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DCE Magazine

Creating an Unbreakable Chain

Fall 2020

Supply chains were devastated by COVID-19, but smart technology can help ensure it won’t happen again.

When COVID-19 began spreading throughout the world, it rapidly wreaked havoc on global supply chains. Factories closed, workers were sent home, and transportation was severely impacted. Many essential products suddenly became dangerously scarce — ventilators, N95 masks, medicines and eventually food items like milk, meat, and eggs.

The pandemic created a crisis that few industries were prepared to deal with. But as with every crisis, lessons can be learned and positive change can result when the world recovers, said Paul Jan, a noted supply chain consultant and instructor for DCE’s Supply Chain Management certificate program. One piece of good news is that people are finally learning the vital importance of healthy supply chains, the lifeblood of the world’s economies.

“Before the pandemic, people would ask what I did for a living, and when I told them I was a supply chain consultant, they’d just get this blank look on their face,” he said, laughing. “It has always been a process nobody really understood or paid attention to. Now everybody is well aware of how important it is. The pandemic has focused a lot of attention on this process which people used to take for granted.”

It was especially significant that the pandemic started in China, a manufacturing and export giant. Supply chains around the world were impacted in a short period of time.

“Factories in China always shut down for about a month during Chinese New Year, and companies take this into consideration and buffer up during this period,” Jan said. “What happened this year, though, is the shutdown was prolonged for an indefinite period because of COVID-19. Suddenly, cross-border and cross-continent delivery chains that were reliable were breaking. And there were no plans or resources in place to mitigate the damage. It wasn’t until mid-to-late March that China began to open up again.”

As the virus spread throughout China, Europe, India and the rest of the world, many supply chains slowed to a halt, including in the U.S., partly due to overreliance on the Just-In-Time inventory management strategy, but more importantly due to the lack of end-to-end supply chain visibility. JIT simply means that production begins when orders are placed and inventory stock is only delivered as needed, a strategy that saves on warehousing and inventory costs but falls apart when materials and finished goods cannot arrive in a timely manner.

Paul Jan“With JIT, if one link in the chain is broken, the entire system could break down,” Jan said. “However with lack of visibility, or lack of ‘control tower,’ no one knows when, how, and how much inventory is available. Personal protective equipment (PPE) is a great example, where states were fighting other states and the federal government to get PPE. There was no visibility. Everyone was in the dark on who has what, who has capacity and how much — not just PPE but automotive, medicine, and consumer goods like Apple products.”

COVID-19 exposed serious flaws in supply-chain management, flaws that hopefully will result in much-needed improvements to prevent and mitigate future disruption. And the rise of artificial intelligence and machine learning can play a major role in creating more reliable, flexible, and autonomous management.

“This is essential even short of a global crisis,” Jan said. “Smaller-scale disruptions such as rail shut-downs, natural disasters, strikes at loading docks and harbors and such can create gaps in supply chains.”

A smart supply chain

Though not infallible, AI and ML can enable an autonomous system to forecast and more accurately predict demand, allow for a quicker response to potential disruption and, perhaps most importantly, take human error and bias out of play, freeing up time for workers to plan and mitigate potential risks, not simply crunch numbers, Jan said.

“This is key, to pivot supply chain planning to be more agile and flexible. AI and ML can use algorithms and models and data to help mitigate sudden disruptions. This enables people to be proactive vs. reactive to potential disruptions.”

The technology can be invaluable in preparing for possible disruptions, by allocating resources to ensure a responsive supply chain system. But there are some factors that AI and ML can’t predict, like hoarding patterns. Who could have foreseen the run on toilet paper at the onset of the pandemic, for instance?

“This technology can help move supply chain management away from managing by dashboard to real-time monitoring and identifying potential disruptions,” Jan said. “Data sets are big now and there’s no human brain that can really process it all. Machine learning can comb data for us and identify potential risk in real-time. This will allow us to integrate risk awareness into the product and value chain, allowing us time to mitigate and plan.”

A more flexible future

The DCE Supply Chain Management certificate program provides in-depth understanding of how end-to-end supply chain works, from raw materials to the Amazon package arriving on your doorstep. It examines how each element in the chain relates to one another, with an eye to creating a more sustainable and flexible system.

“Creating a more flexible supply chain was a given even without the pandemic,” Jan said. “AI and ML and other economic and geo-political factors were pushing us toward a more flexible model before the crisis. The COVID-19 disruption just expedited this need.”

Jan points to a MIT Scale Network study that found even many large companies were unable to create contingency rules and procedures for operations during a complex, high-risk event.

“In fact, approximately 60% of the surveyed managers either do not actively work on supply chain risk management or do not consider their company’s risk management practices effective,” Jan said. “Cisco, Coca-Cola, Whirlpool are the exceptions where they have spent years working out risk management processes due to failures in the past.”

Designed for service and manufacturing professionals seeking to improve the effectiveness of their supply chain, the online DCE program addresses the latest advances and strategies in managing this crucial lifeline. It prepares participants to optimize company supply chains to guard against disruptions — a threat to company profitability as well as national and global economies.

“Supply chain is a cool career,” Jan said. “Even more so now that everyone knows what it is.”