By Jim Hayden Everstream Analytics chief data officer
Low supply-chain visibility is a blind spot that has manufacturers across every industry operating in the dark while trying to protect their products’ integrity and availability. The long-term effects of the COVID-19 pandemic, with ongoing lockdowns in China, cyberattacks on manufacturing operations, labor shortages, and climate-related disasters, have had a crippling effect on value chains worldwide.
In today’s increasingly interconnected and opaque global supply chain, the risk and disruption that occurs deeper in the supply chain can be most devastating. In Deloitte’s 2020 “Chief Procurement Officer” survey, only 50% of procurement leaders had high visibility into their Tier-1 suppliers. Worse, 90% of organizations rated their visibility into their extended supply networks as “moderate to very low.”
For companies focused on increasing supply-chain resilience and agility, it’s critical to start at the sub-tier levels.
Visibility + insights = enhanced supply chain security and resilience
Deep supply-chain visibility, supplier-risk scoring, and ongoing monitoring can help companies gain better control throughout the manufacturing process. But getting to that point is challenging. Some technologies address part of the problem or may use an outdated approach that can’t scale to cover today’s complex, interdependent supply chains. And simply surveying suppliers on their risk and cybersecurity postures, quite frankly, does not work.
An automated, multi-tier mapping and supply chain risk-management solution can deliver the visibility and insights manufacturers need. Mapping down to the sub-tier levels is a big job. It takes sophisticated machine learning (ML), graph technology, and data science to contextualize trading transactions and refine and visualize networks and value chains.
The technology maps down through the levels of sub-tier suppliers—down to the locations and material levels—and monitors suppliers and assets 24/7. The solution generates predictive insights and intelligence on immediate, mid-, and long-term weather, geopolitical, financial, cyber, and reputational risks and opportunities to inform strategic planning and disruption response.
Multi-tier mapping makes a real difference
A few examples of how companies are using this comprehensive multi-tier mapping and risk-management solution include:
A global food product manufacturer receives predictive alerts of potential material shortages from a supplier at Tier 4—a level where disruption might not be felt for months. With the early warning, the manufacturer has time to find alternative sources. The solution identified suppliers at Tiers 2 and 3 that share the same Tier-4 supplier and may be at risk for shortages.
A MedTech company uses the solution to map its supply chain, and with 29 suppliers at Tier 1, it uncovered 212 at Tier 2, 1,766 at Tier 3, and 13,876 at Tier 4. When supply constraints extended the lead time for semiconductors from 90 days to more than a year, the solution alerted the MedTech company. At the time, the company didn’t have direct relationships with its lower-tier suppliers. But now it knew who they were. The company contacted the sub-tier suppliers directly to explain the criticality of its product to patient safety and gained prioritization for its orders.
The following are other ways this approach can give companies greater control of their supply chains:
· Planning. Supply-chain insights and risk-modeling enable manufacturers to simulate potential scenarios, adjust rolling forecasts, and adapt resource requirements.
· Procurement. Sub-tier assessments enable companies to evaluate suppliers across the entire value chain to secure critical materials.
· Logistics. Risk insights enable manufacturers to find the most cost-effective shipping methods, reschedule or expedite shipments, and inform stakeholders of delays.
· ESG targets. Multi-tier visibility gives manufacturers a view of their complete supply chain to accurately track environmental, social and governance (ESG) performance, which is critical to protecting brand reputation and increasing sustainability.
· Supply chain regulatory compliance. Manufacturers can demonstrate compliance with the growing number of supply-chain regulations.
Conclusion
With the visibility, risk analysis, and predictive analytics provided by a comprehensive supply chain risk-management solution (with sub-tier mapping), manufacturers can mitigate the impact of supply-chain shocks and risks deep in the supply chain. They can also make better real-time decisions in response to disruptions and find the most efficient, cost-effective paths to keeping product delivery uninterrupted.
