Reimagine supply chain as a digital network that operates in perfect harmony, so it’s better for people, the business and the planet.
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A supply chain transforms raw materials and components into a finished product that’s delivered to a customer. It is made up of a complex network of organizations and activities, such as raw materials suppliers, manufacturers, distributors, retailers and the customer.
Supply chain management is the orchestration between these networks comprising procurement, management and storage of raw materials and manufacturing, as well as the moving, delivery, and storing of finished goods and after-market services to create maximum efficiency, lower cost and net value.
Supply chains: From linear to network
To understand the importance of supply chains management, it’s worth first thinking about the importance of a supply chain at its most basic level.
Traditional supply chains follow a linear progression. The output of one step is typically the input of the next step. For instance, suppliers must send raw materials to the manufacturer before the products can be made. If there’s a problem at any step, the entire linear chain is disrupted.
Today’s supply chains, however, are more complex than linear models—they’re sophisticated supply networks that are more flexible and efficient. This helps meet customer expectations for a wide selection of customized, sustainable products and fast deliveries that meet individuals’ specific needs.
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The supply chain is no longer just an efficient maker and mover of goods; it’s now required to be a principal driver of business growth. Resilience is also critical, as future supply chains must manage ongoing disruptions. Sustainability is vital, too, so that supply chains not only address the concerns of investors, board members and governments, but also make a positive contribution to society through achieving zero waste, building circular processes and building trust.
Why? Disruption is the new reality. Technology is advancing. Customer demands are evolving. Complexity and uncertainty are increasing risk. Supply chain management is key to solving this conundrum—and it touches everyone, everywhere.
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Being more efficient throughout the supply chain and delivering goods for customers needn't come at the expense of the planet or get in the way of good governance. On the contrary, in fact. Effective supply chain management can and should put sustainability at its core. It's not just the more responsible thing to do; it's what customers want. They also expect companies to protect people through enhanced human rights efforts. Accenture's Human Rights Due Diligence Tool helps companies identify and assess risks in sourcing and production, as well as visualise risks by country and site. Technologies like this, across all aspects of ESG, ensure that companies are held accountable. Companies can no longer fall back on the "we didn't know" defense, and should instead focus their attention in creating a business model that not only delivers products customers need, but produces them in the manner customers expect.
Sustainability & trustIntelligent supply chains are built on digital technologies, including Cloud, data and artificial intelligence (AI). They enable companies to implement supply chain strategy and achieve three key outcomes:
These outcomes are important to business, society and the planet. To achieve them, companies must build intelligent supply chains that bring humans and machines together. And this all starts with effective supply chain management.
Generative AI is one of the biggest breakthroughs in AI’s history. Signifying a new era of enterprise intelligence, it holds out huge promise for supply chains in every industry.
That’s because, combined with analytics capabilities, it puts new kinds of hyper-intelligence into the hands of supply chain professionals, dramatically amplifying what they can achieve.
As humans working with generative AI “colleagues” become the norm, every role in every supply chain has the potential to be transformed.
From advising on vendor selection to introducing new speed and creativity to product design, and from accelerating onboarding of supply chain partners to transforming customer service interactions and introducing new sustainability to E2E operations, one thing is clear: generative AI ‘s arrival means supply chains will never be the same again.
To secure future competitive advantage, now is the time for supply chain leaders to understand and begin to adopt this breakthrough technology.
Turning promise into performance
Supply chains vary by company and industry. But at their core, they comprise several interdependent disciplines and, at a high level, commonly contain seven basic components:
From Engineering to Service Management, each area’s output is the input to the next—each link relies on the others to form a strong supply chain. For example, Sales and Operations Planning can provide real-time sales results to inform product innovation that drives repeat business. In addition, Procurement must source and buy the right parts and get them to the right plant in time to meet production schedules. And products must be made and shipped on time to ensure that customers get what they want, when they were promised.
Intelligent supply networks are similar, but they have one key difference: They leverage digital tools and technologies to optimize the supply chain and provide visibility across the ecosystem to deliver deeper insights and greater value, more quickly. This shift has a knock-on impact on the seven core components of supply chain management, and the skills that each requires.
This shift has a knock-on impact on the seven core components of supply chain management, and the skills that each requires.
ARTIFICIAL INTELLIGENCEScaling AI in the supply chain
Each discipline within supply chain management must transform to meet the needs of the future. That’s not just our opinion—it’s what supply chain executives told us as part of our Accenture Technology Vision 2021 research, which explored technology trends.
Engineering drives the ideation, design and development of a new product or service. In the future, AI and cloud technologies will help engineers innovate using new capabilities, automate deployment and testing for faster product launches, and will connect with the business to optimize functions.
Today’s planners determine how to get the right product or service at the right place and time to meet demand. Tomorrow, algorithms will make most day-to-day planning decisions. A digital twin can optimize outcomes based on different variables. Data and AI will provide insights into what’s happening in the supply chain to react efficiently.
In order to acquire the goods and services for finished products, procurement teams will need entrepreneurial, collaborative and analytical skills to build relationships with ecosystem partners to select supplies that provide transparency into supply sources and practices. They’ll also need to use digital technologies to solve problems.
AI and cloud technologies will transform logistics to provide real-time visibility and optimize decision-making for more efficient movement of raw or finished goods from supplier to factory, warehouse or store.
Factory managers will have a wealth of information from advanced AI and algorithms, coupled with sensors across manufacturing facilities. They’ll need to be extremely adept at using this data to make the right decisions. Read more: case study.
AI and cloud technologies will allow companies to offer true omnichannel fulfillment of orders to customers. This will enable customers to buy anytime, anywhere, with dynamic delivery options.
Rather than being reactive in supplying parts and personnel, companies will have AI and cloud technologies that enable them to make real-time decisions about product support, decrease resolution times and improve service performance and profitability.
Right now, many companies’ supply chains are built on dated, legacy technologies. They can’t support end-to-end visibility or real-time decision-making, meaning they struggle to deliver strategic business value. They’re essentially analog machines trying to solve problems in a digital world. The result? Slow response times, waste, conflicting priorities between functions, delays and rigidity. What’s more, companies struggle to meet increasingly granular customer needs.
Furthermore, traditional supply chain organizations usually focus on optimizing a particular aspect of the supply chain—not all of it. Instead, organizations should share data across silos and optimize along the entire value chain.
Digital transformation of supply chains
To address these challenges, companies should create intelligent supply chains based on data, analytics and AI. These, along with digital twins, are among the top technologies that supply chain executives are looking to deploy in their organization. Enabling and optimizing them all, however, starts with the cloud.
Operating in the cloud is critical because it allows companies to process huge amounts of data—from virtually unlimited sources across the entire supply chain—at speeds and volumes never before possible. Deeper analysis of more data, faster, means developing critical business insights and smarter decision making. This includes gaining the ability to reconfigure how people work, and gaining the agility to respond quickly to new insights that the data generates. Along with being more powerful, simple and flexible, the cloud is also more affordable. This opens up endless possibilities for improving and optimizing the supply chain, particularly in terms of building in resilience and ensuring responsible operations.
There are additional benefits, too. When companies transform their supply chain organization, the focus shifts from driving profitability to delivering value across growth, sustainability and trust. Along with driving profits, the supply chain becomes instrumental in positively impacting the planet and society alike.
Digital technologies and data lay the foundation to make supply chains customer-centric, service-oriented, self-learning, intelligent and agile. There are five keys to executing an effective intelligent supply chain strategy: