H Supply Chain

What is a proactive supply chain network and how can it benefit your business?

Nov. 28, 2022
A proactive supply chain network addresses visibility gaps so that end users can identify and act on changes.

Supply chains are out of whack. We seem to be emerging from the worst of the challenges, but snags persist, even as smart new ways of working mature and scale among manufacturers. Here we chat with Will Freiberg, CEO of Crux, about the value of what he calls a “proactive supply chain network” and how data literacy can empower supply chain managers.

Smart Industry: What do you mean by a "proactive supply chain network"? 

Will: Supply chains are perennially at risk of disruption, whether via a global event like the pandemic or local conditions such as hurricanes, blizzards, heat waves, or labor strikes. The earlier companies have visibility into emerging risks, the faster they can take steps to prevent or mitigate disruptions. A proactive supply chain network addresses visibility gaps so that end users can identify and act on changes in supply, demand, and product quality before they become critical. The opposite approach is a reactive supply chain network that responds when disruptions occur. A reactive approach puts supply chain networks at a competitive disadvantage.

Smart Industry: How has this approach changed in recent years, with the supply chain crises many of us have experienced?

Will: Since supply chain disruptions have always been an issue. Supply chain professionals have looked for ways to gain insight so they can prevent disruptions all along. The ongoing supply chain crisis that began with the pandemic only underscored the urgency of finding new solutions. Companies have and will continue to invest millions of dollars in platforms that address visibility gaps. As data has proliferated, new sources of relevant information emerged. The problem is that most companies don’t have the data literacy and management skills they need across the organization to take full advantage of the volume of information that is now available from multiple sources.

Smart Industry: Do industrial companies properly train staff regarding supply chain management? 

Will: Applying data to optimize supply chain management is table-stakes for industrial companies. Virtually every company has staff to ingest and process relevant data, analyze the information to glean insights, and then act on those insights to improve business results. Most often though, the challenge isn’t with the systems but with the data itself, such as the volume of data available, the speed at which it arrives, and the complexity of the information received. Supply chains frequently lack this initial visibility to factor in any potential risks and unusual circumstances.

It may be helpful to think of data as a commodity that requires its own supply chain strategy, including data literacy and management skills across the organization to turn the raw material into a finished product. When organizations lack that (and most do), they can’t manage the data-supply efficiently, so insights and actionable business intelligence are lost. The solution is to improve data literacy and management skills more broadly, so insights are captured and shared.  

Smart Industry: Why is data literacy important for supply chain managers? 

Will: Data-driven decisions are central to business operations, especially for tasks such as optimizing processes that will increase customer satisfaction, opening new models of business and holding a competitive edge in the increasingly digital market. To get there, though, it’s important for decision-makers to understand how their data—both company-generated and external—is organized, interpreted, and summarized to create actionable intelligence. When organizational silos are broken and a wider circle of people are involved in the analysis and decisions on data, companies gain a broader perspective of the trends shaping their operations from every department.

These insights can help them mitigate risk, ensure fulfillment, determine optimal inventory levels, increase traceability, and avoid scenarios where unconscious biases may produce poor outcomes. It can also bring issues to the surface so that data can be applied in new ways to solve problems. Supply chain companies without a comprehensive data-training program hinder this by relying, instead, on specific teams to analyze and make all the decisions around data, further isolating the process. The solution is to give broader access to data via an approach that seamlessly integrates third-party data sources with internal and external data and delivers insights at each level that enable proactive management of supply chain issues.

Smart Industry: What does the near future of industrial supply chains look like?

Will: Supply chain leaders now understand that data is critical to their ability to proactively manage networks and avoid costly disruptions. They’ve invested heavily in platforms to address visibility gaps, but at present, most aren’t investing in training programs that improve the data literacy and management skills of their workforce, and many aren’t sharing the vast amount of internal operational data that could give suppliers insights—an oversight that can result in millions in lost revenue.

In the near term, industrial supply chain leaders who recognize the potential of creating a truly proactive supply chain network and invest in the training that makes it possible will outcompete peer organizations that don’t take that step. This will drive greater awareness of the fact that companies need to treat data as a commodity that requires supply chain management in its own right. When companies scale their critical data delivery, operations, and transformation, they’ll be ready to meet the challenges and opportunities we’re seeing in the supply chain today and into the future.