Geopolitical uncertainty, global port congestion, rising costs, extreme weather. To say it’s been a rocky road for supply chains would be an understatement.
A recent survey commissioned by Kinaxis sheds light on the prevalence of disruptions for German companies, indicating that three out of four companies (73%) experience supply chain disruptions several times a year.
The survey of more than 200 supply chain managers (in companies with an annual turnover of at least 200 million euros) underscores the need for quick and effective responses when disruptions occur. For the majority (80%), it’s ideal to be able to respond to a disruption within two to three days or faster. However, one in three companies with frequent bottlenecks (34%) need several days just to identify the affected areas of the company.
Gaining end-to-end visibility and transparency is critical to keeping supply chains moving, however, while 36% of companies claim to have a real-time overview of all departments, a significant portion grapple with siloed information, taking hours (33%) or even days (28%) to capture essential details. This time lag between the occurrence of disruptions and the company's response raises concerns about the potential consequences for businesses attempting to navigate these challenges swiftly.
The survey also highlights a surprising lack of transparency when it comes to understanding the actual impact of disruptions. Only one in three companies can accurately identify the costs incurred, and a mere one in four (26%) can gauge the CO2 impact. In an era where environmental, social and governance (ESG) targets are under increasing scrutiny, these low numbers underscore the need for enhanced transparency in supply chain operations.
Looking ahead, the survey reveals that German companies are preparing for future challenges. Over the next five years, international conflicts (37%) and the resulting energy prices (37%) are expected to have the most significant impact on supply chains, closely followed by raw material shortages (32%).
Artificial intelligence (AI) emerges as a point of optimism for many companies in managing these disruptions. The survey highlights that 73% of companies anticipate AI playing a crucial role in mitigating supply chain risks. However, while AI is viewed as a valuable tool, it is not considered the holy grail for optimizing transparency in supply chains. Instead, it is seen as a supplementary tool that can enhance processes already functioning effectively.
For quick response to crises, companies need to introduce robust processes as opposed to the ones they’ve relied on for decades. This is where concurrent planning comes in – a technique that links each individual element in the supply chain with all other elements end-to-end. This means a change in one part of the chain triggers a corresponding reaction in the rest of the chain, allowing an overview of the current status and the consequences of changes in real time. The survey shows that acting quickly and making confident decisions based on the right data is still an issue for a majority of companies. Concurrent planning combined with AI, heuristics and optimization can help address this, ensuring supply chain managers are equipped to deal with today's challenging times.
If you’re interested in learning more about the power of concurrent planning, I invite you to check this out.
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