Author
Alok Joshi
If the last couple of weeks with escalating tariff wars has taught us anything, it is that the world will continue to be unpredictable. In fact, that is the only thing that is predictable. But what can you do about this? And for retailers and manufacturers, how do you mitigate the impact of this uncertainty, especially with maintaining great availability for your customers?
In a word: Resilience
Resilience means that when the chips are down, you find another way to get back up. When your usual method for transporting goods is not available, you have an alternative that minimises the impact to your margins. When your major customer base is met with a steep increase in price due to tariffs, you can find ways to lower your cost to serve and pass on the savings to your customers. When you have too much stock as a result of market fluctuations, you can effectively clear inventory without eroding profitability and waste.
In order to make these decisions, in order to build this resilience, you need the data and the ability to find the optimal operational settings that give you alternative options that prevent you from stopping in your tracks - this is where AI comes in. Setting up for this is not easy, as there are a number of moving parts to your value chain, but with right considerations, can help set you up for success.
What you need to be resilient:
- A robust forecast: in a previous blog, we talked about the demand forecast being at the heart of supply chain planning. A forecast should be driven by the product assortments sold, the promotions run, the network being planned and in turn drives the operational aspects like order planning, inventory management and workforce. A centralised, machine-learning forecasting system is needed to adapt to new norms quickly, keep commercial decisions in sync with operational and most importantly be nimble in providing a coordinated response to an issue. For example, demand for US products drops, where will the sales transfer? What will be the impact on demand for substitute products? Will there be enough of that stock available? Where is the inventory? Do we have enough people to move it? What is the lead time to update my order plans? Central to all of this is a forecast that helps you plan, buy, make, move and sell.
- Ability to solve problems holistically: this means not solving problems in isolation. When you are met with a steep decrease in demand in certain products as you have lost a complete market, this not simply a pricing problem to clear the stock, an inventory management problem to maintain the working capital, or a staffing problem to execute strategies to reallocate and sell the goods, its all of them. And this requires your systems to have the relevant connections and ability to see the impact in one corner when you make a change in another.
- Simulate possible solutions: scenario planning is critical to apply pre-thought out options in dealing with business continuity when faced with curve balls like the tariffs. The ability to simulate changes systemically, see the impacts, save out for future needs can give your business the fighting chance to respond quickly and adapt. For example, say you had planned for the risk of one of you major markets dropping out of your customer base, you can simulate where to send stock, what price point or promotions run to clear, which locations will need more staff to work through the inventory - all possible if you had an “AI Twin” to connect the dots of all your different operational and commercial processes, run simulations of different settings, create strategies to adapt quickly.
AI Twins aren’t a thing of the future, they are here today and can make your supply chain resilient to the ongoing unpredictability of domestic and international events. Partner with an experienced practitioner like jahan.ai to accelerate your journey into resilience.
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