Posted by Dave Food on Aug 20, 2019 6:38:44 PM
Dave Food

Volatility is an unforeseen outcome when huge hard-to-predict events happened and which we fight back to completely comprehend them supported on our previous-usual frame of experiences that somehow have been so difficult to overcome.

The rapid changes the world is experiencing, call for pro-active management of risk to uphold long-term success. Supply chains are of the most exposed areas to these risks, whether internally or external events and demand instabilities as a consequence.

The apparent impulse is to stay in your area of comfort as managing risk is not as it used to be, either. For execs from different areas in your enterprise, Volatility represents two final critical assignments:

How to manage risk and where to distribute resources

It is becoming harder to predict risks due to the climate change we are experiencing. Unseasonable warm weather, extend periods of dangerous heat waves, massive rainstorm, floods or droughts lasting for years; drastic-fluctuating weather changes in the past years and still to come.

Counting on retroactive data has become even riskier. Supply chains and brands have reported difficulties in supplying products, resulting in reduced sales because they base campaigns on weather patterns and adjustments them according to seasonal changes year after year. Consequently, they need to high costs or lost revenue, impacting the result.

Another volatile event is caused by the overwhelming pollution of plastic in our oceans. Documentaries showing our coastlines covered in plastics have a significant impact on the general public. Many instances have proved a great concern about these matters and are trying to make a change of mind on the society and compromised more than 60 countries and top global companies to inhibit plastic production and consumption; enterprises such as Unilever, Coca-Cola Procter & Gamble and many of the sort.

What could be the solutions?

Procurement leaders are implementing a developing framework, by using a ‘Digital Twin' approach which allows them to assess the potential impact of risks, such as lifestyle, commercial, geopolitical, environmental and ready for action situations.

One of the most common menaces enterprises copes within this volatile market as our, is supplier fiasco. Studies published by the Chartered Institute of Procurement and Supply suggests that “over three years, more than eight out of 10 businesses experience this. The loss could be diminished as long as CPOs modelling the risks, analysed the stability of their critical suppliers and used that information to reconfigure their networks.”

For instance, Tata Motors is supporting its operations by AI capabilities, a Data Lake and huge-edge computing systems. It re-engineered the automotive multinational break-point while operating in two frames at once, both ensuring their supply networks to work the new changes, and forecasting the operations for two or three years in advance too.

Further comments: these red-lights should take us to action by introducing strategies to manage these risks, mainly when supported by the edge-technology we have at hand now. Digital Supply Chain could be the solutions. Enterprises embracing change are the ones capable of retaining their competitive incomes. Take volatility risk to your advantage!

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