Analytics in supply-chain management becomes central as coronavirus escalates

From shortages of personal protective equipment to a variety of grocery items to electronics and apparel, coronavirus (COVID-19) has hit the global supply chain in expected and unforeseen ways, and it seems likely that it could take many months to recover.

Bouncing back more quickly, said experts, will require supply-chain managers to turn to new ways of managing the supply chain, including using Internet of Things (IoT) data, analytics and machine learning (ML). These tools will become the foundation on which supply chain managers gain insight into their markets and erratic supply and demand trends.

“Having the right machine learning and AI technologies will help you understand the market and better manage your supply chain,” said George Bailey, director of the Digital Supply Chain Institute.

While the disruption is now global, its starting point was in China — the 800-pound gorilla in global production. Indeed, by 2010, China surpassed the U.S. in manufacturing dominance. And while during the SARS epidemic of 2002 and 2003, China represented 4.3% of worldwide gross domestic product (GDP), today, said MIT professor David Simchi-Levi, the country represents 16%.

‘Globalization As We Have Known It … Is Over’

Manufacturing companies that have relied on China for production materials are feeling the blowback of this dependence; some retailers source more than half their inventory from China, according to 2020 Statista data. Another Statista study indicated that 44% of retailers expect delays and 40% expect inventory shortages given coronavirus disruptions on the supply chain. And more than half of electronics manufacturers anticipated up to four weeks in supply-chain delays. That’s a difficult pill to swallow in an era when customers expect two-day delivery.

Now, companies are scrambling to assess their supply chains, but in truth, managing risk in the supply chain hasn’t been companies’ focus. The Institute for Supply Management, which conducts monthly economic surveys, found that nearly three-quarters of the companies it contacted in late February and early March reported some kind of supply chain disruption. But 44% of respondents didn’t have a plan to deal with it.

“What’s changed now is the sense of urgency to diversify, to have redundancies,” said Alex Capri, a visiting senior fellow at the National University of Singapore’s business school, in a CNBC interview on the importance of localizing value chains. “Globalization as we have known it in the past is over,” he said.

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