for a network of digital twins to help our customers predict and improve asset performance and reliability with engineering insights,” says Thalbauer. “We are enabling a virtual network for secure and distributed systems of record, real-time collaboration across the digital supply chain, new business model delivery and advanced analytics.”

Intelligent Asset Management can also help customers accelerate innovation, optimise operating performance conditions, predict service requirements, improve diagnostics, and enhance decision-making throughout the value network.

Also a consideration, for companies that understand planning is the nerve centre of any successful digital supply chain strategy, SAP’s Integrated Business Planning solution uses machine learning and predictive analytics to shorten customer planning cycles, which in turn will provide more accurate responses to changes in supply and demand.

This article first appeared on IT-Online.