Data holds the key to minimising supply chain disruption
Since 1994, the Eurotunnel has carried more than 26 million trucks and more than 340 million tonnes of freight goods. 25% of trade in goods between the UK and continental Europe goes through the Channel Tunnel, representing a total value of around 115 billion euros per year.
For over 20 years it has served as Britain’s gateway to trading on the continent. Any slight delay could cause a devastating domino effect on businesses reliant on the smooth passage of goods across borders.
And it’s not just the Channel Tunnel. The Department for Transport has recently unveiled a plan to keep traffic moving on motorways through Kent in the event of severe disruption at Channel ports after Brexit. ‘Operation Stack’ aims to ease traffic for residents and businesses in Kent in the event of cross-Channel disruption. While the government puts in place interim plans such as these to tackle disruption, businesses need to think proactively about how they can plan for scenarios around customs, tariffs, delays and any changes at our borders – be they temporary or long-term shifts.
The world-wide supply chain web
Many current manufacturing processes involve crossing borders several times during the production process, adding yet another layer of complexity to supply chains. For example, the crankshaft used in the BMW Mini makes the journey across the English channel three times as part of a 2,000 mile journey to the shop floor.
This example highlights the very real danger UK car manufacturers face following the UK’s split from the EU, and is just one symptom of a much more widespread issue across the UK’s economy. Ever since we joined what is now known as the EU in 1973, Britain’s industry has been shaped and bolstered by partnerships with suppliers in neighbouring countries. Brexit brings this entire system under threat, casting doubt over whether businesses will be able to move products and parts efficiently and affordably across borders.
Networks have moved from linear supply chains to a sprawling web that can seem impossible to follow. Looking forward, businesses need to deliver visibility to people across the organisation, not just those directly involved with suppliers. Breaking down departmental silos such as finance, supply chain and sales, will help businesses take a more holistic, and accurate approach to planning. With the need to respond quickly to changing tariffs or border controls, businesses can’t afford to spend time piecing together disparate sets of data.
Is it too late for just-in-time?
Many car manufacturers like Toyota operate a ‘Just-in-time’ production cycle, where inventories are kept to a minimum to avoid costs associated with keeping spare parts in storage. While this dramatically improves productivity and reduces costs, it leaves businesses incredibly exposed to any market shifts and surprises.
Crucially though, this system relies on the ability to accurately forecast demand. A delay with one supplier could bring down the entire production process. For example, a sudden surge in demand could significantly delay delivery of finished products if parts down the supply chain are sitting outside Dover. Businesses transporting perishable goods across the border also need to factor in potential delays at customs.
Businesses with far reaching, complex supply chains should be looking for ways to get on the front foot, to proactively mitigate against disruption. While details surrounding trade tariffs and border infrastructure will continue to be scrutinised and debated, businesses need to make sure their supply chains are ready for any scenario. Integrating external data into forecasting is now so important, and businesses are starting to realise the potential this has to accurately forecast and mitigate against external risk factors.
Once you have collected the vast amount of data, consider using AI to quickly and accurately produce forecasts based on current internal and external risks. Adding artificial intelligence into the mix is primed to transform supply chain planning. While AI will lead to more dynamic pricing and intelligent insights, it will also reduce the time to decision making by automatically identifying potential disruptions and forecasting the impact on the onward supply chain. Planners can use AI to correlate external data from sources like social media, weather forecasts and news to track and predict disruptions at break-neck speed. AI’s ability to assimilate billions of data points into useful information means the technology could well be the saving grace for today’s daringly tight production cycles.
Connecting across borders
The supply chain is going through a period of unprecedented transformation. Supply chain organisations are under enough pressure already to be able to adapt to shorter production cycles. While some level of disruption may be unavoidable, it pays to be prepared. Take time to understand the risks to your business by working through potential scenarios to see the potential impact and seek advice where required. The maturity of cloud technology has made planning strategies to become truly connected, allowing employees to access company data wherever they are and gain real-time insight into what is happening on the ground. AI will take some time to learn from the data it processes, but we’re beginning to see how important the technology is for planning for disruption.
By Nick Turner, RVP United Kingdom and Ireland, Anaplan.