Creating Resilient And Sustainable Supply Chains

In this episode of TFiR: Let’s Talk recorded at the 2023 SAP Sapphire Conference in Orlando, Swapnil Bhartiya catches up with Richard Howells, VP — Solution Management for ERP, Finance and Digital Supply Chain at SAP, to talk about the current trends in supply chains.

Evolution of supply chains:

For the last 20 years, supply chains have been all about cost reduction and efficiency. As a result, they became global supply chains. However, the pandemic exposed the risks in our supply chains.
In the last 3 years, the key word has become resiliency: find new ways of doing business through our supply chains, look for alternative sourcing strategies, leverage inventory optimization strategies to better position inventory, look at offshoring and nearshoring.
Moving forward, sustainability will join resiliency as a key driver of supply chains. Many companies have created quite ambitious goals for being carbon neutral by a certain date. The challenge is that many of them don’t have the tools in place to actually capture that information, much less act on that information. Apps capturing emissions, minimizing waste, and alleviating inequality within the supply chain will become key drivers for most businesses.

Current trends in the market:

The pandemic has caused companies to come up with more resilient risk mitigation strategies. Cost is still a key part of this because they still need to be profitable, sustainable, and keep customer service levels high.
There is a move away from fully global, single-source supply chains. Instead, companies are establishing local supply chains for key components, having manufacturing closer to the actual demand to reduce the risk.
Common questions from companies: How do I better leverage a network? How do I know which suppliers can provide the material I need and have contracts in place with those suppliers? How can I better position inventory around my supply chains? How do I know if it is resilient and sustainable?

Advice for companies looking to improve their supply chain resilience:

Identify a network design and design risk out of your supply chain.
Have alternate sourcing strategies.
Position inventory to work with your manufacturing facilities and have them as close as practicable to your demand.
Have an accurate view of demand, leveraging technology to not only look at the forecast but at point-of-sale information and sentiment analysis. Starting with the wrong demand means you’re going to be ordering the wrong raw materials and making the wrong products.
Improve visibility across the supply chain, within and outside your organization. You can’t manage what you can’t measure and you can’t measure what you can’t manage. This requires better collaboration and tighter relationships with suppliers, contract manufacturers, logistics service providers, and any other partners.

SAP is continuously embedding AI capabilities into its supply chain solutions. At the SAP Sapphire Conference, the company announced that it:

Improved the slotting capabilities in the warehouse management logic, which means it helps companies optimize inventory, have the right inventory in the right place within the warehouse, and optimize the use of the warehouse.
Improved the freight receiving process in transportation management. Companies can use generative AI to better automate the receiving and matching processes within inventory management.
Made enhancements to the footprint management solution. Sustainability calculation for a product(s) and capturing real information, not estimates and averages.

This summary was written by Camille Gregory.