Supply chain- Problem of the Global Village

It has now been two years since we first heard about the new virus. We all know how it has affected our reality. It will be no exaggeration to say that it has redefined it. 2022 is another year showing the truth of Charles Darwin’s statement that “it is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.” We need only to replace the word “species” with “company” to get a clue as to what course of action can give organisations a market advantage. The principle is simple – adapt or die. It is time for a change.

Every day we hear about problems related to the shortage of computer chips and its domino effect. During the run-up to Christmas, supplies were jeopardised, and many retail chains are still reporting supply problems. The Amazon effect, that is, the expectations of consumers and companies for fast and trouble-free delivery and immediate satisfaction, has reignited the discussion about the role of supply chain in the structure of a modern company. Behind every final product, there is a complex network of various suppliers, who form further links in the entire supply system. It’s easy to imagine what happens when one of the links in that chain breaks, and that’s exactly what has been happening for the past two years of Covid.

An old – nomen omen – Chinese curse says: “May you live in interesting times.” Such a time has come for all the purchasing staff planning deliveries. They are all involved in a kind of arms race and a battle to gain an advantage, determined by the current reality. The metaphor of a battlefield is no exaggeration, as purchasing departments are often the front line these days, and a company’s victory depends on how they fare and what tools they use. The change in the supply chain field has created a need. Now more than ever, sales, logistics, and purchase officers need tools that address these changes. Advanced technology is a contemporary army. You can’t win with an ordinary rifle against an opponent equipped with a modern Corner Shot, enabling them to fire from around a corner. You can’t win if, in these uncertain times, you only use Excel for supply chain planning while your competitors employ tools based on artificial intelligence. A proper tool is the first element of a new purchasing strategy. It can determine the ultimate success. As Wael Safwat says, “In my view of all the procurement and supply chain professionals, supply chain will become a more strategic function rather than a transactional one. You can’t always increase your revenue, but you can always reduce your cost. How are we going to do this? With Supply Chain. I can see that supply chain will be a rising star in the next 5-10 years, will be a more strategic business function.”

Streamline – Solution at Hand

All purchase professionals will agree that supply chain has always evolved. Yes, until 2020, it has. Forecasting, planning or even prediction was based on predictable data and built on a kind of supply chain status quo, even if it took into account a certain amount of variables or uncertainties inherent in the process. That reality no longer exists. It is time to adapt. You seek for another option for survival, you can discuss the situation and try to wait it out, but the effect is, in fact, known in advance – you’re out of the game. There is no exaggeration in stating that the current evolution of supply chain is revolutionary. Moreover, for many purchasing departments, it is imperative.

Purchasing departments are changing and are beginning to play a strategic role in companies. These departments cannot be stuck thinking only in terms of command-and-control. The current change forces them to use methods other than those that have been effective so far. Already dedicated solutions exist that take these changes into account. Not only do they consider the entire supply chain process, from sourcing through production and distribution, but also forecast and analyse final sales. Artificial intelligence comes to the rescue where tried and tested analytical methods fail. Is it possible nowadays to increase the accuracy of forecasts by several percent? We say, yes. More than that, we say – and any procurement officer can confirm it – achieving a more than 30% reduction rate is an impressive result. New times, new challenges, new tools. This is the essence of progress. That’s why it’s worth paying attention to these solutions. If you’re analysts, CEOs, CFOs, purchasing specialists or procurement managers, you might want to remember one word: Streamline.