With the fourth quarter now upon us, every industry faces a challenge in managing a holiday production calendar that will deliver the goods. The key for startups looking to defend the quarter from disruptions is to adopt a proactive, data-driven approach to inventory management.
Here are five methods we’ve been counseling clients to adopt:
- Use data and analytics to identify and map out the inventory being affected by the global shipping crisis. If you don’t have the data about what is on a ship transporting your materials, then use this crisis as an opportunity to justify prioritizing supply chain digital transformation with data, IoT and advanced analytics (e.g., machine learning and simulation). You need to know the location of your goods all times if you are going to successfully gauge what impact a shortage will have on your operation.
Ultimately, AI will help startups understand how myriad disruptions affect their supply chain so they can better respond with a Plan B when the unthinkable happens.
- If you don’t have the data readily available, then you need to partner with a vendor and use a secure environment to share second-party data to deliver AI-driven actionable insights on the business impact on all parties involved, from startup to retailer to the consumer.
- Simulate and forecast the impact of these supply-side issues on the demand side. Conduct scenario planning exercises and inform critical business decisions. If this ability is not in place, an emergency like a pandemic, civil unrest or an uncontrollable rate hike will wreak havoc on your business plan. Use this situation as an opportunity to put a disaster management program in place to prepare for the potential risks.
- Get ahead of the potential impact and proactively communicate with affected parties, be they vendors or consumers. Retailers need to outline and plan their holiday season marketing campaigns now anyway — this is the time to read consumer sentiment/preferences and adapt your messaging accordingly. If you don’t have a hyperpersonalized, responsive communication strategy in place, then this supply chain crisis is another reason you need to invest in an AI-based, responsive communication strategy and platforms.
- In addition to informing your customers about the impact, proactively take steps to help mitigate the situation. For example, implement machine-learning-based, forward-looking KPIs like weeks-of-supply and holistic inventory optimization. Doing so will not only help you be better prepared for the future, it will also help you win the loyalty of your customers. If you aren’t able to do this already, then this is the best time to apply artificial intelligence to build an ecosystem with trusted industry peers and partners, enabled by data and technology.
How AI can help
With real-time data flowing in from multiple data points across the business, using AI platforms will help you quickly analyze where supply chain vulnerabilities exist and, more importantly, identify potential alternate suppliers or distributors who can be called on to fill in. With enough data, these platforms can reach a granular plain and reasonably predict where the next disruption will happen.
Suppose a key distribution center needs to shut down the operations you depend on because of wildfires. Normally, this would interrupt the entire enterprise. But if your startup has an AI model in place, you can reroute product to an alternative distribution center that data tells us is ready to handle the workload. AI enables these types of supply chain pivots with minimal extra cost and lower impact on customer expectations.
This is not theoretical science. Leading consumer retailers that had AI platforms in place pre-pandemic suffered the least disruption. It’s now time, as part of any digital transformation process, to put this ability to work for your startup. For many, it can mean the difference between making it to the next level or falling into the “also-ran” roster.
The promise of AI
Ultimately, AI will help startups understand how myriad disruptions affect their supply chain so they can better respond with a Plan B when the unthinkable happens. It’s a strategy many of the hundreds of companies affected by the massive ransomware attack over the July Fourth holiday weekend wish they had in place so their ventures weren’t completely shut down during ransom negotiations.
Of course, AI is not a magic wand that will right all the world’s wrongs. But it can help businesses plan for problems in advance and respond to them. To get there, every company needs to assess the relationship between data, intelligence and experience. Then, they need to apply AI to collect and prepare vast reams of data into real-time intelligence that can be used to mitigate issues and sustain a customer-friendly experience.
While AI won’t protect startups, manufacturers and retailers from these types of disruptions in the future, it can help them sense, anticipate, reroute and respond to them more effectively.
Startups that master the data-intelligence-experience relationship will emerge as the winners here — when supply chain or other crises occur — whether they’re reacting to a global shipping crisis or figuring out how to succeed amid rapid changes in consumer behavior.