Drama, disruption and daring to look ahead

The recent potential for a rail strike in the US threatened a system integral to our supply chain. A disruption would have catastrophic impacts on industries, suppliers, manufacturers and retailers across the country. It would be yet another stressor on an already strained supply chain that, over the last 3 years, has faced disruptions from the global pandemic, rising inflation, climate change, historic geopolitical events, unstable financial markets and sustainability challenges.

As chief supply chain officers (CSCOs) walk the tightrope over potential disaster, their steps are far from tentative. A new report by the IBM Institute for Business Value (IBV) collects insights from 1500 surveyed CSCOs. According to the report, CSCOs are helping their organizations differentiate and create competitive advantage by using data and AI to improve their supply chains. And that competitive advantage is driving profitability and an increase in revenue over their peers.

Smart investments give clear advantages

Corporations that align their digital and sustainability transformation agendas achieve 20% higher revenue growth when compared to their peers, the report reveals. CSCOs are seeing a clear competitive advantage because of these investments, from a top-line and bottom-line perspective. They’re also getting a differentiated proposition to attract top tenured talent and early professional talent.

Over half of surveyed CSCOs are accelerating investments in digital technologies, including increasing automation and digitization of physical and asset-driven processes. 48% are applying open innovation with business partners, 46% are exploring new risk models and 54% are taking a cutting-edge approach to data-driven innovation, including employing predictive approaches and implementing tech-infused workflows.

Take for example the Hong Kong Applied Science and Technology Research Institute Company Limited (ASTRI). This R&D center for information and communications technologies is tasked with promoting Hong Kong’s competitiveness in technology-based industries. As part of its mission, ASTRI is helping manufacturers shorten their time to market, reduce development costs and enhance the quality of their products.

ASTRI has developed a digital-twin approach to equipment development. By implementing a science-based, agile approach to designing smarter manufacturing equipment, leveraging intelligent workflows across assets throughout the extended production process and using requirements-driven analysis and a model-based design, the organization creates a digital twin of an equipment piece. This allows engineers to perform a wide range of simulations and tests at nominal incremental cost to identify potential design defects sooner in the cycle. This model-based method also enables earlier validation of customer requirements.

ASTRI estimates that the twin approach has reduced integration time by 40% and cut the total cost of development by 30%. In addition, the use of robotic automation, IoT sensor integration and digital twin modeling for predictive maintenance supports 24/7 factory uptime.

Innovators edge out the competition

Using such transformational technology investments, CSCOs manage their supply chains to drive powerful results. They ratchet up tech strategies and adopt a data-driven innovation approach that emphasizes the scaling of a hybrid cloud infrastructure, AI-enabled workflows, customer-focused sustainability and a deeper focus on cybersecurity. These CSCOs make up the top 20% of those surveyed, also known as “the innovators.”

Innovators are edging out other CSCOs by embracing digital transformation. They use hybrid cloud platforms 60% of the time, versus 49% among their competitors. Innovators also lead the field with digital infrastructure that enables new technology investments to scale efficiently and deliver value. They use digitalization and AI automation 81% more than their peers. 90% of Innovators use AI and advanced analytics in demand management and predictive forecasting, which is 18% more than their peers.

The results highlight the importance of innovative CSCOs who prioritize digitalization for efficient end-to-end visibility and dynamism. In short, if you want to increase performance and value, data-led innovation is your journey.

The post Drama, disruption and daring to look ahead appeared first on IBM Business Operations Blog.

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