It has been more than 30 years since Walmart allowed its suppliers access to point-of-sale data and other information about their products. The move spawned a new wave of technology and collaboration throughout industries. Today, companies have access to an abundance of data sources and advanced analytics, which are bringing forth new approaches to planning and modeling, with the goal of optimizing product flow throughout markets.

Emerging from the disruption caused by the coronavirus pandemic, companies are embracing “Business 4.0” digital technologies to support the move toward becoming “purpose-driven resilient enterprises.” The notion of corporate social responsibility is broadening to include the circular economy and ethics. To become resilient, supply-chain leaders must adopt the entire suite of digital technologies for advanced planning and optimization, eventually leading to the integration of planning with execution, and the resulting ability to better respond to variance and disruption.

The pandemic posed new challenges that are driving supply-chain transformation:

• Demand and sales driven by e-commerce grew from around 8% of retail sales to 30%. Other industries experienced similarly large swings across channels.
• Market awareness of supply-chain capabilities and operations was greatly heightened, making the difference between success and failure.
• Demands for last-mile delivery led to critical operations and transportation capacity shortages. At the same time, predictions about the demise of brick-and-mortar retail turned out to be greatly exaggerated.
• E-commerce service levels eroded rapidly, and were found to be unsustainable in an increasingly competitive customer-service market. Shipping delays, extended delivery lead times and the inability to guarantee time-definite delivery will not be tolerated in the “new normal.”

Addressing these challenges requires new systems, processes, applications, and structure, as part of a transformation from “chain thinking” to “ecosystem thinking,” and a move to enterprise supply network management. Most companies are just embracing the transformation to digital. However, the new model is fast approaching, opening up a chasm between early adopters and stragglers. There is a pressing need for integrated business planning (IBP) and the adoption of a “digital-twin” initiative, in order to provide the visibility needed to integrate planning and execution.

A digital twin can be extended beyond the enterprise to include a complete model of ecosystem nodes and processes. Fueled by new sources of digital data both internal and external, a digital twin is enabled by modeling, visualization, and cognitive analytics. It provides for simulations of various actions and scenarios. The result is a shift from traditional enterprise resource planning (ERP) to ecosystem resource planning (ERP 4.0). The simulation and modeling capabilities provided by a digital twin allow companies to cut through functional silos, and facilitate real-time collaboration. IBP, coupled with digital simulations, allow organizations to respond quickly to disruptions and achieve greater supply-chain resilience.

Outlook

The pandemic elevated supply-chain awareness to both the board room and public, as a critical element for achieving global market growth. As companies transform to digital technologies, and pursue the goal of becoming purpose-driven resilient enterprises, they will require new supply network management processes and applications. The strategic adoption of enterprise supply network principles, along with deployment of digital-twin and IBP applications, will “cross the chasm” by late 2021.

Rich Sherman is a Senior Fellow with Tata Consultancy Services.