The outbreak of pandemic Covid-19 has disrupted global supply chains and international trade. Social Distancing norms and restrictions on cross-border travel have made supply chain management extremely difficult. This has set off a chain reaction where many small and medium industries have been hit.
To discuss the impact of COVID-19 pandemic on the supply chain and how technology can help create better supply chain flow during and post-pandemic, we interviewed Mr. Deepak Singhvi from SAP.
Mr. Deepak Singhvi is a Software Architect for SAP Ariba; where he steers designs and solutions for B2B E-procurement marketplace. Deepak has more than 15 years of experience in Big Data, Analytics, and platform development for various industries like e-commerce, banking, and semiconductor.
Connect with Mr. Deepak Singhvi – LinkedIn
Excerpt from the interview-
What are some of the challenges organizations are facing due to disruption in global supply chains?
Mr. Deepak: We can gauge from the current situation how this pandemic is different from the outbreak of SARS in 2002. That time, China was contributing around 4% of the world’s total GDP and now China contributes somewhere between 18%- 20%. China is like the world’s factory which is present in every aspect of the business and production process. China is manufacturing for the world.
In the post-pandemic world, we will have to adapt to the volatile environment. Especially, the continuous change in consumer behavior is creating a Bullwhip effect which is troubling the manufacturers. This effect makes it difficult for them to estimate inventories, plan production, set logistics in place, etc. The impact is going to be huge mainly because of China’s major contribution towards world GDP.
Is money also a challenge for the organizations in the supply chain?
Mr. Deepak: Money is an issue, maybe not for big companies. However, for SMEs and startups, who are also contributing to the supply chain, cash liquidity has been a concern. They need to maintain cash liquidity by reducing their operating costs and plan for short-term needs.
Many governments have introduced provisions for SMEs and start-ups like the Government of India through Small Industries Development Bank of India (SIDBI), France has announced a 4 billion euros package, Germany has introduced a 2 billion euros package and so on.
Small scale industries need working capital/short-term capital/short-term cash liquidity. Manufacturing units will have to ensure that they have enough supplies because they are somehow surviving this quarter. But, in the next quarter, they’ll have difficulty putting together everything in place.
Role of Technology in Supply Chain Management
As per a March survey conducted by the ‘Institute For Supply Chain Management’, nearly 75 percent of companies reported supply chain disruptions due to coronavirus-related transportation restrictions — how is technology going to address these concerns moving forward?
Mr. Deepak: Technology will play a very important role in Supply Chain Management. We need to understand the kinds of problems that are there and how technology can solve it. There are three dimensions to it.
First is Cost. The USA and many other countries moved their manufacturing units to China three decades ago. That time, Supply Chain was mostly about Cost — how to reduce cost and improve operational efficiency.
Second is Risk. In the past 5-10 years, another factor has come into place — Risk. Government tariffs and restrictions had a huge impact on the supply chain. It is difficult to import goods from China as there was a lot of opposition to it.
Third is Resilience. The outbreak of pandemic COVID-19 tested the resilience of organizations to the disruption.
It if was only about cost, a single human could have managed the cost by taking the assistance of tools and technology. But with increasing dimensions, humans alone cannot manage it. Therefore, technology is helping humans in holistic and better decision making. The supply chain dimensions will keep on increasing and will get more complex. Hence, technology will be important to adapt to the dynamic environment.
AR and VR in Supply Chain
Do you see technologies like AR & VR playing a greater role in the procurement process?
Mr. Deepak: Technologies such as Augmented Reality and Virtual Reality will help enhance the User Experience. Social Distancing will be in practice for a long time. People might not get the same in-person experience as before. Therefore, AR and VR can help provide a similar experience to their customers. Moreover, these technologies will help significantly in the Customer Support function. VR can help in employee training and real-time assistance in manufacturing plants or offices. There will be a wider application of these technologies in various business units across different industries.
[Also read – 25 Disruptive AR Use Cases]
AI and Automation in Supply Chain Management
How does AI-based technologies like Machine Learning, Automation play a role in supply chain management? Is the investment in AI still relevant for enterprises during this Pandemic crisis?
Mr. Deepak: Artificial Intelligence will be needed more than ever. As the dimensions — apart from Cost, risk and Resilience will increase, it will create a need for an Intelligence System which can use rule-based computing. The system should be able to handle the effects of the bullwhip and enable automatic stock verification. AI will have a bigger role in developing Supply Chain solutions in the New Normal to automate manual operations and increase operational efficiency for Business Continuity.
What are the main pain points in supply chain management which AI technologies or automation can address?
Mr. Deepak: Today, most of the systems and processes are in place. Suppliers and Buyers can collaborate on a system. Even SAP Ariba has a Supplier Collaboration platform. Everything works seamlessly under normal circumstances and there are intelligent solutions that make the Supply Chain a bit more flexible.
Technology can automate manual collaborations. Normal rule-based decision making works most of the time but now we need more complex decision making. Systems need to consider external factors of COVID-19 such as disruption in any specific country or manufacturing plants. These factors can act as inputs to enable better decision-making.
Supply Chain in the New Normal
What lessons can you share for buyers and suppliers operating in the New Normal?
Mr. Deepak: One of the important lessons we learn here is to keep innovating. We need to introduce technologies like AI, AR, VR, RPA, etc. to automate manual processes wherever possible.
Employees need to be trained in new technologies. Stakeholders need to get ready for the change. Those collaborating on systems should make their systems more agile. Also, businesses need to plan their cash flows to survive in the long term.
The Future of Personalization
The growth of ‘web content management systems’ is driven by the demand of organizations to deliver personalized content and increase the interactions with customers present online — what does the future of personalization look like?
Mr. Deepak: We have been seeing personalized content for the past couple of years now. There are two aspects to this.
First, in the current situation, we need some kind of personalization. Companies that are ready to deliver personalized content will make a mark for themselves. Whereas, those who were not ready for it will be left behind.
Second, in the post-pandemic world, many new people will be using digital platforms for the first time. They need better experiences that go beyond the traditional way of buying and selling. The companies that will add personalization into their products and services will have an edge over those who don’t.
Start-ups in the Post-Pandemic World
It will be a survival issue for the start-ups for the next 1-2 years. Which sectors should start-ups focus their technological innovations which could add value not just to them but society at large?
Mr. Deepak: Many start-ups have been hit due to this pandemic. But now they need to evaluate whether to continue in the existing line of business or make a shift to an area where there’s opportunity in the post-pandemic world.
The technology-led business model will be critical. It will have a key role in defining strategies. Start-ups have opportunities in the area of security and performance engineering as more people are working from home creating gaps in the data security. We are learning many lessons from this pandemic. They are reinforcing and validating our current model of getting out of the global crisis. There is a scope of growth as long as we keep building innovative solutions.
In a nutshell
In this session, Mr. Deepa Singhvi shared his insights on technology innovations needed in the time of this crisis for start-ups and how supply chains can be improved through a new set of technologies like AI, AR, VR, and automation in the post-pandemic world.
Podcasts in this series:
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