COVID-19 has had crippling effects on globalized supply chains, from longer recovery and lead times to volatility in supply and demand. Enterprises must take swift action on multiple fronts to deliver consistently and avoid further disruption and vulnerability. The business consequences of not doing so are impactful – losses of profitability, revenue, market share, and consumer confidence – yet a variety of forces challenge companies’ attempts to eliminate risk. To build resiliency in day-to-day operations, organizations should move beyond assessing their supply chains and assess supplier risks.
New business realities such as global sourcing, rapid developments in technology, supplier rationalization and a demand-driven supply chain have traditionally been perceived from a business imperative standpoint. At the same time, world-class companies have begun to recognize the potential downside of these paradigm shifts, including lower supply-chain visibility, process breakdowns due to technology failure, and suboptimal collaboration and information sharing. In a recent global survey, 93% of respondents plan to increase resilience across the supply chain, and 54% expect changes to supply chain planning post the pandemic. Where can they begin?
Five Imperatives for Supply Chain Risk Mitigation
To proactively mitigate risk, companies must address five key foundational areas: Risk Intelligence, Risk Orientation, Visibility, Flexibility, and Collaboration.
A Framework to Assess Supply Chains
All organizations will at some point face supply-chain disruption. To prepare for this inevitability, they must properly assess their risk mitigation and make it actionable with a business continuity plan, something many organizations lack. Through this assessment, coupled with an AI-driven approach, organizations can quickly recognize and respond to evolving complexities and increasing requirements. By applying a comprehensive framework to study multiple domains, companies can assess their supply chain and ensure they are covering every opportunity area aligned with the corporate vision to improve critical process KPIs.
This impact can be analyzed by leveraging an AI-driven platform that assimilates millions of different sources and provides real-time news and events coverage. In turn, this allows risk scores for each supplier to be computed. Moreover, an AI-enabled platform allows organizations to benchmark their suppliers by comparing current risk maturity levels against a standard risk maturity model.
In essence, Wipro designs around the Identify, Quantify, Mitigate, and Respond Framework.
Disruptive events lead to an immense imbalance in supply and demand and must be recognized immediately. These events should first be classified as externally or internally triggered. Externally triggered examples include natural disasters, accidents, and terrorist acts. Internally triggered examples include incorrect market assessments or systems/processes (for example, over-stocking during Christmas, or labor strikes).
After identifying the disruption, the supply chain impact needs to clarified: does it reside in supply, manufacturing operations, logistics, IT, or workforce availability? Ultimately and most importantly, the area of business impact must be assessed and quantified, thus leading the organization to implement mitigation solutions and respond accordingly.
Holistic Solutions – Seeing the Bigger Picture
Leveraging the framework above empowers organizations to identify disruptions in their supply chains and assess the risk with simulation capabilities. With real-time visibility into risks and associated impacts, a disaster-recovery effort can be established to mitigate any major financial impacts. Accordingly, organizations have the option to implement holistic supply-chain risk management solutions that incorporate the following features:
Alerts integration – Third-party alerts are integrated to trigger the risk visibility process. The Wipro HANA system, which is a pre-configured platform that combines SAP software and content with services from Wipro, helps clients reduce risks and achieve benefits quickly and affordably. In providing alerts, the platform scans emails using a text analysis feature to identify incidents and create respective cases.
Unstructured & structured data processed together – The incident and affected suppliers are represented geographically for clear risk identification. HANA leverages geo-spatial processing to plot suppliers geographically and to quantify the zone of an incidence impact.
SAP HANA modeling – This provides a robust but flexible infrastructure to help quantify the risk in detail. The app has been built using HANA XS engine and modeling. It processes large amount of data and presents it quickly to users, and integrates with backend ECC to take risk mitigating actions via BAPI’s.
UI5-based dashboard – Built using SAP UI5 and a Google Map API integration, this intuitive and interactive dashboard enables the planning and operations team to assess the impact and take the necessary actions quickly.
From there, Wipro’s Resilient Supply Chain solution helps companies minimize risk by quickly reacting to changes in the supply chain while ensuring employees’ health and continued productivity. The recommendations here become very specific and customized based on the company’s needs and business models. The solution backbone is formed by cognitive, digital and autonomous supply-chain solutions, integrating Supply Chain Risk Management, Blockchain Order Management, Cognitive Predictive Demand Forecasting and Digitization of Logistics and Distribution.
Value Creation – An Opportunity to Adapt
Embarking on a digitalization journey and developing a resilient business model can empower companies to reap long-term benefits such as cost savings and cost prevention. Using an ROI analytics tools like RiskMethods, companies can also foresee ROI results such as savings per year, savings per crisis, and avoidance per crisis.
As an example, a leading high-tech manufacturer deployed a multi-tier collaboration solution that extended its supply chain visibility to the next “source” tier and ultimately served as a one-stop reference to manage disruptions. This resulted in operational efficiency improvements, coordinated disruption responses, and revenue protection in excess of $1 billion.
Conclusion
Supply-chain leaders have a unique opportunity to make transformational investments in resiliency and business continuity for the new normal, as well as future crises that will inevitably emerge. Using Wipro’s Identify, Quantify, Mitigate, and Respond Framework can help organizations move beyond assessing their supply chains to more holistically assess – and mitigate – supplier risks. By leveraging an AI-driven supply chain risk-assessment program, enterprises can make great strides toward protecting their long-term profitability and increasing shareholder value.
