Supply chain

analytics and AI
in driving relevance, resilience
and responsibility
It’s not business as These advanced technologies,
working in concert with humans,
usual for supply can help companies create an
intelligent supply chain that
chain organizations predicts and monitors the impact

today of nearly every decision they make,

enabling them to balance three key
outcomes that supply chain leaders
today are expected to continuously
As technologies such as digital and simultaneously achieve.
twins, machine learning (ML)
and the internet of things (IoT)
continue to mature and
proliferate, companies
everywhere can begin to do
things never before possible.

02 Supply chain analytics and AI to drive relevance, resilience and responsibility

It’s not business as usual for supply chain organizations today

Three key outcomes:

Relevance Resilience Responsibility

Customer and employee relevance, which Operational resilience, which creates Business responsibility, which fosters
secures future growth—According to the profitability and viability in a post-COVID prosperity for all without destroying the
Accenture Technology Vision 2020, 76% world prone to crises—Accenture’s July 2020 planet—A sustainable supply chain is the
of executives agree that organizations need CxO Pulse Survey found that three-quarters top value proposition for companies as
to dramatically reengineer the experiences of chief supply chain officers want to rethink consumers become more conscious about
that bring technology and people together their supply chains (including processes the products they are consuming—where
in a more human-centric manner. Such and operating models) to make them more they are sourced, how they are made, and
experiences help create more engaged resilient—which isn’t surprising given the how they are recycled.
employees and more loyal customers. mass disruptions they’ve experienced in
the past year.

03 Supply chain analytics and AI to drive relevance, resilience and responsibility

It’s not business as usual for supply chain organizations today

These are all great ideas—but are there any The keys to simultaneously addressing Furthermore 90% or more
companies actually working this way yet? relevance, resilience, and responsibility
According to recent Accenture research, are advanced analytics and AI. Our study
of both Leaders and Others
there are. shows that Leaders are adopting these agree that generating a return
powerful tools at scale and, in the process, on this investment will require
A small group of Leaders getting a head start in capitalizing on the engaging with and scaling
we identified in our significant opportunities created by human
ecosystem partnerships with
and machine collaboration.
research—13%—excel at a wide range of players,
simultaneously delivering For example, at least half of the Leaders said
acquiring and retaining
they are investing more than US$ 5 million in
relevance, resilience and analytics and AI-related skills,
AI-embedded connected products, AI virtual
responsibility. assistants, advanced data analytics, and embracing key digital
We found that across every industry intelligent automation, Industrial Internet of platforms.
surveyed, these companies are significantly Things sensors, and AI-embedded connected
outperforming Others in overall financial products. Just under half said the same about
performance, as measured by EBITDA and ML/deep learning and sentiment monitoring
enterprise value. These Leaders give us a analytics.
window into what human and machine
collaboration makes possible for all
companies.

04 Supply chain analytics and AI to drive relevance, resilience and responsibility Source: Accenture Research. (2021). [Unpublished raw data on supply chain]. Accenture.
Analytics and AI: Some are more difficult to scale than others, and the impact on key business priorities
can differ across use cases. This is why companies that are looking to increase their
Three critical use spending on and use of these technologies should focus their initial efforts to get the
biggest return on their investment. We think three use cases, in particular, make the most
cases to drive sense as starting points—all of which can play a significant role in helping companies

immediate and maximize relevance, resilience and responsibility.

significant value
Myriad use cases for supply
chain analytics and AI exist,
and the number continues to
grow. But all use cases aren’t
created equal. Advanced Unified
scenario demand
modeling planning

