“Historically, supply chain teams react to crises only after they have already begun,” writes Material Handling & Logistics (Dec. 19, 2024). A crisis starts and the team goes into fire-fighting mode. After the situation is remedied, teams return to business as usual, only to await the next crisis. Balancing strategic imperatives with solving these short-term crises is the key to effective supply management.
For years, supply chain professionals have been forced to play defense, constantly reacting to minimize disruptions as they arise. This approach not only diminishes employee productivity by forcing them to constantly switch between projects and contexts, but it also undermines the perception of the function’s strategic importance.
But new technology is transforming the way supply chains are managed. Instead of addressing problems as they arise, procurement professionals can identify opportunities for strategic value early and often, developing proactive response plans for dealing with predictable disruption events. While the specific timing and severity of disruption events like hurricanes, port closures, labor strikes, or country shutdowns are difficult or perhaps even impossible to predict, there are a finite number of event types each year that can disrupt supply chains, and thus a finite number of response plans that can assure resilient continuity of supply.
With the advent of new predictive procurement tools like those we discuss in Module G (Applying Analytics to Big Data), supply planners and purchasing teams now have the capacity to reduce the chaos of unexpected disruptions. AI-driven tools are now helping to streamline and automate labor-intensive tasks, allowing procurement teams to quickly identify alternative suppliers and manage spot-market opportunities when unexpected challenges arise. By analyzing data trends, such as historical supplier performance metrics and environmental factors, these predictive procurement systems enable businesses to make more informed decisions proactively.
Identifying alternative sources of supply within a company’s existing supplier base is key, since qualifying new suppliers can be time-consuming, and expanding the total number of suppliers may introduce unnecessary complexity. Also, securing carriers with secondary capacity is equally important, as logistical challenges often arise when transport routes are disrupted.
Classroom discussion questions:
- What tools do AI provide supply chain planners?
- What canal issues have companies faced the past two years, and how have they dealt with them?
Katie Decker is Marketing Manager at Account Mate, a California software firm with over 150,000 clients. She regularly shares her ERP expertise with our readers.
