Reuters Events | Supply Chain & Logistics Business Intelligence

Supply chain leaders are meeting an unpredictable world with smart planning, simulations and demand sensing technologies finds new white paper

Robust supply chains that can cope with high volatility and rising costs are increasingly underpinned by unified planning systems that can sense, simulate and respond to demand signals, often through automation.

That is one of the main findings of the new smooth sailing in rough seas: how global logistics leaders are navigating supply chains through geopolitical instability, conflict and risk white paper from Reuters, Events and DP World.

The white paper, which features perspectives from supply chain experts working at Electrolux, Ikea, Philips and Sanofi can be downloaded for free here.

Getting ahead of demand

The research highlighted tools for predicting and responding to demand as being absolutely key to improving supply chain performance amongst the major brands interviewed.

We can lower costs, achieve more robust and precise inventory management, and ensure higher availability for customers

“Demand sensing is where we’ve seen the biggest benefits of technology,” said Susanne Waidzunas, Global Supply Manager for Inter IKEA Group. “We introduced it a couple of years ago and realised its great impact. We can lower costs, achieve more robust and precise inventory management, and ensure higher availability for customers.”

Similarly, Ruth Beadle, Head of Global Supply Chain for Sanofi, highlighted that planning tools had been game changers for their business. “Sanofi has implemented an AI-driven tool called ‘Plai’ that offers real-time visibility across the entire supply chain,” she explained “helping to predict and mitigate risks such as inventory shortages and disruptions before they materialise.

“The tool uses probabilistic inventory projections and automatic root cause analysis,” allowing them to “predict 80% of low inventory positions.”

Rapid responses through automation

Knowing when inventory is reaching these mission critical positions through digital systems is allowing firms to automate their responses reported the white paper.

“One of our main investments is in safety stock settings,” said Head of Personal Health Integrated Supply Chain for Philips Jeroen van Weesep. Their approach mines their data through AI to see where inventory positions need to strengthened.

We decided to adjust our parameters to reflect extended lead times and closed supply gaps on the most critical items using air freight. We were back in flow without significant disruption to customers

“The safety stock system is deployed to a very deep level,” he explained. “It is by item in each respective market, updating to both the demand dynamics, as well as our historic performance on forecast accuracy, so that it understands patterns as well as performance. Then it deploys new levels every month so that we keep in flow.”

Van Weesep recalled that “when the Red Sea crisis started, we realised it would not be over soon”. Therefore “we decided to adjust our parameters to reflect extended lead times and closed supply gaps on the most critical items using air freight. We were back in flow without significant disruption to customers.”

Twin planning for peaks

Building these kinds of business planning and data management systems “is triggering another opportunity,” said Paolo Galli, VP Group Logistics for Electrolux Group, an opportunity to create more “in-depth analysis and running simulations on our network.”

“Once we have the data, we can then start to simulate and understand what if we move this distribution centre, what if we do a consolidation centre?” he stated.

Simulation of this nature is proving to be a valuable tool in the supply chain planner’s kit, particularly the deployment of digital twins.

This approach not only increases resilience, by allowing us to proactively address disruptions, but also drives operational efficiency

Beadle explained that they are “creating a digital twin of the supply chain through value stream mapping.”

This “enables Sanofi to visualise and assess every node within our network, identify potential risks, and optimise inventory levels. This approach not only increases resilience, by allowing us to proactively address disruptions, but also drives operational efficiency,” she said.

Electrolux’ Galli noted that “we now want to add transaction data, so that we can combine the cost view with shipment dimensions to have a more performance-oriented indicator.

“This could give us an expectation of a plan for the sales supply stock … and convert this into the logistics element.… to automatically calculate how many square meters we need in each warehouse over the next 18 months, how many trucks we need on this flow over the next 18 months, and how many containers we need on these flows over the next 18 months,” he outlined.

The low hanging fruit have already been explored and exploited, and now it’s time to go to the next level

Technology investment

Critically, “the industry must continue to invest in transformative tools that provide real-time visibility into inventory levels, transportation routes, and demand patterns,” emphasised DP World Group Chief Commercial Officer, Logistics Beat Simon.

“The low hanging fruit have already been explored and exploited, and now it’s time to go to the next level,” concurred Galli.

These actions help take us from the traditional ‘just in time’ model to a ‘just in case’ model, which anticipates and prepares for disruptions

Now, “it’s about, for instance, analysing a market down to the different types of customer, understanding the behaviour, the different channels and what is really needed from each of these channels,” he thinks.

“Integrated Business Planning (IBP) facilitates data driven decision-making and allows for rapid response to changes in demand or supply chain constraints,” commented Beadle, “thereby reducing risks and ensuring continuity during disruptions.”

“These actions help take us from the traditional ‘just in time’ model to a ‘just in case’ model, which anticipates and prepares for disruptions,” concluded DP World’s Simon.

To read the complete insights from these supply chain experts, download the entire white paper here for free.