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As supply chains rebalance in 2024, enterprises have eyes on agility

Peter Budweiser Profile picture for user Peter Budweiser February 6, 2024
Summary:
Supply chain disruption in recent years has seen enterprises facing shortages followed by surpluses. Next year we’ll see a rebalancing, says Peter Budweiser of Celonis, as companies find new ways to stay agile and avoid bottlenecks. End-to-end visibility will be key – but the notion of ‘end-to-end’ itself is changing, as process visibility expands beyond enterprise walls.

Enterprise Supply Chain Analytics © kentoh - Canva.com
( © kentoh - Canva.com)

Like any complex system, supply chains are volatile, unpredictable things. So when you throw as much disruption into the mix as we’ve seen in the past few years, it’s no wonder many enterprises have seen their inventory levels go from one extreme to another.

The pendulum swung from shortages to surpluses as companies reacted to everything from COVID, to the blockade of the Suez Canal, to the war in Ukraine. The rebound effect will surely continue in the coming months, but 2024 will be a year of recalibration and rebalancing in the pursuit of lasting agility.

A time to prepare

Don’t get me wrong – uncertainty and the risk of disruption will continue to prevail in 2024. A period of high inflation needs to be digested. This means margins have changed compared with two years ago, leading to increased pressure to reduce costs. Also, consumers do not have as much disposable income as in the early years of COVID-19. At the same time, we see a shift in interest rates (again), with uncertainty about the exact development. Lastly, because supply chain management heavily relies on forecasting, the uncertainty surrounding recent demand trends won’t fill anyone with huge levels of confidence.

But in many areas, the pressures will ease off to the point that enterprises may find themselves in a position to regroup to address future challenges.

With fewer fires to fight, there’s capacity to implement processes and solutions to build a more agile and resilient supply chain. After all, while many task forces were set up and processes were adapted to address immediate crises, few enterprises had the time, money or appetite to commit to lasting change programs or to invest in new software solutions.

There’s a risk they’ll abandon or roll back some of these efforts – and the temptation of old habits can be a dangerous trap. My advice to enterprises would be to maintain focus on building more agile, more resilient supply chains by learning from the past and defending against the inevitable threats of the future. But what does that look like in practice?

Prioritization and responsiveness

Supply chain agility is the ability of a supply chain to adapt quickly to changes, disruptions and fluctuations in demand while maintaining operational efficiency. For me, this is about two critical capabilities. Firstly, the company's ability to identify problems as early as possible in order to have enough time to react, and secondly, the speed and efficiency of the reaction itself.

It’s a subtle but important difference that speaks to an enterprise’s readiness for change. In the past, many of our customers at Celonis were held back by slow, manual reporting. Now, by using object-centric process mining (OCPM), and solutions like the End-to-end Lead Times App, they have tailored insights at the click of a button.

An additional key element of supply chain agility is the ability to prioritize actions – and, likewise, this is vastly improved by the end-to-end visibility that OCPM gives you. It helps you answer the question, What is my most urgent issue right now? Once I know that, I can prioritize my next steps and execute them very quickly.

As an example, German manufacturer Freudenberg uses Celonis to gain an end-to-end understanding of shortages and the implications for customers – internal and external – so they can adapt at speed. With supply chain transparency at the push of a button, they can easily identify and prioritize which challenge to address next.

Smarter technology enables a new approach to ‘end-to-end’

We’ve been talking about end-to-end visibility for decades. Everybody wants as comprehensive a view as possible of their processes, in order to understand where the value opportunities lie.

What’s happening now, thanks to technologies like OCPM, is that the ‘ends’ of end-to-end visibility are moving further and further apart. From single processes to multiple interconnected processes within an organization. From a digital twin of a single organization to one that shows how many organizations connect, whether they’re your partners or tier-1 suppliers. From single supply chains to whole ecosystems of connected organizations.

Okay, so we’re still many years away from that level of connectivity and data sharing. Let’s be honest – most companies don’t even know what’s happening inside their own walls. But the point is that that’s the direction of travel, and it’s a journey we have to take step by step. I’m extremely excited to see us taking those early steps, and laying the groundwork for more. This includes collaboration across organizations, integration of data from third-parties like freight visibility, and the extension to new business objectives like sustainability.

The best solutions may surprise us

However we define its boundaries, here’s the funny thing about end-to-end visibility: nobody’s ever achieved it. So if an average enterprise were to achieve it tomorrow, it probably wouldn’t be able to realize its potential to the fullest.

That’s the nature of innovation – it’s unchartered territory. And while we at Celonis have our ideas about what the supply chain of the future will look like when it’s optimized with end-to-end visibility and intelligence, we also know that there will be breakthroughs no one can predict. It’s those emergent innovations that I’m most excited by – and I look forward to being pleasantly surprised.

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