Seeing into the Future with Supply Chain Risk Management Software
Supply Chain Risk Must Be Managed with Software
Every supply chain stakeholder knows it doesn’t take much to disrupt it. Risks can come from anywhere, often without much warning, and cause disruptions that can slow or even stop progress completely. Companies try to assess their risks, but without intelligent supply chain risk management software, those threats often go unseen until they are imminent or have already caused problems.
Manual efforts, antiquated tools, and obsolete systems aren’t equipped to see all risks before they happen. At best, they provide a historical view of what’s already happened. What companies need in order to have any chance of mitigating risk and, therefore, disruption, is a more comprehensive view of risk – one that includes historical, real-time and predicted risks.
The evolution of intelligent technology, such as artificial intelligence and predictive analytics, is changing how risk is assessed and managed. Instead of being reactive, companies can use this modern supply chain risk management technology to be highly proactive, avoiding risk altogether to keep the supply chain humming.
Artificial Intelligence and Predictive Analytics
Virtually every industry is either utilizing artificial intelligence and advanced analytics or is at least considering it. According to Gartner, the trend towards these sophisticated technologies will only intensify and become the new norm. When it comes to the supply chain, artificial intelligence brings automation in more than meets the eye. Automation has more value than just streamlining production. Gartner says artificial intelligence can “enhance risk mitigation by analyzing large sets of data, continuously identifying evolving patterns, predicting disruptive events along with potential resolutions.”
There has always been an inherent fear that artificial intelligence and the automation it brings replaces human effort. What we’re finding, however, is that artificial intelligence often does what humans simply can’t do – or at least do as efficiently or as quickly. There is simply too much dynamic data to aggregate, cleanse and analyze. For every minute it takes a human to attempt to manage the data, artificial intelligence can do in milliseconds. This is of particular importance when identifying risk. The key to mitigating risk is early detection. The longer it takes to make data operational, the longer it takes for decisions to be made.
Today, companies can benefit from the integration of artificial intelligence in supply chain risk management software to aggregate a limitless number of internal and external data points. Instead of only seeing part of the picture, supply chain leaders have real-time visibility into the complete supply chain picture. Decisions don’t have to wait on manual reports, spreadsheets and queries. Dashboards make the data instantly actionable and the data is updated in real-time. Artificial intelligence is changing the game. So much so, Gartner reports nearly 40% of organizations have implemented artificial intelligence to come capacity already, a 270% jump in less than five years.
Supply chain risk management software is getting a boost from other technology as well. Advanced analytics such as predictive analytics is providing even greater value to the supply chain. Gartner says predictive analytics and prescriptive analytics are giving decision-makers unprecedented capabilities to analyze big data that was once inaccessible. While artificial intelligence automates data aggregation and analysis, predictive analytics identifies data patterns and anticipates future scenarios. Prescriptive analytics then maps out the best course of action to mitigate identified risks. Preventative planning
Using a combination of artificial intelligence, predictive analytics and prescriptive analytics, business leaders can engage in preventative planning at scale. Risks no longer are just part of the supply chain that have to be tolerated; they are manageable threats that have less of a chance to impact the supply chain.
The logistics portion of the supply chain is far from immune to risk, yet Forrester says the adoption of a formal risk management program has been slow. Even with Forrester’s recommendations that new technologies provide a competitive advantage and reduce risks that often become public, a large number of shippers and carriers still rely on old methods and systems simply because it’s the way logistics has always been managed.
While this approach may have worked in the past, Amazon has completely changed the supply chain, including logistics. Before consumers demanded rapid shipping, Amazon was offering it, creating demand at such a rapid pace, same-day and next-day shipping is now the norm. Expedited shipping is convenient for the consumer, but it’s forcing the supply chain to churn out more products at a faster pace. Any hiccup in logistics can result in unmet demand, a damaged reputation, and ultimately, a smaller marketshare.
Related: Must Haves When It Comes to a Transportation Supply Chain Risk Solution
In order to keep up, logistics companies must lean on modern technologies to replace manual efforts. The sheer amount of data, stakeholders, and moving parts overwhelms obsolete systems. Only supply chain risk management software is capable of ingesting the big data and transforming it into actionable intelligence. The faster the data is operational, the faster decisions can be made earlier in the planning process. Typical logistics risks, such as inclement weather and infrastructure outages, become more predictable earlier than ever before, giving decision-makers time to adjust schedules, lanes, modes of transportation and expectations before damage is done.
How Supply Chain Risk Management Software is Changing Logistics
The beauty of supply chain risk management software is that once it’s configured, it instantly begins streamlining, enhancing, and presenting the data in a way that brings it to life. It eliminates the old practice of digging through numbers in massive spreadsheets and manually analyzing the data (which is already outdated because spreadsheets provide only a historical snapshot).
On the other hand, supply chain risk management software continually analyzes all of that data to reliably deliver actionable data that needs no manual analyzation. It has already done that hard work. It doesn’t just spit out facts and figures but paints a complete picture. Decision-makers spend less time making sense of the data and more time taking action on the data.
Here’s how supply chain risk management software benefits logistics companies. Instead of simply seeing a hurricane approaching the Gulf of Mexico, leaders can predict with greater certainty the most probable impacts, when and where those impacts are most likely to occur, and which shipments would be affected if they were traveling their planned route at specific times. This kind of granular data ensures shipments that may not be in the exact affected area during potential flooding, for instance, aren’t delayed. They can see where each shipment will be on a timeline to see which trucks do need to be rerouted or rescheduled and which ones can go on as planned.
Similarly, a predicted temperature shift may mean a company can save money on the truck type. If the planned shipment will be in sub-freezing temperatures for the duration of the journey, the company doesn’t need to waste money on a more expensive reefer truck. They can confidently decide on a non-reefer truck without compromising the sensitive freight.
Companies not only have greater visibility into potential risks and impacts, but they see scores on each risk – scores that immediately indicate how probable that risk is to a specific shipment. Perhaps there is a risk, but the intelligent software predicts that there is a 60% chance it would only impact the shipment delivery time by 10 minutes and a 30% chance it would impact it by more than an hour. With this information, business leaders can decide their risk tolerance and determine if they need to adjust the shipment. Going further, the software offers prescriptive analysis that presents the best adjustment options, dramatically speeding decisions.
Logistics companies must be agile. Plans are not concrete. Dynamic planning ensures leaders can pivot when needed, using data to drive and justify their decisions. A component of dynamic planning is modeling through scenario planning. Supply chain risk management software not only automatically consumes large amounts of data about the freight type, origin, destination, pickup time and arrival time, and risks along the way, but it also simulates the entire lifecycle of the shipment with forecasted conditions included. Leaders can visualize how each scenario is likely to play out – no manual analysis required. The software is constantly monitoring shipments and provides alerts when a viable risk presents itself, giving staff the ability to focus on other things as they have peace of mind the software is working in the background.
The capabilities that this type of software provides are invaluable in many ways, including preventing rushed decisions, business-as-always practices that often result in overspend and missed deadlines, and poor optimization that squanders resources. Having reliable, actionable data in hand as much as 10 days before a shipment is scheduled is a powerful differentiator. It allows companies to be more nimble and agile to the inevitable changes and risks that pop up.
Related: How to Prevent Lost Freight Loads with a Supply Chain Predictive Analytics Solution
It’s time logistics stakeholders take control of big data, using it to their advantage to streamline their processes, minimize disruptions, and meet their commitments. Manual processes are inadequate to meet increasingly strict demands and put organizations at greater risk for failure. Supply chain risk management software is a critical piece to become or remain a major player in the logistics industry and gain a competitive advantage.