AI in Supply Chain Management
AI in Supply Chain Management
With cases topping one million globally, governments and health care agencies across the world are working to contain the spread of COVID-19 through several safety measures including the complete lockdown of high-risk countries. While this might prove effective in controlling the pandemic, enterprises across multiple industries are struggling to mitigate its growing impact on the supply chain.
Forced quarantine in manufacturing countries like China has significantly affected major industries including automotive, electronics, pharmaceuticals, and medical devices and supplies, highlighting the limitations in their existing supply chain models. The impact on the overarching life sciences industry is particularly acute, because it cuts across the entire ecosystem, and could potentially enable the spread of COVID-19 due to the diminishing supply of active pharmaceutical ingredients and medical supplies such as masks and hand sanitizers from the key supplier, China.
Despite acknowledging the risks of a single sourcing strategy, many organizations in the life sciences industry continue to work with a single supplier in low-cost regions like China and India to capitalize on their lower costs for labor and materials. This is risky in and of itself. And it also results in sub-contracting situations that lack transparency into the tier-2 and tier-3 suppliers, which further complicates risk management.
Here are our suggestions for how organizations in the life sciences industry can combat the global supply chain crisis:
Despite the extra costs associated with building a proactive supply chain and qualifying multiple suppliers, doing so allows organizations to rapidly respond in pandemic-like situations, thereby reducing reliance on inventory management. Building an adaptable supply chain model that remains operational under any critical situation is the key to managing sourcing risk and avoiding global supply chain disruptions.
Enterprises must leverage analytics, cloud computing, control tower technology, IoT and MDM solutions to control cost, remove process inefficiencies, manage risk, and address uncertain customer demands.
Enterprises drove 15 percent growth of Supply Chain Management (SCM) Business Process Outsourcing (BPO) in 2017 as they sought to reduce high operating costs, address evolving customer demands, and manage risk and compliance. The solution to much of these problems, according to Everest Group, is digitalization.
“Enterprises can struggle with broken supply chains for many different reasons, not the least of which are siloed operations, inefficient processes and lack of visibility” said Vikas Gujral, practice director at Everest Group. “Enterprises that adopt digital solutions to combat these challenges are achieving better supply chain efficiency at lower cost. We have identified analytics, cloud computing, control tower, Internet of Things (IoT) and master data management (MDM) solutions as the emerging drivers for success in the SCM BPO market.”
These results and other findings are explored in a recently published Everest Group report: “Supply Chain Management (SCM) BPO—Annual Report 2018: Moving Toward a Digital Supply Chain Ecosystem.” In the report, Everest Group analyzes the global SCM BPO market in 2017, focusing on the state of the market, market size and adoption trends, and the service provider landscape.
Key Adoption Trends:
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