Supplier risk monitoring

and resolution

05 Supply chain analytics and AI to drive relevance, resilience and responsibility

Use case 1

Advanced scenario modeling: Uncovering vulnerabilities and opportunities

One use case that’s becoming increasingly A digital twin can be created for the are, but also to identify the weakest links and
important in the wake of COVID-19 is scenario end-to-end supply chain or for specific quantify the impact of those links’ failures on
modeling, often done with the help of a functional areas for targeted improvements. fulfilling their role. This analysis, in turn, can
digital twin. Underpinned by AI and the cloud, these help companies develop mitigating actions to
digital doubles can help companies improve resilience, and can also be used to
A digital twin is a virtual improve resilience by identifying potential reallocate resources away from areas that are
supply chain replica that vulnerabilities and optimizing key areas deemed to be low risk to conserve cash
of their supply chain. during difficult times.
represents assets, warehouses,
logistics and material flows, For example, a digital twin can serve as
the foundation of a supply chain stress test,
and inventory positions—
such as the one Accenture and MIT have
basically, an online, living developed. The test uses digital twin scenario
version of a company’s modeling to assess potential operational and
backbone that can be used financial risks and impacts created by major
market disruptions, disasters, or other
to simulate supply chain catastrophic events. The test can enable
performance, including all companies to not only understand how
the complexity that drives resilient their supply chain and operations
value loss and risks.

06 Supply chain analytics and AI to drive relevance, resilience and responsibility

Use case 1

Scenario modeling also can help companies optimize their network, processes, and inventory—which not only improves
overall operating and business performance, but also helps enable companies to achieve ever-higher responsibility goals.

Network Optimization Process Optimization Inventory Optimization

Digital twin-driven modeling allows In many companies, processes have Modeling with a digital twin can help a
companies to design a network that become increasingly complex due to company address a “single-echelon” inventory
optimizes cost and customer service levels, global expansion and growing customer challenge (optimizing inventory in a single
while simultaneously analyzing its carbon diversity—and, therefore, less efficient warehouse) as well as a “multi-echelon”
footprint. This ensures that companies can and more costly. A digital twin can help a one (optimizing inventory across the entire
meet sustainability targets while delivering company take a deep look at key processes network), taking into account demand
the best service for its customers. For to understand where bottlenecks, time, forecasts to improve replenishment
instance, a company can design a network energy and material waste, and inefficiencies policies and modify inventory levels
that reduces shipping times by minimizing are bogging down work, and model the according to demand. This helps improve
the distances trucks must drive and, thus, outcome of specific targeted improvement customer-centricity by ensuring a company
reducing fuel consumption and emissions. interventions. The identification and has the products customers want in stock,
elimination of waste, in particular, can help when they want them—avoiding stockouts
minimize a process’s environmental impact. while also improving a supply chain’s
responsibility by minimizing overall costs
and the distances that inventory must be
shipped to reach the end customer.

07 Supply chain analytics and AI to drive relevance, resilience and responsibility

Client story

Network cost savings with scenario modeling

One example of modeling-driven optimization is the experience of a

global diversified technology company with a complex physical network
spanning multiple business units. Accenture built a digital twin of the
company’s manufacturing configuration to help the company design
and evaluate different network optimization scenarios. The digital twin
generated deep visibility into product and plant profitability, which led
to a portfolio simplification and segmentation strategy and, ultimately,
a rebalancing of network volume that drove cost, service, and product
optimization and unlocked new network capacity.

Network-wide cost savings as a result of the

initiative has exceeded $20 million.
In addition, scenario modeling enabled the company to identify the
network and route configurations that would have the smallest CO2
footprint and environmental impact, thus helping the company make
major strides toward its sustainability goals.

08 Supply chain analytics and AI to drive relevance, resilience and responsibility

Use case 2

Unified demand planning: Single source of truth for customer demand

Deeply understanding the source of organizations ultimately establish a unified Unified demand underscores
demand—the individual customers—so it view of demand and a repeatable planning
can be met most precisely has never been process that enhances accuracy and yields
a truism throughout human
more difficult, with customer expectations new insights to drive more meaningful history: Better information
changing rapidly and becoming more diverse. decisions across the business. leads to better decisions—
And as we saw in the early days of COVID-19, for customers and for the
getting a good handle on demand during For example, Accenture leverages internal
times of disruption is virtually impossible data (e.g., from supply chain and trade), business.
without the right information. The good external data (e.g., consumption data,
news is that the data and AI-powered tools mobility, macroeconomic factors, brand
a company needs to generate insights into sentiments, weather, and COVID-19 cases)
demand are now available. That’s what and advanced algorithms to forecast
unified demand is all about: integrating consumption at a customer level and
all of the available internal and external shipment at a location level. As a result,
(and often real-time) data across every companies are better positioned to meet
process and every function within an demand, avoid being surprised by disruptions
organization to completely transform the or changes in conditions, and even eliminate
approach to forecasting and planning unnecessary shipments and, thus, fuel use
demand. With this new approach, and emissions.

