A modern cloud data platform is the foundation of all intelligent supply chains
In a world where disruptions and complications are inevitable, strong supply chains are more essential than ever before. As highlighted in the new thought leadership paper “Building intelligent, resilient and sustainable supply chains,” the necessary transformation improvements are not just a question of manufacturing, logistics or transportation. They’re fundamentally a question of timely and accurate data, both from inside the enterprise and from the ecosystem of supply chain partners. For years, enterprise supply chains have rested on the shaky foundations of disconnected, unverifiable and untimely data. When things go wrong, enterprises turn to war rooms with often aged data and competing sources of truth. This approach results in too much executive energy seeking to understand where the business is, and not enough time spent on the forward-looking decisions essential to driving the business.
The transformative results of a digital twin+ unlock significant value, including a 5%–10% decrease in product wasted.
Even when supply chain transformation initiatives consider the implications of data, they often do it too late in the process, as a hygiene issue. This limits improvements to the realm of visibility, rather than surfacing actionable insights, making it harder to achieve operational success and realize value. Every high-performing supply chain is only as good as the data that fuels it. If you want to transform supply chains, you must internalize this truth before you start. Clean, connected data will be the foundation of next-generation supply chain operations. Additionally, if you want accurate and timely data, you need to collaborate across enterprise boundaries. With the right data foundation, you’ll be empowered to build better capabilities, such as capturing real time changes in demand signals, proactively identifying exceptions in orders and deliveries, and dynamically adjusting the business to avoid emergencies and escalations.
To put data at the heart of transformed supply chains, organizations need to take three key strategic actions:
1. Create a unified data fabric as the foundation to exchange supply chain data
In today’s data-rich world, data inherently lives in silos and is not harmonized to easily drive insights and actions. For example, much of the data that supply chain analysts use lives outside of ERP systems in quality systems, manufacturing execution systems (MES) and warehouse management systems (WMS). But you can enable easy data exchange by using the cloud to create a data fabric that instantiates a common data model across the enterprise. Cloud-based data fabrics enable the consumption and publishing of core data through services and APIs. In turn, these support downstream and collaboration tools to visualize data while applying intelligence to workflows and processing.
Beyond these performance improvements, the new data foundation means that supply chains can offer completely new capabilities that support better business models. For example, you can build insight-driven relationships with customers and deliver products “as a service.” IBM Systems does this by supporting long-term engagement with hardware customers. Based on usage data, support professionals can predict when new hardware might be needed and respond more quickly to service interruptions. Many capital-intensive products are good candidates to deliver “as a service,” but only if the provider has sufficient insight to support these products throughout their lifecycle and deliver the service seamlessly.
2. Use a digital twin+ to go beyond data visibility into process orchestration
Visibility solutions and data warehouses have incrementally improved the transparency of supply chain operations, but there is a limit to how much benefit they can provide. The solution is to pair the control tower with a digital twin into a so-called “digital twin+”. This model enables intra- and inter-enterprise data-driven processes, and delivers benefits such as improved accuracy in demand signals and early warning on supply chain disruptions or transportation delays. The result is a platform that thinks, listens, learns and acts, while establishing transparency and trust in the process. The transformative results of a digital twin+ unlock significant value, such as ~1%–3% of cost of goods sold (COGS), 5%–10% decrease in product wasted, and increased speed to market. (Representative results based on IBM Consulting supply chain engagements.)
A digital twin+ leverages the right technologies for each business driver, such as:
- Internet of things (IoT) for quality, geolocation and asset performance data
- Machine learning and artificial intelligence (ML/AI) for advanced forecasting, dispute resolution and disruption management
- API/service to stand up a flexible, componentized architecture
These technologies leverage the rich data from the entire ecosystem to drive insights and processes across the value chain.
3. Use a case-based approach to adopt specific components and score quick wins
Although it’s essential to have an overarching vision for your supply chain transformation and do the work of building a data foundation, don’t overlook the potential for that data to deliver quick ROI in well-defined areas. For example, you can deploy technology accelerators to focus on targeted outcomes:
- Leverage IoT and sensor data to improve asset utilization and minimize downtime
- Infuse AI/ML to increase the efficiency of operational processes such as purchase order creations, safety stock, and reorder points
- Identify and correct master data anomalies that create repetitive supply chain disruptions
Taking a pragmatic approach to solving supply chain disruptions and infusing innovation into the process can drive significant business outcomes. As an example of how these efforts can add up, consider how IBM Consulting recently helped IBM Systems transform the global supply chain that supported their USD 10 billion server business.
- Mitigating disruptions in days instead of hours
- Resolving persistent supply chain challenges 95% more efficiently
- Cutting supply chain structural costs by 10%
To see more about how clean, connected data is the foundation for transformative supply chains, read the new thought leadership paper “Building intelligent, resilient and sustainable supply chains” today.