IBM Report: COVID-19 and

Future Supply Chain Planning

Failing to plan is planning to fail.
By Jonathan Wright

The COVID-19 contagion has caused a major slide in manufacturing and disrupted
the supply chain for many companies across the globe. While the immediate focus is
on maintaining the supply and meeting customer needs—often through hands-on
rigorous and hard work—leaders should also analyze the current pain points to plan
for future disruptions.  
Most supply chain leaders are still in the reactive phase of how to deal with this
pandemic. That includes combating fear and uncertainty around shortages and
gauging the overall impact the coronavirus will have on supply chain and logistics
operations. Given the extraordinary costs many businesses are facing, however, they
should start to identify actions now that will improve their resilience.

No one can predict the future. But we can be much smarter and strengthen the global
supply chain by leveraging the power of AI and other emerging technologies that can
help companies maintain business continuity amid disruption and uncertainty.
According to a new IBM Institute for Business Value report, “COVID-19 and
Shattered Supply Chains,” supply chains should be dynamic, responsive and
interconnected to an organization’s ecosystem and processes. This requires end-to-end
visibility, real-time insights and decisive actions—particularly in escalating situations.

The Predictive Power of AI

Using AI, organizations can turn unstructured real-time data into insights that help
predict disruptions and vulnerabilities, providing near-term visibility. When it comes
to IBM Systems’ own supply chain, we developed a cognitive control tower capability
to help us identify early warnings based on external data, including social media and
The Weather Company insights. This allows our supply chain professionals to have
relevant and actionable information at their fingertips—enabling them to quickly
respond and focus their attention on higher value activities like communicating with
customers, suppliers and other impacted stakeholders rather than chasing information
and status reports. 

With AI, supply chain professionals can optimize orders based on factors like
inventory reallocation and prioritization. This allows teams to react faster and shave
off hundreds of person hours previously spent collecting data so that they can focus
on that higher value work.
Supply chains have evolved into a network of hundreds of suppliers, sub-contractors
and distribution centers, which are dispersed all over the world.

Even the smallest upset can create a dramatic and resonating effect on the global
supply network.  Over the last decade, many organizations have been impacted by
some major issues that caused ripples throughout the global supply chain, such as the
2010 eruption of Iceland's Eyjafjallajökull volcano, or the 2011 Tohōku East Japan
earthquake and tsunami, or the flooding in Thailand later that same year.  What we
have learned is that no company can afford not to have a multi-dimensional, dynamic
supply strategy that is capable of responding to disruption.
As organizations continue to move toward intelligent, self-correcting supply chains,
there are three strategies to consider:  

Re-evaluate the sourcing strategy and redesign the supplier network: Balance

between the level of risk the enterprise can tolerate and the amount of operational
flexibility it wants to achieve. Use AI to leverage unstructured real-time data to
provide alerts to help predict disruptions and vulnerabilities and to provide visibility
and insights for recommended corrective actions.

As an example, The Master Lock Company, the largest global manufacturer and
marketer of padlocks and personal safes, recently onboarded a significant number of
additional global partners.  The company chose IBM to migrate its electronic data
interchange (EDI) to IBM Sterling Supply Chain Business Network—a security-rich,
cloud-based solution for trading partner integration.

Build smarter supply chain modeling and scenario analysis: Use digital twins to
provide both immediate assessment and the longer-term ability to continually evaluate
the fine balance between lean operations and risk mitigation. Using analytics, AI, and
visualization tools, it’s possible to model and then build flexibility and optionality into
structural supply chains.  In Europe, we are working with a client to develop a heat
map for their suppliers to know where the current pandemic is impacting their
business, allowing them to make real-time decisions and immediate order changes.  

Set up data-sharing platforms: Allow strategic partners to quickly collaborate and

understand the impact of disruptions. Leverage AI to support rapid scenario planning
and unlock hidden insights that augment the supply chain planner’s abilities to
quickly determine options and take action. We recently worked with Lenovo, which 
took part in the Watson™ Supply Chain Fast Start program. Within five weeks, the
IBM team helped Lenovo complete three AI-driven use-case analyses using supply
chain data from its production system.

Supply chain professionals are confronting and will continue working through the
immediate challenges they are facing during this pandemic. These organizations are
learning how to better manage, foresee and limit the severity of disruptions by
building the capabilities necessary to respond to future events with both pace and
certainty. 

Jonathan Wright is Global Head, Cognitive Process Re-engineering at IBM.