A case made for modernizing the supply chain vs. relying on old infrastructure.
According to Forbes, the Biden administration created a Supply Chain Disruptions Task Force to address supply chain discontinuities. More significant investment can now be directed to revitalizing manufacturing and shoring up supply chains with the newly passed landmark legislation, the Infrastructure Investment and Jobs Act. While political leaders across party lines agree that the U.S. needs to close supply chain vulnerabilities, the question remains how to best put these funds to use.
President Biden has set the goal of creating more resilient, secure, diverse supply chains with “a world-class American manufacturing base and workforce.” But how can the U.S. take these lofty ambitions and make sure that these funds are used to truly overhaul our supply chain instead of putting Band-Aids on old infrastructure?
Digitalizing The Supply Chain
Our supply chain has become increasingly unstable during the pandemic, resulting in extreme costs for U.S. businesses. For example, this summer, Walmart and Home Depot announced they had started chartering their own vessels in the range of $40,000 per day, an unprecedented move to meet holiday demand. This reckoning has been a long time coming, with the pandemic merely exposing existing cracks in global supply chains. Part of the answer to this issue is in digitalizing the supply chain to create a more transparent, unified ecosystem.
Digitalization is unquestionably expensive, but continuing with business as usual isn’t an option. Gartner has predicted that at least 50% of large global companies will be using AI, advanced analytics and IoT in supply chain operations by 2023. By embracing AI, automation and machine learning, U.S. businesses can develop a 360-degree view of the existing supply chain and potential disruptions.
This includes understanding and predicting customer and supplier behavior, as well as optimizing inventory and procurement decision making. Intelligent supply chains can react quickly to disruptive events like severe weather by having advanced knowledge of how the disruption will affect the existing supply chain and acting quickly to prevent shortages. These technologies help to prevent bottlenecks by predicting where they will happen and suggesting how to counteract them in real time. That’s a level of responsiveness to potential disruptions that hasn’t been possible in the past.