CIOs Discuss “Life Since COVID-19: The Supply Chain Becomes a Strategic Asset”
*A Gartner/Evanta Event
On Oct 13, 2020, a group of CIOs from major consumer brands convened with Noodle.ai to discuss the state of supply chains in 2020 and the imperative they own to bring order to a chaotic situation. Supply chains are forever changed, no longer relegated to rote, rules-based, deterministic handling of supply and demand, but elevated to the strategic asset that they are, with the power to unearth hidden financial returns for the business.
Four themes emerged:
- Leaders managing supply chains have discovered during this pandemic they are “data rich and insight poor.”
- Manual effort by planners is the hidden bottleneck that must be eradicated so they can focus on value-added work instead.
- Make/Plan/Deliver and Industry 4.0 are overarching themes. System-wide volatility across the entire value chain requires advanced analytics like artificial intelligence (AI) to solve for it.
- CIOs are uniquely positioned to lead CPG companies in this digital transformation.
Data rich and insight poor…
Global leaders have spent decades capturing and organizing data (e.g. data lakes), building capabilities and feeding planning systems that this one, single 2020 event “blew up”. The pandemic exposed the frailties of systems that worked well during periods of stability but faltered with the unprecedented volatility of 2020. Both on the demand side and the supply side, companies, especially those experiencing spiking demand, had trouble getting products into the hands of consumers. These are not new pains for supply chain leaders – they have always been there, but the pandemic made the pain more acute.
Predicting outcomes and recommending actions in environments of extreme volatility is what advanced planning using AI is purpose built for. AI is effective in crunching lots of data, both internal and external, and sensing, predicting and recommending actions based on the probability distribution that a certain outcome will occur (e.g. demand for Product X will be Y at the SKU/DC/Region level). The advanced math underlying AI algorithms helps answer the question: “How do you use data to manage uncertainty using end-to-end analytics?”
Manual effort by planners is the hidden bottleneck. Unburdening them unleashes valuable human insight towards solving problems.
Someone asked, “How do we move forward with a system that is not rules based – that is non-deterministic – without killing the planners, who are already overburdened?” As the crisis grew in 2020, the state-of-the-art aspect of the planning function actually moved backwards, as more manual tasks and excel spreadsheets were added to construct a response to urgent conditions.
What’s needed is a tool to give them visibility within the execution window of 0-12 weeks. Leaders have become removed from the day-to-day life of the demand, supply or inventory planner. “Stay close to how people are doing the work” suggested Mike Hulbert of Noodle.ai. He continued: “When twenty people have to do something in a coordinated fashion, with volatility, it breaks down.”
The goal should be to move planners from manual effort to get out in front of issues; to think about what data could be predictive that could be added to make the models better. For example, what data can we pull from a retailer to make those base predictions better? This adds to the equation (or algorithm) an element of human intelligence that current systems entirely fail to unleash. How do we activate this new model to become a truly resilient organization?
The Make/Plan/Deliver and Industry 4.0 are the overarching themes here. System-wide volatility requires advanced analytics like AI.
The increases in volatility are system-wide, end-to-end, spanning across:
a) consumer behavior: pantry loading, channel shifting to online
b) production/sourcing: ability to manufacture sufficient amounts of spiking products
c) transportation: networks operate with increasingly unpredictable routing schedules
d) channel shifting: between Drug, Club, Grocery and now online/eCommerce segments – how to serve your top accounts and keep up with shifting demands?
Manufacturing is constrained. Transportation is constrained. eCommerce requires paradigms shifts.
Organizational leaders now have to understand what the variables are, which is where the AI is helpful – it takes that burden off of individuals and finds the patterns in the data.
Concerns emerge such as:
“At what stage in the process is change going to give you the best business result?”
“How do I avoid getting fined if i don’t deliver according to retailer’s service levels?”
With fundamental upsets across your value chain, the data and the intelligence behind it becomes mission critical.
CIOs are uniquely positioned to lead in the transformation
“Customers, retail partners, consumers – so many things have had to change in 2020.”
This was the shared sentiment of the group. How can CIOs lead in the changing of mindsets to become a continuous learning organization? The change management is massive. Mindset is the hardest part. Many business processes are not well defined. They have been on a journey for years now, leading up to this moment. This pandemic will drive people to be more open; we can’t succeed the old way. Empowering people is at the heart of it, and this, combined with data intelligence will build sustainable competitive advantage. CPG industry leadership is willing to spend on technology that can solve the problem wisely/quickly/cost effectively WITHIN larger, multi-year, multi-million-dollar larger digital transformation initiatives. Noodle.ai’s Athena Supply Chain AI Suite is uniquely positioned to do just that. 🙂
Request a demo of the Athena Supply Chain AI Suite and see for yourself.