Routing To Supply Chain Resilience Accenture

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STORIESRouting tosupply chainresilienceThe power of proactiverisk management

Call for changeSuperchargingsupply and profitsFew of us stop to think about the brainsbeneath our smart devices, cars andappliances. This microchip technology comesfrom third-party suppliers and is essential tomanufacturing today’s products—frompacemakers to PCs. For this reason, whenfaced with an unexpected microchipshortage, technology suppliers moved tomake supply chain risk management andresiliency a priority.This was especially true for one global technologysupplier. The abrupt stop-and-go for vehicledemand caused by the pandemic led thecompany to discover that, like many others in theindustry, its supply chain lacked the muscle tomeet the moment.Copyright 2022 Accenture. All rights reservedIn 2020, the pandemic understandably put thebrakes on global automotive production. At thesame time, the demand for electronic at-homeentertainment (TVs, gaming consoles, computers,etc.) grew—and microchip suppliers shifted theirsupply to electronics. As a result, when vehicledemand rebounded, a microchip shortageeffectively stalled the global auto industry, costingit an estimated 210 billion in lost revenue.1Without the chips, the technology companystruggled to meet renewed vehicle demand,putting both its profit margin and marketvaluation at risk. Given the magnitude of thisproblem, company leaders were determined tofind a solution and brought in Accenture to help.1 Shortages Related to Semiconductors to Cost the Auto Industry 210 Billion In Revenues This Year, SaysNew Alixpartners Forecast, “AlixPartners,” 2021

When tech meets human ingenuityThe muscle tomitigate riskThe joint team first performed a maturityassessment, examining current supplychain risk management practices andcapabilities. It identified an opportunity tomove from the company’s basic, reactivecapabilities to more proactive riskmanagement using advancedtechnologies and analytics. This wouldallow the company to build the muscleneeded for long-term resilience across itsentire value chain—not just for microchipsupply.The team developed an advanced “heatmap” to identify high risk suppliers andcomponents and recommend mitigatingCopyright 2022 Accenture. All rights reservedactions. The heat map analyzed over onethousand parts—including the smallestcomponents—that could delay a finalproduct and put the company’s revenue atrisk if they suddenly became unavailable.The heat map looked at 15 different riskdimensions, such as risk contribution,supplier relationships, deliveryperformance and availability of alternativesources of supply. To perform the analysisand understand revenue impacts, the teamleveraged company data and created a“supply chain digital twin.”

When tech meets human ingenuityThe digital twin is a virtual replica of thecompany’s global supply chain built using theAccenture Intelligent Supply Chain Platformand hosted on Microsoft Azure. It’s highlydetailed, providing a virtual map of everyfactory, warehouse, material and componentsupplier—from Tier 1 to Tier 5—in the supplychain, along with visibility intointerdependencies. The digital twin allows thecompany to visualize, understand and analyzevarious supply chain challenges, such asphysical flow complexity, supplierconcentrations, supply bottlenecks andrevenue at risk. For example, when Germanysuffered catastrophic flooding in 2021, thedigital twin was able to identify the impact onthe company’s supply chain within an hour.Finally, Accenture performed the innovativesupply chain resilience stress test, leveragingjoint research with the MassachusettsCopyright 2022 Accenture. All rights reservedInstitute of Technology. The stress testsubjects the digital twin to pre-defined,disruptive scenarios—such as anenvironmental disaster, port congestion or asupply shortage—and calculates a Time toSurvive (TTS) and Time to Recover (TTR). Eachscenario receives a resiliency score. Forexample, if you lose 40% of your normalrevenue, your resiliency score is 60%. At theend of the stress test, scenario resiliencyscores are combined to identify the overallresilience of the supply chain.The success of the stress test proved theefficacy of the digital twin methodology.From there, Accenture worked with thecompany to transfer the knowledge to itsinternal Supply Chain Resilience team. Thislaid the groundwork for subsequent strategicand operational actions to reduce supplychain vulnerabilities.

A valuable differenceFrom reactiveto resilientIn just six months, Accenture and thecompany turned a significant global challengeinto an opportunity, building the muscle andcreating a foundation for a more resilient,relevant and sustainable supply chain.the digital twin and its visualization and analyticstools, the company can respond in hours ratherthan weeks to disruptions. This has contributed toreducing the company’s revenue at risk by severalhundred million dollars.The advanced supply chain capabilities will helpthe company focus on proactive supply chainmanagement. In combination, the maturityassessment, heat map, digital twin and stress testwere able to produce several targeted riskmitigation actions—sometimes down to thecomponent or part number—across businessfunctions. The team was able to model the impactof these actions by adding them to the digital twinand performing another stress test.These advanced capabilities also position thecompany for increased commercial success. Itsongoing efforts to build supply chain resiliencewill help prove to its global customers that it iswell prepared to navigate future disruptions.The company will also be able to efficientlymitigate ongoing supply chain challenges. WithCopyright 2022 Accenture. All rights reservedWith Accenture’s help, the company can nowidentify and start responding in “almost real time”to supply chain changes and support growth.Even better, it has the technology, talent andcapabilities to continue building an advancedsupply chain with the muscle to withstanddisruptions from many angles.

DisclaimerThis content is provided for general informationpurposes and is not intended to be used inplace of consultation with our professionaladvisors. This document refers to marks ownedby third parties. All such third-party marks arethe property of their respective owners. Nosponsorship, endorsement or approval of thiscontent by the owners of such marks isintended, expressed or implied.Copyright 2022 Accenture.All rights reserved. Accenture and its logo areregistered trademarks of Accenture

Accenture reports how a microchip company created a more resilient and sustainable supply chain to respond in almost real-time to disruptions. Read more. Keywords: sustainable supply chain, supply chain resilience, advanced supply chain, maturity assessment, proactive risk management, supply chain digital twin, supply chain stress test Created Date

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