Boosting Supply Chain Resilience in the High-Tech Industry – An ounce of prevention is worth a pound of cure.
Benjamin Franklin wrote in 1735 “an ounce of prevention is worth a pound of cure” when advising Philadelphia about protecting towns from fires. Nearly 300 years later, these words still apply to any area where abrupt disruptions can have disastrous effects on a system.
Covid-19 is the latest in the string of major supply chain disruptions the high-tech industry experienced in the last decade. External macro events including, for example, tariff wars or natural disasters are a recurring element of risk that will continue to happen. In the example of COVID-19, it exposed the vulnerability of many organizations’ supply chains and raised the topic of supply chain resilience to the boardroom. The consequences of supply chain disruption range from increased personnel costs, severe productivity losses to poor customer experiences. To minimize those risks, companies must understand their supply chains vulnerabilities as well as appropriate mitigation strategies available.
In August 2020, SAP’s High-Tech Industry Business Unit led by Jeff Howell started to pool the strengths of industry experts across multiple domains, customers, partners and various SAP solution experts. Supported by SAP AppHaus, part of SAP’s Customer Innovation organization, they developed an innovative new vision: a dashboard that provides a supply chain resilience score based on five different risk factors. Additionally, the solution suggests risk avoidance strategies, which are tested by simulations and ultimately increase the company’s supply chain resilience.
Following a human-centered approach
Following SAP’s Human-Centered Approach to Innovation, the initial challenge was to design a tool for making supply chains more resilient while at the same time easy for the end user to consume and react to the information. To turn the vision into reality, Jeff brought together various experts from different Lines of Business (LoB’s) who ran through different design thinking workshops, creating personas, conducting end user research with customers and partners and extracting supply chain management challenges. The outcome was a conceptual prototype of a supply chain resilience dashboard. Like a credit score, this dashboard provides a single score that expresses resilience based on five risk factors:
- Component Risk: Identifies critical and highest at-risk components
- Disruption: Assesses suppliers’ potential for disruption based on location, regulatory, geopolitical or other issues
- Workforce: Assesses suppliers’ current workforce capacity and ability to expand
- Agility: Rates sppliers’ ability to serve based on capabilities: find alternate sources, alternate capacityVisibility: Rates suppliers’ capabilities to provide visibility to customers and secure visibility of their suppliers.
The prototype leverages frontier technologies provided by SAP Business Technology Platform and data provided by SAP Ariba, SAP Integrated Business Planning for Supply Chain, SAP Supply Chain Collaboration for High Tech and Qualtrics. The dashboard provides maximum transparency on supply chain resilience and allows detailed insights into every factor to make informed decisions. By simulating recommended actions within the system, the end-user can evaluate a quantitative-based assessment of the cost-benefit tradeoffs.
A day in the life of a supply chain executive leveraging the solution
Resilience in the supply chain planning process
The developed prototype envisions companies incorporate resilience into their supply chain planning process. They anticipate supply chain risks, respond using machine-based recommendations, minimize disruptions, maintain business continuity and ultimately increase customer service, market share and financial performance.
This visionary prototype was made possible by the commitment of the cross-LoB and industry experts, customers and partners. The SAP Customer Innovation AppHaus team led the effort with critical thinking and facilitation skills, creativity, speed and determination.
If you would like to join us on the innovation journey and, as a customer, collaboratively develop the Proof of Concept further, please leave a comment and we will get in touch with you. Tell us what you think and share your comments below.