What is supply chain orchestration?

Supply chain orchestration (SCO) is an emerging sub-segment of supply chain management (SCM) that coordinates, automates, and optimizes the most critical activities of SCM, from planning to logistics, in a single, connected, holistic process.

Unlike traditional supply chain management, in which individual supply chain functions typically operate in disconnected silos, supply chain orchestration uses an end-to-end approach that goes beyond point solutions and leverages artificial intelligence (AI) to gain comprehensive insights across the entire supply chain.

SCO supports supply chain network design, scenario modeling, and intelligent, integrated decisions that help companies balance competing objectives across cost, sustainability, speed, and resilience. Keeping each part of the supply chain in harmony with the whole is an overarching goal of orchestration.

While technology is a significant part of the orchestration equation, achieving high levels of coordination depends on going beyond technology to incorporate other critical dimensions such as business objectives, governance, and strategy.

Today’s supply chains are expected to deliver top- and bottom-line financial results and be stewards of regulatory and environmental compliance. What’s more, they need to accomplish all this at a time when supply chains are more complex than ever before.

Shifting consumer expectations, extreme weather events, regulatory changes, geopolitical conflict, cybersecurity threats, and rapid technological advancements are just some of the many sources of volatility and disruption that are challenging supply chain professionals in new ways.

Faced with operating in this demanding environment, companies recognize that the combination of legacy SCM systems, manual processes and fragmented data sets are no longer sufficient. Many are making the shift to supply chain orchestration to break down silos, empower teams with accurate data, actionable insights, and intelligence so they can make better decisions faster in all areas of SCM.

With supply chain orchestration, organizations can better foresee and negotiate the complex challenges of supply chain management with confidence, ensuring they meet their corporate goals while minimizing harm to the planet.

Supply chain orchestration provides companies with numerous benefits, including enhanced visibility, improved agility, and resilience. Any company that is looking to proactively transform its supply chain to achieve better business results and improve the way it delivers for its customers can take advantage of these benefits.

Industries that rely on complex, multi-tiered global supply chains, where high levels of coordination, visibility, and agility are critical, stand to benefit most from the sophisticated capabilities supply chain orchestration offers. Some of these industries include:

• Industrial manufacturing
• Automotive
• Aerospace and defense
• Consumer products
• High-tech and electronics
• Life sciences

Supply chain orchestration enables supply chain professionals to continuously synchronize the entire ecosystem in real time, from multi-year planning through to last-mile delivery. Some of the specific benefits of supply chain orchestration include:

Breaking down functional and information silos

Supply chain orchestration gives organizations the tools to break down barriers and silos created by legacy processes and systems and empower their teams with accurate data, actionable insights and augmented intelligence they can trust, which gives them the ability to make decisions faster and with more confidence.

A unified source of truth

Supply chain orchestration removes the boundaries between individuals, functions, and nodes across the supply chain, fostering enhanced collaboration and creating a single, accurate, up-to-date unified source of truth. Multiple teams across the supply chain have a shared understanding of every person, process and piece of data across the end‑to‑end supply chain and can work with greater efficiency towards common objectives.

Enhanced visibility

By providing enhanced visibility across the entire supply chain, supply chain orchestration harnesses the power of AI to enable teams to quickly derive actionable insights from large volumes of supply chain data. People across the supply chain have everything they need to understand the impact of any change on all upstream and downstream activities as well as the bottom line.

Improved agility

Agility is central to supply chain orchestration, bringing about a fundamental shift in how organizations approach their operations. With orchestration, companies can swiftly identify surges in demand, assess available inventory, and initiate real-time communication with suppliers, manufacturers and distribution partners to make data-driven decisions such as allocating additional resources, expediting production and rerouting shipments to ensure availability.

Accelerated innovation

Supply chain orchestration provides a strong foundation for companies to accelerate innovation in their businesses. By breaking down organizational silos across the organization and enabling different functional areas to operate harmoniously, orchestration gives companies access to a wealth of real-time data and insights. With the help of AI and machine learning, organizations can harness these insights, learn from them, and then automate processes and decision-making to drive rapid innovation across their supply chains. Without the connection and collaboration orchestration facilitates, the opportunities for leveraging AI are limited.

