Supply chains have never been more relevant than they are right now. The COVID-19 pandemic is the first disruption in a millennium that has impacted almost every aspect of life in every corner of the globe. Few supply chains have been immune to its effects, from wildly unexpected spikes and drops in demand to supplier shutdowns and shortages. COVID-19's far-reaching impact has put the world's supply chains under extreme pressure – and even more intense public scrutiny. This crisis has triggered many companies into reigniting or accelerating digital transformation initiatives, all in the name of building agility and resiliency into their supply chains and their businesses.
Digital transformation goals provide an opportunity to deploy innovative, new technologies and overhaul antiquated, siloed processes. The two elements of "out with the old, in with the new" play a significant role in digitalization, but focusing on technology and process alone won't lead to success.
Supply chains rely on human connections
That's because, at their core, supply chains are all about human connections. Connections between customers and the companies who manufacture the goods they want and need. Connections between suppliers and the businesses who are vying for critical components and materials. Connections between planners and their counterparts in other areas of the organization like finance, sales, marketing and operations. Even the connections between supply chains – whether via partnership, collaboration or competition. Every one of those human connections is vital to the success of any supply chain.
Some are aiming toward a world with "lights-out" planning and a supply chain devoid of humans, where supply chains are run entirely by artificial intelligence (AI)-powered machines and robots. I do not share those beliefs. I know the tremendous value AI and machine learning can bring to supply chains. However, I do not believe that technology can or should entirely replace the role of human judgment and creativity.
Technology should empower people, not replace them
Look at what has happened during this pandemic for example. Countless companies' supply chains have fallen or flown. A challenge that has been repeatedly highlighted is the limits of historical data for prediction. In times like these, where demand and supply patterns are so outside the norm, AI-based models trained using historical data see these spikes and drops as outliers, instead of what they truly are – a pattern of events so unexpected that few saw it coming. These model outputs make it challenging for planners to know how to respond. And yet respond they did, using their human intelligence and domain expertise to make the best judgment calls possible under the circumstances, and in many cases quickly when the speed of response mattered.
In many ways, disruptions like this illustrate the trade-offs between accuracy and agility. The quest for a perfect plan can be upended by an unexpected disruption, particularly one of this magnitude. But do you abandon any semblance of forecast accuracy in the name of agility? Continued success is found in the balance between the two. The blending of accuracy and historical trends, with the agility to recognize and respond when those trends shift—whether it's a short-term course correction to alleviate an immediate problem, or a longer-term strategic change to business and operating models.
Either way, it's the people behind the supply chains who are responsible for its success or failure, augmented and empowered by technology, not replaced by it, through their ability to make confident decisions and collaborate with those inside and outside the company's own four walls. And through their ability to persevere under immeasurable pressure.
COVID-19 isn't the first, and certainly won't be the last major disruption to shake up old supply chain beliefs. But perhaps it will be the one that re-shapes it to put people at the forefront. Because after all, at their heart, supply chains are human.
Leading brands across industries trust Kinaxis to empower them to take control of their integrated business planning and digital supply chain capabilities. Our supply chain planning software delivers the agility for them to make fast, confident decisions in an unpredictable world. To learn more, visit www.kinaxis.com/en/customers.
