Peter Swartz, the Chief Science Officer at Altana, a supply chain insights company, emphasizes the transformative role of artificial intelligence (AI) in navigating the complexities of global supply chains. Since the company’s founding in 2018, Swartz and his co-founders realized the pressing demand for creative solutions. They rose to meet the unprecedented challenges presented by this new wave of globalization. The COVID-19 pandemic has exacerbated these flaws and made them even more apparent, forcing companies to reconsider how they approach risk within their supply chains.
Swartz says AI holds the real power to amplify company insights. It provides them with important transparency around the immediate and downstream impacts across their supply chains. You have to understand second-order effects upstream and downstream. This kind of understanding is critically needed to deal with the tectonic changes happening on a global level. He adds that this technological leap gives companies the ability to see the complex spiderweb of their supply chain. Importantly, it gives them an opportunity to focus on critical areas in need of all-but-immediate attention and action.
The Changing Landscape of Globalization
Perhaps most importantly, the age of frictionless supply chains is over, Swartz says. He observes that in addition to huge increases in complexity and regulation burdening businesses today, there has been an unprecedented reordering of the dynamics of global trade.
“Prior to the pandemic, unfortunately, we were living on a razor’s edge.” – Abe Eshkenazi
This complexity has largely been driven by greater expectations across our industry to be ethical in our global supply chains. Swartz warns against too much nostalgia for the golden age of globalization. Overseas, forced labor and environmental degradation have festered in our supply chains for decades. The pandemic has forced all companies to face these harsh truths as well.
“Let’s not overly romanticise the previous era.” – Peter Swartz
Swartz sees this moment as a “tremendous moment of disruption.” He thinks the worst is yet to come. This will mean that firms selling in the US will need to start thinking about supply chain management differently.
Embracing AI for Supply Chain Management
Central to Altana’s supply chain management philosophy is the idea of “see, focus, act.” This framework provides a roadmap for companies to get an accurate grasp of their supply chains and make better informed decisions with data-driven insights.
The first is the visibility, and that’s the one that raised the most alarm bells, Swartz says. Prior to the pandemic, a majority of organizations had difficulty maintaining transparency and traceability throughout their supply chains. This issue became patently clear during the pandemic. They soon found themselves wrestling with deeper questions regarding who and what was in their supply networks.
“I don’t know who or what is in my supply chain.” – Peter Swartz
3 Businesses are also busily focusing on figuring out what constitutes their entire supply chain. Swartz pushes stakeholders to think beyond their own tier in this process. That kind of layered understanding is key both for understanding costs and figuring out what adjustments should be necessary.
“This understanding of the multiple tiers is so key to both understand the costs and then understand what adjustments need to be done.” – Peter Swartz
Altana has created several other tools including the Tariff Scenario Planner, a free tool that enables businesses to quickly identify and quantify potential financial impacts resulting from tariffs. Such resources are priceless as they chart a post-pandemic course filled with blanks and unknowables.
The Path Forward: Ethical and Sustainable Supply Chains
As companies learn to navigate these new realities, no matter the format, Swartz is adamant that they need to be prioritizing sustainable and ethical practices. The impacts of the pandemic served as a wake-up call that many supply chains have deep-rooted gaps in resilience.
“That’s the good news. The not-so-good news is that we now know who and what is in our supply chains, and we’re finding out that we’re not as resilient, we’re not as sustainable and we’re not maybe as ethical as we believe we should be.” – Peter Swartz
He underscores that understanding the complex layers of supply chains will aid companies in achieving greater sustainability and ethical standards. Most organizations have siloed supplier and partner data, making it difficult to build an accurate picture and take smart action.
Swartz is convinced that AI systems are big enough to handle complexity at scale. This capability allows businesses to model hundreds of thousands of data points across tens of thousands of suppliers and their multi-tier impacts. This ability is key to building more resilient, ethically responsible supply chains.
“It’s all about actually understanding what’s happening and then being able to act at scale.” – Peter Swartz