Supply chain optimization: Business scenarios and architecture

The pandemic has brought supply chain to focus, and organizations recognize dynamic supply assurance as a critical capability for their business. Chief Supply Chain Officers (CSCO) and other executives seek to optimize their supply chain by infusing AI, modernizing their technology and addressing sustainability goals.

Over the next decade, CSCOs will need to solve key industry challenges: supply chain disruptions due to climate events, regional conflicts such as Ukraine or the Middle East, the desire for convenience and personalization, awareness of the environmental impact of consumption, meeting delivery expectations, fears about trade disruptions and fluctuations in cost. All of these challenges can be solved with more connected, agile and sustainable supply chains.

Organizations that proactively address these industry challenges can see some typical outcomes related to stock, including a 4–8% improvement of lost sales from stock outages, increased stock turnover. They can also expect improved management of product risk, perishability and age, increased management of lead time (a leading indicator of stock overage) and a reduction of days on hand.

In addition, there can be financial benefits, such as a solution cost savings of 10%, reduced holding costs and improved gross margin return on investment. Finally, they might also see customer-facing benefits, including a reduced return rate, the ability to manage unusual supply chain interruption events including weather or natural disaster and an overall improvement in customer satisfaction.

To help organizations address these industry challenges, IBM and Red Hat teams developed this white paper and supporting assets through an IBM Academy of Technology Industry Affiliate Initiative.

This white paper provides an executive summary, business challenges and overall solution followed by specific business scenarios. For each business scenario, we will discuss the business challenges, business value and business outcomes. We will then provide automation and modernization actionable steps organizations can take to drive innovation and move toward a digital supply chain. Actionable steps will be developed through the lens of use cases on how the main risk factors can be transformed into opportunities.

The specific business scenarios covered in this white paper are demand risk, loss and waste management, product timeliness, perfect order, last mile delivery, sustainable supply chain, supply chain returns and disaster readiness. For each business scenario, we present the business scenarios, solution overview and architectures.