b'JANUARY 23 - FEBRUARY 20, 2023SUPPLY CHAIN FORECASTS eating into the price153 digitalization strategies driving(THREATScontinuedstruc-from page 14) ture and profitability margins attacksremainselevatedof many companies. Like the supply chain resiliencyin2023,whiletheaveragerealeconomy,thefinancial cost of a data breach is at anmarkets are facing a difficult Expert cites 3 common supply chain risks and how to safeguard againstall-timehighat$4.35mil- year,ascentralbanksdrain inevitable turbulence and uncertainty lion and expected to surpassexcesssystem-wideliquid-$5 million in 2023. The con- ity and trading volumes even By Merilee Kern, MBA flictinUkraineandwiderin historically liquid markets geopoliticaltensionsaredecline.Withtheconsiderablesupplychaindis- levelofvisibilitythatwouldotherwisebeheighteningtheriskofa2023 will be a challeng-ruptions brought on by the pandemic and amidimpossiblewithoutleveragingtechnology.large-scalecyber-attackbying year; in purely economic escalatinginflation,supplychainresilience2.PredictiveMaintenance:Thisisapre- state-sponsoredactors.Interms, it is likely to be a year is more critical than ever before. The unfore- ventative technique that uses machine learn- addition, there is also a grow- toforgetformanyhouse-seen pandemic of late has presented a rangeingtechnologiesandsensorstotrackhowing shortage of cyber securityholdsandcompanies.Nev-of challenges that many supply chains weremachinesandsystemsarefunctioning.Pre- professionals,whichbringsertheless,thereisnoreason clearlyoftenadmittedlyunpreparedfor.dictive maintenance is able to foresee whenchallenges when it comes totodespair,saysLudovic Laborshortages,shippingcostsurges,newa machine is likely to develop issues in theimproving security. Subran,ChiefEconomistat patterns of production and consumption havenear future so that maintenance can be doneForbusinessesinmanyAllianz.Foronething,the allplayedakeyroleindisruptingbusinessbefore any breakdowns. Supply chain opera- countries, 2023 is likely to beturnaround in interest rates is logistics,upendingmarkets,industries,andtions become more resilient knowing that allanotheryearofheightenedhelping, not least for millions whole economies in the process. In its wakemachines and robotics are working efficiently.risksforBusinessinterrup- of savers. The medium-term arelogistics,procurementandothersupply3. Tracking: Todays supply chain manage- tion(BI)becausemanybusi- outlook is also much brighter, chainprofessionalswhocontinuetosufferment companies live in a fortunate time whereness models are vulnerable todespiteorratherbecause stress and chaos on the front line, scramblingtheycancollectreal-timeupdatesoncur- suddenshocksandchange,oftheenergycrisis.The toreacttonewlyexposedsystemicweak- rent events courtesy of the Internet and otherwhichinturnimpactprof- consequences,beyondthe nesses and vulnerabilities. technologies. Companies can leverage socialitsandrevenues.Ranking#2expectedrecessionin2023, Inordertoprepareagainstunforeseenmediatoobtainconsumerbehavioranalyt- globally, BI is the number onearealreadybecomingclear: andinevitableturbulenteventsahead,itsics while also monitoring the industry, newsrisk in countries such as Brazil,aforcedtransformationof important to take proactive measures to iden- and other sources that can indicate potentialGermany,Mexico,Nether- the economy in the direction tifythemostinherentlyfragileareaswithinsupplychaindisruptionslikethepassingoflands, Singapore, South Korea,of decarbonization as well as a supply chain, urges Nirav Patel, CEO ofanewregulation.Logisticsandtransporta- Sweden, and the US.increasedriskawarenessin Bristleconetheleadingproviderofcon- tiontechnologiesprovidepowerfulmodernThescopeofdisruptiveall parts of society, strength-nected logistics solutions thats part of the $19digitalfleettrackingsothatcompaniescansources is wide. Cyber is theeningsocialandeconomic billion dollar Mahindra Group. In this post- tracktheirshipmentsandfleetsacrosslandcauseofBIcompaniesfearresilience.pandemic era, we need to challenge conven- andsea,allovertheworld. Analyticsfrommost (45% of responses); the tional thinking and pursue digital innovationcloud-basedandothertechnologiesprovidesecond most important causer iSkr iSerS anDf allerSon a much larger and more significant scale.valuable insights onand can fiscally quan- istheenergycrisis(35%),The Energy crisis is the EmbracingemergingtechnologieslikeAItifythingslikeemployeeengagementandfollowed by natural catastro- biggest risk riser in the Alli-andSAPintegrationcantransformandfor- productivity. This data is direct feedback thatphes(31%).Theskyrocket- anzRiskBarometerappear-tifycompanieswithanappropriatelevelofsupply chain managers can leverage to assessing cost of energy has forcedingforthefirsttimeat#4 resilience and agility to defend against futurewhat leadership tactics are effective and whichsome energy-intensive indus- (22%).Someindustries, crises and unforeseen challenges. fail to drive workforce benchmarks.tries to use energy more effi- such as chemicals, fertilizers, Mitigating avoidable business risk by pro- ciently,moveproductiontoglass,andaluminummanu-t hreeC oMMonr iSkS toS upplyC hain actively transforming and shoring up supplyalternative locations or evenfacturing, can be reliant on a Whiletherearenumerousreasonswhychains with digital technologies and method- considertemporaryshut- single source of energyRus-supply chains are disrupted, there are a fewologies like these is a trend forecasted to per- downs.Theresultingshort- sian gas in the case of many prime culprits: sist over the