Historically a supply chain system has always been part of human societies. It has existed in different ages and time by arranging supplies of different goods & services from one area to another or in the same area to meet diverse, growing demands and needs of people or to just earn profits. Yet it wasn’t till 1982 term “Supply Chain Management System (SCMS)” came into public use. “Push Supply System” was very common in the initial phase of industrialization, till Toyota introduced Just-in-time (JIT) manufacturing or “Pull System”. This was a new fine-tuned supply chain system with almost no “fat” bringing down cost and increasing the profitability of organizations. Although the JITSCMS started in the manufacturing industry, it adopted by a wide range of processes to get a competitive advantage. However, this well-oiled, fine-tuned and smoothly running machinery was about to get a jolt with an impact so strong that it would shake the whole system to its roots.
And the jolt did come at the end of 2019 in an unexpected form of coronavirus pandemic (COVID-19) at pace and severity not seen in recent history. The social, business and industrial lives across the world almost crumbled bringing many economies to their knees. The fast-moving wheel of the global economy had sudden braking. Mother Nature seems to have pressed the reset button for the mad industrial growth.
Apart from many other impacts on human life, “The Great Reset” has exposed the vulnerability of JITSCMS. The JITSCMS was extremely successful initially in Japan and later in the whole world when it expanded its footprints. However, while expanding across the globe, JITSCMS developed into a network, crisscrossing continents as multi-tier suppliers, could possibly be located anywhere on the planet. It was perfectly ripe to fall on any minor disruption as no one ever bothered about what would happen in case any of the weakest links in these razor thing chains get broken. And the COVID-19 did the same. It not only broke one but many of the weaker links in these fine-tuned, trimmed supply chains, spread across the globe, the system started crumbling like a pack of cards. The businesses could only continue their operations till the last piece of supply feeds existed and then they had to pull the plugs out.
It is worth mentioning that many questions on JITSCM were already brewing in the inner circles of global supply chain operators as well as by many OEMs who were facing the intermittent impacts of regional pandemics, disasters & concerned about JITSCM operations. In light of this troubled past, COVID-19 had raised a much bigger question on JITSCM epitomizing what happens to “just-in-time”; “just-in-case” supply gets another disruption of the level of the current pandemic.
The Future of Supply Chains Post “The Great Reset”
Businesses worldwide are also discussing a need to reinvent new operational dynamics to take a quantum leap using enabled technologies like IoT/IIoT/AI and Machine Learning, Augmented/Virtual Reality/On-Demand Additive Manufacturing/Voice-Activated Technology/End-to-End Digital Connectivity/Big Data/Cloud Computing/ Drones/3D Printing/Blockchain/Robotics/Predictive Analytics and many others which could be forming the framework as well as drive the development of future supply chain model.
Before “The Great Reset”, SCM-related risk management principles were often only applied to Tier 1 or Tier 2 suppliers, leaving OEMs blindsided and vulnerable to shocks affecting their “invisible” lower-tier supplier chains. Now OEMs have become aware that in order to effectively manage their systems and mitigate the risks involved; they need to manage their supply chains till the last end of the supplier.
Supply Chain 5.0 – Early Dawn
Post COVID-19, it is expected that tomorrow’s supply chains will rely more on the faster flow of information from end-to-end and will be more connected, self-orchestrated, forming a self-correcting ecosystem, continuously assessing the demand, and supply, generating feedback to meet the customer or market requirements. It will be a fully digital and exceptionally flexible ecosystem that will dynamically adapt, with the increased use of decentralized and localized manufacturing, and single-piece customization capabilities, responding quickly to individual customer’s changing demands.
While the industry is already moving to its Version 5.0, the Current SCMS 4.0 or JITSCMS 4.0 needs to move up to its own Version 5.0, a new avatar to get integrated with Industry 5.0 (Society 5.0) as soon as possible.
With “The Great Reset”, the Supply Chain 5.0 may get a much-needed push along with the rise of Industry 5.0 in order to meet unique is mass personalization needs to Society 5.0. Interestingly, like Industry 5.0, Supply Chain 5.0 also will have to rely heavily on collaborative robots (cobots) and need to combine human creativity and ingenuity along with the productivity, speed, and consistency of robots to improve the customer experience. While this next generation of supply chain solution is still in the making, deploying Industry 5.0 technology and amalgamating the current learning of COVID-19 period with JITSCM 4.1 (a stage which COVID-19 has brought, see below) will certainly lead to the development of a new way of handling future supply chains.
Prabhat Khare is the Director of KK Consultants.