For years, companies walked a high-wire act, carefully balancing efficiency and cost. But then the global pandemic sent a storm with high winds, shaking the wire and sending businesses scrambling to regain their footing. The global Covid-19 pandemic redefined the way businesses think about supply chain management, exposing vulnerabilities and pushing systems to their limits. In a recent webinar, Crisis, Chaos, and the Road Ahead: The New Era in Supply Chains, John Lash, Group Vice President of Product Strategy at e2open, joined Adrian Gonzalez from Talking Logistics to explore lessons learned about supply chain resilience and strategies for navigating the road ahead.
The lasting impact of the pandemic: A system pushed to the brink
The empty store shelves and the frantic search for toilet paper were just the visible tip of a disruption that left an indelible mark on supply chains and businesses. The pandemic pressure-tested all areas of supply chains in a way they’d never been before, exposing flaws and testing resilience. Demand, supply, and logistics were all stretched simultaneously to their limits, and, in some cases, to their breaking points. The pandemic brought to light systemic weaknesses that were forged into supply chains over decades in pursuit of efficiency and cost reduction.
So, what crucial lessons should we take from this event? How exactly did AI create a competitive advantage? And most importantly, how can we use this information to prepare businesses for whatever might happen in the future?
Key supply chain lessons learned from the pandemic
- Demand and Supply Volatility: Traditional demand forecasting relies on the premise that history repeats itself. However, during the pandemic, last year’s data – let alone numbers from three years ago – became irrelevant when supply chains took a one-two punch from two major disruption vectors. First, the panic buying of essentials such as toilet paper and cleaning supplies resulted in demand shocks. Then supply constraints followed, making it difficult to restock. Both of these challenges exposed the vulnerabilities of rigid supply chain models and underscored the limitations of traditional planning methods.
- Long-Tail Complexity: The “long tail” – the slow-moving inventory items that make up more than 80% of your portfolio – added disproportionate challenges. Errors in forecasting these items surged by 20 percentage points during the pandemic, leading to profit erosion and service issues. Companies were forced to rethink their portfolios and began to ask themselves: Do we really need so many product variations, or is it time to focus on what matters most?
- Visibility and Connectivity: The pandemic exposed major weaknesses in supply chains, including poor visibility into both upstream and downstream partners. This lack of transparency compounded disruptions, and it took supply chains four years to recover. While conditions have stabilized, the fact remains that it is harder to do business now than it was in the pre-pandemic era.
The AI advantage: Turning data into a superpower
The pandemic sparked debates about the role of artificial intelligence (AI) in supply chain management. Some questioned whether AI would falter during unprecedented disruptions because it had never “seen” a pandemic before. However, evidence showed that AI combined with real-time data outperformed traditional methods time and again. For instance:
- Forecast Accuracy: Real-time data – such as orders, shipments, and point-of-sale information – enabled AI to sense demand shifts, and reduce forecast error by 35%.
- Planning ROI: AI tripled the return on planning investments by providing actionable insights during all stages of the pandemic.
- Reducing Extreme Errors: AI cut the volume of business exposed to the most costly and disruptive extreme error by over 60% .
The takeaway? While everyone battled the same storm whipped up by the pandemic, companies that embraced AI and real-time data gained a distinct advantage and navigated disruptions more effectively.
Want to learn more? Take a dive into some of the key numbers from our Forecasting and Inventory Benchmark Study.
The path forward: A new era of supply chains
We’re living in a new era where uncertainty is the only certainty, making supply chain resilience more critical than ever before. The question is, will your supply chain be ready for the next major disruption? Whether it’s geopolitical instability, looming trade wars, supply or labor shortages, or the growing threat of extreme weather events, the global commerce arena has become increasingly unpredictable. To succeed in this harder, more complex environment, companies should embrace two key strategies:
- Invest in AI and Real-Time Data: The ability to make decisions based on real-time conditions rather than past events is critical. AI can process vast amounts of data from across the supply chain, enabling better forecasting, planning, and execution.
- Build a Connected Network: Supply chains don’t operate in silos. The companies that will thrive will be those that break down walls and build up integrated, collaborative networks where supply chain partners can share real-time data and insights.
Preparing for the next disruption: The time to act is now
While the pandemic was a brutal stress test, the next major disruption is not a matter of if but when. Whether it’s geopolitical tensions, new pandemics, or environmental crises, businesses must act now to increase their supply chain resilience. The cost of inaction is too high – for some, it could mean the difference between survival and failure.
The lessons of the pandemic are clear: what was “good enough” in the past no longer suffices. By leveraging AI, real-time data, and connected networks, companies can build resilient supply chains ready for the challenges of tomorrow. The road ahead may be uncertain, but with the right tools and strategies, businesses can navigate the chaos and emerge stronger.
Download our full Forecasting and Inventory Benchmark Study to learn how you can reduce forecasting error, reduce safety stock, and triple the return on your planning investments. Or you can reach out to contact us with any questions.
