Stress testing supply chains to beat disruption

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2 Minutes Read


 

When the world goes topsy turvy, what happens to your supply chain?

Over the past few years, we’ve had every unwanted opportunity to find out. Pandemic, political tension, bizarre port issues and more threw the world into chaos time and time again. And not all supply chains escaped that turbulence unscathed. In fact, companies that experienced supply chain problems tended to struggle more financially as well. A difficult place to be in the face of an oncoming recession.

But one way we can do it better during future disruptions is stress testing during the relative calm.

 

What is stress testing in supply chain?

Stress testing refers to putting something through its paces to see if, or more realistically where, it breaks. The idea is to identify weak points and recommend ways of fixing them going forward. 

In supply chains, however, actually pushing things until they break can be disastrous. That’s why stress testing is more commonly done with data than live supply chains. In the past, this has relied on historical data. Of course, we now see the pitfalls of this as the word ‘unprecedented’ became near omnipresent in 2020. 

Instead of relying on purely historical data that is outdated, modern supply chains need to use AI for scenario planning and stress testing. As AI and machine learning get more advanced, their ability to create effective simulations only grows.

 

Simulated breaking points

So how do these AI simulations work? At the most basic level, you feed data into an AI platform like 7bridges which combines it with a bunch of other data that it has rolling around in its ‘brain’ and out pops a digital twin of your supply chain. The truth is that it’s quite a bit more complicated than that, but it’s conceptually similar. So, now you’ve got a digital twin of your supply chain. What next?

Read more: What is a digital twin for supply chain?

Digital twins are essentially virtual copies of your supply chain. They should function identically to what you see in real life, but with one major advantage: if you break it, nothing bad happens. So digital twins are ideal for scenario planning. You can change the parameters you want to test and figure out how that could impact your supply chain. 

If, for instance, you wanted to see how your supply chain will cope without being able to go through a huge geographical region, you can factor that in and test it. You can test port closures, sudden demand or even another lockdown. Or what happens if one leg of your supply chain is in a climate vulnerable area? How does it keep moving? Getting answers to these questions is what stress testing is all about. 

 

Investor interests

Increasingly, investors are demanding that supply chain stress tests are carried out. When you think about it, it makes sense. Any person or organisation that invests their money wants to make sure they’re not going to lose it. For a lot of businesses, that means making sure that they never have a down period for their supply chains again. 

The pandemic scared a lot of investors and has made them more cautious going forward. But stress testing can provide a degree of assurance to them and make your business more appealing.

Read more: How supply chain stress testing can help combat the impact of cyber attacks

Stress testing your supply chain is a crucial part of supply chain strategy. That means you need to be sure you have the tools and skills to do it well. Be sure that you know what to look for in an AI provider and are really getting the right platform for the job. Ultimately you know best what your supply chain needs and data should be the way you validate or clarify that thinking.

If you’re ready to find out how else AI can enhance your supply chain, get in touch.


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