Sustainability

Supply chain orchestration gives companies the tools they need to optimize resources, reduce waste, and ensure compliance with sustainability goals by leveraging real-time data, AI, and automation. It enables companies to use a more holistic, data-driven approach to operationalizing sustainability that simplifies the process of evaluating environmental impact alongside existing business key performance indicators (KPIs).

Supply chain professionals are dealing with a variety of challenges that are holding them back from navigating the complexity and uncertainty of modern supply chains. Here are some of the key challenges that supply chain orchestration helps companies overcome.

Disruption and volatility

In the current global business environment, disruption and volatility are a given. Yet many supply chain professionals still struggle to respond quickly to mitigate their impact. Supply chain orchestration solutions typically provide a wide range of tools and capabilities that help supply chain professionals proactively predict and prepare for disruptions before they happen. When disruption can’t be avoided, orchestration solutions provide sophisticated what-if and visualization capabilities that enable companies to react quickly, for example to activate business continuity plans or secure needed supply in the event of shortages.

Lack of visibility

Many supply chain professionals have limited visibility across their supply chain and often have to make decisions based on outdated or incomplete data. When the unexpected does happens, such as shortages, delays, or quality issues, they don’t have all the data required to make the right decision and can’t respond with the level of agility required.

Information silos

Information silos are one of the key challenges of legacy supply chain management systems and process. Separate data sets stored in multiple spreadsheets or legacy systems impedes communication and data sharing among the various functional groups involved in supply chain management, which in turn makes it challenging to understand problems and quickly determine the best course of action to address them effectively.

Outdated systems and processes

Achieving supply chain resilience is a delicate balancing act that’s almost impossible to achieve with an aging IT infrastructure and labor-intensive and error-prone manual processes that don’t scale. Legacy systems used for supply chain management often become bottlenecks, resulting in delays, reduced efficiency, higher costs and dissatisfied customers.

Challenges and the future of supply chain orchestration

Moving from legacy SCM systems and processes to supply chain orchestration requires a significant upfront investment, and the process of integrating a new platform with existing IT systems can be complex and time-consuming. Companies that move forward with these transformation efforts also require highly skilled and experience talent to ensure success.

Supply chain orchestration technology continues to evolve rapidly. New developments in AI-driven decision making and predictive analytics, in particular, will make supply chains more autonomous and gradually reduce the need for human intervention to make adjustments and respond to disruptions. In addition, as they work towards achieving greater sustainability in their supply chains, companies will shift towards circular economy models that focus on recycling, refurbishing, and reducing waste.

There are several different supply chain orchestration platforms available on the market. According to Gartner, these platforms “use harmonized and enriched data to prescribe and implement responsive decisions that impact metrics evaluating supply chain business value. These platforms will enable software product managers to compete for new supply chain management transformation deals.”

Here are some of the essential technologies required to achieve seamless supply chain orchestration:

• Automation to reduce manual intervention and improve speed and efficiency
• AI and machine learning to forecast demand, assess risks with what-if scenario modeling, and automate decision making
• Digital twins to create a virtual replica of the supply chain
• Cloud-based platforms for centralizing supply chain data
• Supplier portals for real-time collaboration between companies and their suppliers and partners

Today, companies in every industry are facing a new reality marked by high levels of complexity, volatility, and disruption. Geopolitical conflicts, talent shortages, extreme weather events, disruptive new technologies, intense cost pressures⏤these are just some of the factors that are making it more challenging than ever for companies to manage their supply chains and deliver the right products to customers at the right time.

Making small changes to legacy SCM tools and processes may result in some improvements, but these stopgap measures are costly, time-consuming, and delay large-scale transformation initiatives. To accelerate supply chain excellence, stay ahead of the competition, and unlock new business opportunities, many companies are transforming their supply chains now by moving to orchestration.

To assist organizations in their supply chain transformation efforts, Kinaxis has introduced a Supply Chain Orchestration Maturity Model and Self-Assessment. The assessment help organizations evaluate their current state and identify actionable steps to achieve their goals.

Spanning strategic, tactical, and operational planning and execution, the assessment encompasses the 14 dimensions of supply chain orchestration: Objectives, Strategy, Organization & Responsibilities, Circularity, Risk Management, Network Design, S&OP, Planning, Demand, Supply, Agility, Procurement, Production Planning & Scheduling, and Fulfillment.

Take the Kinaxis Supply Chain Orchestration Maturity Model and Self-Assessment.