Managing Risk with Supply Chain Risk Management SoftwareEverstream Team
June 4, 2020
Taming The Supply Chain
Anyone who’s a stakeholder in a supply chain knows that it’s never predictable or stable. Change is constant and risks are abundant. One small disruption to the supply chain can quickly wreak havoc on the entire supply chain, making it critical for companies to be thorough in their risk assessment. You can’t change what you don’t know.
While not all threats are predictable, they don’t have to be invisible. More companies are using supply chain risk management software to shed light into where risks often hide, even those that may happen days or weeks ahead. This isn’t your legacy software. Today’s supply chain risk management software brings the superpowers of artificial intelligence and predictive analytics, and it’s completely changing how companies assess and manage supply chain risk.
In fact, this modern software is allowing companies to turn risk management into a competitive advantage. Those who are able to predict risk sooner are able to implement mitigation strategies before those risks turn into disruptions.
Digging into The Technology
We are seeing artificial intelligence and advanced analytics everywhere these days and they’re finally making it to the supply chain. According to Gartner, the trend of transition from legacy tools to solutions that rely on this more sophisticated supply chain technology will only increase in the coming years. Artificial intelligence is a game-changer because, as Gartner puts it, “AI supports the shift to broader supply chain automation that many organizations are seeking. For example, AI can enhance risk mitigation by analyzing large sets of data, continuously identifying evolving patterns, predicting disruptive events along with potential resolutions.”
Artificial intelligence is able to do what humans simply can’t, at least not nearly as efficiently: gathering and assessing massive amounts of dispersed, often data that is changing at lightning speed, and providing actionable analytics that gives decision-makers insights they never before had. AI capacity is nearly limitless, whereas humans can only do so much.
When supply chain risk management software is empowered with artificial intelligence, logistics professionals can do more sooner and faster. Decisions aren’t based on old, unreliable, or incomplete data but accurate, historical or real-time data that’s already been analyzed. It’s saving leaders massive amounts of time and resulting in more proactive and appropriate actions. The newfound capabilities are too attractive for many to ignore. In fact, Gartner reports that nearly a 270-percent increase in AI implementation over the past four years, with 40 percent of organizations saying they’re using it to some capacity.
Beyond artificial intelligence, advanced analytics is also playing a major role in the advancement of supply chain risk management software. For many, this means predictive analytics that is capable of providing forward-looking estimations that are highly accurate. Gartner says that the value of advanced analytics is to help organizations “identify data patterns and anticipate future scenarios – as well as prescriptive analytics – a set of capabilities that finds a course of action to meet a predefined objective.”
Technology is giving business leaders unprecedented, actionable intelligence to assess, identify, analyze, and mitigate risks up and down the supply chain. Instead of relying on legacy applications that can’t keep up with the amount of data or spreadsheets that are labor-intensive and historical, supply chain risk management software is enabling businesses to track weather patterns, infrastructure and traffic issues, social unrest, natural disasters and temperature fluctuations with great accuracy. With this data in hand days and even more than a week in advance of a shipment, leaders can make smarter decisions about the best way to mitigate risks.
Why The Hesitation?
We all know logistics is full of risk. While the industry is growing rapidly and Gartner believes the trend will only increase, not all companies are ready to adopt a new way of doing things. If it works, why fix it?
Forrester has a different perspective, saying, “Executives must take big bets on new technologies, business models, and emerging markets to stay ahead of the fast pace of competition.” Change is scary but falling behind can be a death sentence. Now that the value of artificial intelligence, predictive analytics, and prescriptive analytics is well-documented, it’s only a matter of time before this technology becomes the new norm.
One of the biggest drivers for this new capability requirement is the same-day or two-day shipping that Amazon introduced. Retailers have to keep up and offer similar shipping commitments. All of this demand is forcing companies to retool their operations and produce more product faster. All of that product has to get to the end-user rapidly and that puts pressure on the entire supply chain.
With the pace of production and shipping increasing, companies have to up their game. Delays can mean lost revenue, customers, and fines if they have on time in full commitments. Relying on manual efforts, unintegrated systems, and inefficient processes slow down the supply chain. The amount of data needed to effectively manage risk renders these traditional methods obsolete.
The Value of Intelligent Analytics in Logistics
Artificial intelligence and predictive analytics can handle massive amounts of data, but it also presents it in a way that makes sense without having to manually manipulate it to understand it. The whole point of this technology is to provide instant insight to speed decisions – decisions that can prevent shipment delays or damaged cargo. It reveals trends, offers trustworthy recommendations, and paints a complete picture, even as that picture constantly changes.
In logistics, it’s invaluable to know ahead of time what risks are most probable and preventable. Supply chain risk management software automatically analyzes every shipment, type of freight, mode of transportation, and planned lane and then overlays weather, temperatures, infrastructure outages, live traffic patterns, social hazards, etc. along the entire route. It can then score each risk and flag those risks that need to be prioritized, even offering mitigation recommendations to speed decisions even further.
This type of insight not only gives every shipment the best possible chance of being delivered on time and in its expected condition, but it can also save companies money. For instance, companies without this type of analytics would likely pay for reefer trucks for sensitive cargo because it’s what they’ve always done.
On the other hand, a company using this type of supply chain risk management software would be able to use climate to its advantage. If the temperatures are predicted to be below freezing along the entire route, the company could save money by not paying for the more expensive reefer truck while still ensuring the integrity of the freight.
Similarly, a company without this capability may not have much notice of a tropical depression that was supposed to go east but a day before the shipment headed west. With the software, however, logistics leaders would have all shipments coming from, going through, or heading to the danger zone scored in real-time so they would have the time to modify routes and set the proper expectations.
Adapting to Changes
Spreadsheets are static. Legacy systems can’t keep up. Companies who want to get control of their risks require a dynamic system that automates the entire process. Supply chain risk management software with intelligent analytics is capable of consuming large amounts of shipment data, timing, and delivery commitments at scale. It then simulates the lifecycle of each shipment with forecasted conditions and risk scores included so leaders can determine which risks warrant action.
Instead of rushing to action with every potential risk, leaders can evaluate their options before changing a lane, a mode of transportation, or a date. They have reliable, real-time data they can rely on to make an informed decision as much as 10 days before the shipment is scheduled.
Supply chain risk management software is changing logistics for the better to meet customer expectations. The technology has finally caught up with the rapid changes in the supply chain.
The Everstream Solution
To speak with an expert about predicting risk sooner using artificial intelligence and advanced analytics to gain a competitive advantage for your business, contact us now.