next few years. This as Gartnerages threaten to cause supplyEuropean countriesand are EnvironmentalForces:Externalfactors,predicts that by 2026, more than 75% of com- disruption across a number ofthereforevulnerabletodis-suchasnaturaldisasters,economicturmoil,mercialsupplychainmanagementapplica- critical industries in Europe,ruptiontoenergysupplyor andgeopoliticalinstabilityimpactsupplytion vendors will deliver embedded advancedincludingfood,agriculture,price increases. If such base chainperformanceinnumerousunsavoryanalytics(AA),artificialintelligence(AI)chemicals,pharmaceuticals,industries struggle, repercus-wayslikedamagedtransportinfrastructure,and data science.A McKinsey survey alsoconstruction,andmanufac- sions can be felt further down canceleddeliveriesanddemolishedinven- citedthatmorethan90percentofrespon- turing, although warm winterthe value chain in other sec-toryallofwhichcanleadtounbalanceddentsreportedtheyhaveinvestedindigitalconditions in Europe and sta- tors.AccordingtoAllianz supply and demand. supplychaintechnologiesinthelastyear.bilization of the price of gasTrade, the energy crisis willValue Chain Disruptions: Issues within theDigitaltransformationisalreadyreinvent- is helping to ease the energyremain the largest profitabil-valuechain,theprocessstartingfrombusi- ingthemodernsupplychainacrosssectorssituation.ity shock for European coun-nesses receiving raw material to then sellingastechnologieslikeArtificialIntelligenceA possible global recessiontries in particular. At current the finished product to consumers, can create(AI),MachineLearning(ML),lnternetofis another likely source of dis- levels,energypriceswould abullwhipeffectwheresmallfluctuationsThings(IOT)andBlockchainintegrationsruption in 2023, with potentialwipe out the profits of most in initial operations can lead to even greatergrow.Thesenextgendigitaldeploymentsfor supplier failure and insol- non-financialcorporatesas negative effects across the entire supply chain.are offering innovative ways for supply chainvency,whichisaparticularpricing power is diminishing Valuechaintriggersincludelabordisputes,professionalstoprocurehighlyaccurate,concernforcompanieswithamid slowing demand.limitedsuppliercashflow,manufacturingup-to-the-minutedatathekindthatcre- singleorlimitedcriticalsup- Drivenby2022being accidents and so on.atesopportunitiesforcompaniestopredictpliers.AccordingtoAllianzanother year of turmoil with BusinessOperationChallenges:Whenandaptlyreacttomacroandmicrocondi- Trade,globalbusinessinsol- conflict and civil unrest dom-troubles arise internally within key areas of thetions, mitigate risks and, at the most extremevenciesarelikelytorisesig- inatingthenews,Political business, like breaches in the finance, IT or HRlevel,thwartabusinessbustingdisaster.nificantly in 2023: +19%.risksandviolenceisanew divisions, core operations will struggle to func- Supply chains are complex and disruption isentryat#10(13%).Aside tion and that will impede the company at large. becoming the norm, Patel says. BusinessesM aCroeConoMiCM alaiSe from war, companies are also Assupplychainthreatsliketheseandmust be able to operate seamlessly within theirMacroeconomicdevel- concernedaboutincreasing othersremainomnipresentwithregional,ecosystem of functional teams, partners, logis- opmentssuchasinflationdisruption from strikes, riots national,andglobalimplicationsithastics providers, customers and other stakehold- oreconomicandfinancialandcivilcommotionactiv-becomeanimperativefororganizationstoers, and work together to navigate and mitigatemarket volatility rank as theity as the cost-of-living crisis employ digital tools for enhanced automation,supply chain riskall while improving cus- third top risk for companiesaffects many countries.visibility, and resiliency. Here are three digitaltomerexperience.Establishingmulti-tieredgloballyin2023(25%),upDespitedroppinginthe strategies leaders can implement to do so:digitalizationrepletewithdataaggregation,from #10 in 2022the firstrankingyear-on-year,Nat-1.SupplyChainDigitalTwins:Digitalinformationexchange,collaboration,risktimethisriskhasappeareduralcatastrophes(19%) twins are digital replicas of physical supplymanagement, AI-powered analytics and robustin the top three for a decade.andClimatechange(17%) chains.TheyintegratewiththecompanyscloudtechnologiescanshoreupasupplyAllthreemajoreconomicremainmajorconcernsfor systems to provide real-time insights on anychainwithunprecedentedspeed,visibility,areastheUnitedStatesbusinesses.Inayearthat sudden disruptions in a supply chains perfor- synergyandcontrol.Itsamissioncritical(US), China and EuropeareincludedHurricaneIan,one mance level, allowing supply chain manage- way to maintain the kind of resiliency that willin a crisis mode at the sameof the most powerful storms ment to become more proactive than reactive.demonstrateandprotectbusinessvalue.time, albeit for different rea- recordedintheUS,record-Digitaltwinshelpcompaniesmitigateenvi- MerileeKern,MBAisaninternationally- sons,accordingtoAllianzbreaking heatwaves, droughts ronmentalrisksbyimmediatelynotifyingregarded branding, leadership, and communi- Research,whichforecastsand winter storms around the themofnaturaldisastersorotherexternalcations analyst and strategist who works withrecessioninEuropeandtheworld,and$100billion+of forces that can harm the supply chains effi- companies, agencies, C-suite thought leadersUSin2023.Inflationisainsured losses, they still rank ciency. This simulation provides an additionaland subject matter experts worldwide.particularconcernasitisin the top seven global risks.'