09 Supply chain analytics and AI to drive relevance, resilience and responsibility

Use case 2

Today, two converging factors are enabling companies to get this

“better information” when it comes to forecasting what customers want to buy.

Explosion of relevant data enables The cloud provides the mechanism

far deeper insights for data collection and analysis
Historically, when companies tried to understand demand, they had to All this data that’s now available still wouldn’t be very useful if it couldn’t
rely primarily on their own sales data: what they’ve sold over what time be collected and used. That’s where the cloud comes in. The cloud
horizon. This was useful, but incomplete. Consumer-focused companies gives companies a platform for liquidity of information. It enables a
have been able to improve their understanding of their end consumer company to access and consolidate a vast range of relevant data
with greater access to point-of-sale data from retailers and the sources—both external and internal—triangulate the data it cares about,
emergence of syndicated market data—but they’re still falling short. and make the data interoperable across business functions. Rather than
individual functions (such as sales, marketing, finance, or supply chain)
But now, thanks to the pervasive use of AI-powered solutions to help creating separate forecasts based on their specific data siloes, everyone
organizations capture and use that information, a whole new world of can apply analytics and AI to the data to generate non-linear insights
data has opened up for companies that can help them truly understand into what’s really influencing demand and how changes in certain
what influences demand at increasingly granular levels—and meet that elements—the weather, economic activity, and government actions,
demand more effectively, possibly predicting demand before customers for instance—will affect it.
even know what they want. For instance, ML algorithms learn demand
patterns and predict what categories of products a consumer will need Armed with data-driven predictions, supply chain leaders can then more
at a specific store based on relevant data, thus boosting customer intelligently and proactively decide how they should respond to and
satisfaction and loyalty. meet demand, including determining what are the most appropriate
actions to take in production, pricing, promotions, and fulfillment.

10 Supply chain analytics and AI to drive relevance, resilience and responsibility

Client story

End-to-end planning transformation

A global consumer goods manufacturer is seeing the benefits

unified demand can generate by transforming its formerly manual,
slow, and inflexible demand planning process. Accenture worked with
the company to first assess the company’s supply chain, using an
ML-based accelerator to identify the various unique components of
demand and isolating the key drivers behind each unique supply chain
segment—insights that Accenture and the company then used to create
a tailored supply chain strategy for each segment. In parallel, Accenture
worked with the company to create new demand planning capabilities
and a new operating model that use advanced algorithms and rich
internal and external data, as well as a fundamentally redesigned
demand planning process, providing real-time visibility, a unified
view of demand, and near-real-time scenario analysis.

As a result of this end-to-end planning

transformation, the company in just two years
has boosted revenue by 1.5% due to greater
customer relevance, reduced inventory by 20%,
and cut costs by 10%.

11 Supply chain analytics and AI to drive relevance, resilience and responsibility

Use case 3

Supplier risk monitoring and resolution: Visibility across the supply chain

Deeply understanding demand is only half Most companies couldn’t see beyond a few decades, but now the data and technology
the battle. Gaining similar visibility into the major suppliers—they were effectively flying are available to finally do something about it.
full supplier base is also critical so a company blind—so they couldn’t know which suppliers
can understand how its suppliers are were shut down or where orders were in the Analytics, AI, and the cloud play a powerful
performing and see potential risks across pipeline. It was especially difficult due to role here, enabling companies to
the supplier base. the global nature and complexity of most continuously monitor and respond to
supplier bases. disruptions within the multi-echelon supply
We saw the importance of chain. Just as we said about demand, having
But a company doesn’t need a pandemic-sized better information about what's happening
having greater visibility into disruption to knock a normally operating throughout the entirety of the supply chain
the supplier base in the early supply chain off kilter if the company lacks leads to better, more informed decisions.
days of the pandemic, which access to vital information. Even a relatively
minor issue—for example, a delay in one
caused massive disruptions
shipment of raw material from a single
in supply in virtually every upstream supplier—can be magnified
industry around the world. across the supply chain, causing potentially
huge complications further downstream as
supplier after supplier—and, ultimately, the
end customer—is affected. This so-called
“bullwhip effect” has been known for

