Minimizing Risks in the Supply Chain
Even Algorithms Cannot Predict the Future
All of manufacturing has been suffering from supply bottlenecks for semiconductors for some time. Medium- and long-term effects on operational workflows are already apparent. Even with fundamentally correct multi-sourcing strategies, the current scenario could not be remedied.
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The pandemic has shown us that we are indeed living in a VUCA (volatility, uncertainty, complexity, and ambiguity)world. No one could have predicted such a significant, historic event.
Global supply chains are changing in the face of geopolitical developments
The pandemic is a once-in-a-lifetime, exceptional situation in which multiple factors have come together in an unfortunate way. But experts also believe that this is the first taste of decoupled economies and intense technological competition with China. Europe could be cut off from supplies more frequently in the future. For procurement, this would mean that in the medium to long term, production would shift to Europe, or more regular sourcing would take place in various Asian democracies. Currently, high-demand components, such as memory chips and standard processors, are in short supply. They are scarce because of the growing demand for computer hardware due to prevalent home office work. But these are only developments that affect the short term. Over the long term, the more crucial question is how global supply chains will change in the face of geopolitical developments. Depending on how they develop, other regions might also be supplied first with Chinese technology in the future.
Digitization offers a key capability: the ability to make better decisions even when time is of the essence and situations are complex.
The Coronavirus pandemic has taught us that companies need to be better prepared for supply chain disruptions
The pandemic demonstrated the extent to which economic processes operate according to the VUCA principle. No one could have predicted such a significant, historic event. And even algorithms cannot predict the future. To increase business resilience, it is therefore important that companies invest more in AI and the optimization of planning processes. Digitization offers a key capability: the ability to make better decisions even when time is of the essence and situations are complex. This applies, for example, to operational decisions in material planning, transport management, or production management. These processes can be perfectly mapped using mathematical models that contain billions of different possible courses of action. Optimization algorithms calculate the best situational scenarios, for example, using the material still available to complete as many orders as possible on time. Algorithms offer increased computing power and enormous efficiency gains, which means they can be used to calculate increasingly large, interrelated tasks. In this respect, one of the most important tasks from an IT perspective will be, on the one hand, to link planning processes more extensively, and on the other hand, to find meaningful delimiters that still allow the optimization or simulation results to be used operationally.
Managing the Unplannable Digitally:
It remains to be seen how the current crisis will develop and how it will impact the economy over the long term. What is certain, however, is that modern technology can help ensure greater planning reliability.
Read here how our software helps to make the unplannable plannable.