Many view today’s supply chains as true marvels of modern existence — push a button and a desired object is delivered to one’s doorstep. Others see modern supply chains disrupting local economies and damaging the environment.
Massively complex, interdependent, and subject to disruptions, supply chains were, for the most part just a few years ago, the purview of midlevel executives operating out of sight of newsrooms and boardrooms.
The pandemic, escalating geopolitical tensions, cyber attacks, and severe weather events have made the supply chain a universal issue subject to boardroom and even White House scrutiny.
Supply chain disruptions and irregularities leading to shortages, delays, and escalating price increases have become defining realities of modern business today. So too is the fallout of an ever-expanding knowledge set that sees modern enterprises filled with black boxes of “we-know-it’s-important-but-we-don’t-really-understand-it” specialty areas.
Supply chain used to be one of those black boxes. But CEOs and boards of directors are now demanding that the supply chain black box be opened and fully explained. This is not a trivial exercise — and it is one that CIOs need to undertake strategically.
The CIO as transparency and data delivery champion
Prior to the pandemic, most people — even businesses — took supply chains for granted. You wanted something, or needed a part to produce a product, and you simply ordered it and it would be delivered — quickly, affordably, and with forecastable precision.
This is no longer the case. Supply chain realities are changing how organisations operate, and how they design and deliver new products and services.
But the first step to making supply chains more resilient is transparency. For IT, this means mapping the total end-to-end flow of material, tasks, and costs from product/service design to ultimate customer delivery.
This exercise will surface high-risk areas of the supply chain such as the auto industry’s over-dependence on a few semiconductor factories in Taiwan, or the global pharmaceutical sectors’ reliance on Chinese supplies for foundational life science ingredients.
One life sciences organisation had secured the raw materials needed to manufacture its end product but failed to account for supply issues with the packaging of that medicine. Shortages in the ink used to print expiration dates on the packaging made shipping the product impossible.
The adequate supply of ink for labelling, not raw materials for production, had become the bottleneck in the supply chain. Companies must pay attention to all aspects of their supply chain.
Of course, history tells us that management teams have a tendency to overcorrect in response to many crises. Yes, we have learned that existing supply chains are not as resilient as we thought. But before rearchitecting the entire supply chain, CIOs and their C-suite colleagues need to collect estimates regarding how much will more money resilient supply chains will actually cost.
Scholars at the DHL Initiative on Globalisation at the NYU Stern Center for the Future of Management remind us that attitudes regarding supply chain strategies are not etched in stone: “In an April 2020 survey, 83 per cent of executives said their companies planned on near-shoring to regionalise their supply chains. When the same survey was repeated in March-April 2021, only 23 per cent still said they were planning on near-shoring."
Historically the CIO and the IT organisation have delivered and managed the transactional and information systems that drive the supply chain.
In most organisations, IT and the CIO have not taken the responsibility of aggregating and making sense of the end-to-end data supply chain systems generate. They should assist the data analytics team in implementing digital dashboards for end-to-end supply chain visibility.
Supply chain analytics are the key way CIOs can help address this central business issue — and help ensure the strategic response on the part of the business to supply issues is measured, realistic, and impactful.
As for customers’ concerns about the impact of supply chains on the environment, analytics can also play a part — as well as messaging.
Research at MIT’s Sustainable Supply Chain Lab shows that with the proper messaging, “70 per cent of the consumers surveyed were willing to delay home deliveries by approximately five days if given an environmental incentive to do so at the time of purchase.”
Furthermore, the words used to describe the eco-benefit mattered as well: “Around 90 per cent of respondents accepted slower deliveries when they were told about the number of trees saved, compared with 40 per cent of those who were told about reduced emissions.”
So, in addition to helping establish ESG-related metrics around the impact of their companies supply chains, CIOs can also help establish channels for open and honest communication with customers regarding supply chain realities through customer engagement initiatives aimed at putting data to work to assuage their concerns.