12 Supply chain analytics and AI to drive relevance, resilience and responsibility

Use case 3

For the first time, companies can actually Real-time access to supplier
capture data from across multi-echelon
supply chains, consolidate it in the cloud,
data can enable companies
and apply robust AI models to it to give to hold suppliers accountable
companies a real-time view into the state for where and how they’re
of their suppliers. With this data, companies sourcing materials—allowing
can proactively identify where certain
suppliers present risk—for instance, a brands to cut off a supplier
supplier’s shaky financial footing that could that’s not meeting ethical or
cause it to go under or a supplier’s inability sustainable standards.
to source a vital raw material—and predict
the resulting impact across the supply chain.
Scenario modeling can then help a company
identify the best alternatives so the
organization is prepared if a disruption
actually occurs.

And they can further their responsibility

agenda by ensuring, for instance, that
suppliers’ carbon footprints are in line
with agreed-upon levels and that suppliers
are sourcing and producing materials in
a sustainable and responsible way.

13 Supply chain analytics and AI to drive relevance, resilience and responsibility

Client story

Mitigate potential supply risks

A global food producer was concerned about fluctuations in material

availability, especially for sole-sourced materials from COVID-19-related
countries. The company worked with Accenture to quickly develop
and deploy an AI-based tool and related dashboard that enables
the company to mitigate potential supply risks. The tool provides
accurate visibility into inbound supply flows and risks caused by
COVID-19 disruptions, as well as into inventory levels across locations;
identifies root causes for the largest gaps between material forecast
and actual production volume; and models alternative scenarios
(based on simulations of inbound flows and production) for what to
manufacture, and where, at a given point in time to ensure the company
can meet fast-changing demand in the most responsible way possible.

With this tool and dashboard, the company could

anticipate 80% of late purchase orders due to
dashboard alerts and reduce inventory by 2 to 3%,
which could translate into $15 million to
$20 million in savings.

14 Supply chain analytics and AI to drive relevance, resilience and responsibility

Charting a path to These powerful tools are enabling companies
to automate tasks they never could before
considering these three outcomes are fading
away, as human and machine collaboration
a more relevant, while providing much deeper insights
companies can use to make faster, better
becomes more pervasive. And, as our research
also shows, striking the right balance across
resilient, and decisions to improve business performance. these outcomes is a winning formula for

responsible future And “business performance” today requires

delivering simultaneously against traditionally
stronger growth and greater enterprise value.

competing KPIs like customer satisfaction, Other companies need to step up their game
revenue, efficiency, cost control, and carbon to avoid being left behind. Focusing on a few
In the past five years, emissions. key use cases—such as scenario modeling,
analytics and AI have unified demand planning, and supplier
But companies so far have only scratched risk management—is a good way for
become increasingly
the surface of what analytics and AI make companies to start infusing supply chain
important to many possible. Accenture research points to analytics and AI in their operations to inform
companies’ business. growing evidence of some companies that every person and every decision across the
are now beginning to use these tools to business. They’re very manageable first steps
help them do what used to be impossible: that can put companies on a path to more
become more relevant, resilient, and intelligent operations that can help them
responsible—simultaneously. These effectively compete with organizations
companies are demonstrating that the old that are currently setting the bar.
tradeoffs they used to have to make when

15 Supply chain analytics and AI to drive relevance, resilience and responsibility

About Accenture
Authors

Jaime Lagunas
Managing Director, Applied Intelligence, Supply Chain & Operations Global Lead

John Matchette
Senior Managing Director, Strategy & Consulting, Supply Chain & Operations Lead
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