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R. Manoj Kumar
Functional Analyst, Supply Chain Advisory, Technology, Software & Services BG, TCS
Anshuman Adhikari
Consulting Partner, Business Advisory, Technology, Software & Services BG, TCS
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Each iPhone consists of thousands of components from hundreds of suppliers located globally. Apple’s success depends on its ability to manage complex supply chains as it is the smartphone’s sleek design and functionality.
The supply chains of 21st century technology companies are extremely complex. The makers of hardware must juggle critical raw materials including rare earth minerals, semiconductors, manufacturing, software, and logistics alongside harsh competition from established and new market entrants. Companies need to excel in managing their supply chains to bring products to market faster, more reliably, and at a lower cost than their competitors
In our so-called VUCA world – a place of volatility, uncertainty, complexity and ambiguity – managing these convoluted supply chains is a constant challenge. Failure can come in many guises from natural disasters, to pandemics, to trade disputes or geopolitical instability. Supply chains can no longer be governed by static decision frameworks. They need a dynamic system, that improves over time, to become more aligned with the shifting goals and priorities of the organization.
Capital investments in technology supply chains are high, and demanding customers wanting ever more customizations, and shorter product cycles, make business planning a high-risk game. Geopolitical tensions wax and wane. Tariffs, sanctions, and export controls shift in real time. Raw materials and critical components are concentrated in a few places leaving companies exposed to unique and globally dispersed suppliers with limited scope for substitution. Compliance and regulation that varies between countries adds cost and friction. In addition, climate change is now seen as a major risk with water scarcity and copper availability severely impacting global semiconductor production. Add energy price shocks and cybersecurity risk and the whole process can feel like a house of cards: Fragile and unstable.
Large technology enterprises have access to vast amounts of data, presenting a tremendous opportunity to unlock new value as they reimagine and integrate legacy systems for seamless collaboration.
Strategy and analytics teams are disconnected from their planning counterparts in inventory management or from the objectives of buyers and contract managers running procurement. The same problems exist for suppliers, so the complexity becomes amplified exponentially.
The result is decision makers who constantly make choices based on partial, outdated information with limited context or understanding of the compromises incurred by their decisions.
Real time intelligence is becoming a strategic necessity, as well as better access to data across the ecosystem. This is an imperative for shared awareness and collective intelligence across the full supply chain.
Historically the supply chain leaders’ priority was efficiency built on principles of ‘just in time’ and resource optimization. Since we recognize the VUCA features, but can’t control them, the focus has now shifted towards supply chain resilience and the creation of more fallback options.
The future of supply chain management for technology companies is intelligence-led so that data from procurement, operations, sales, logistics, and finance can be integrated to manage the constant trade-offs that companies face daily: agility versus security; costs versus sustainability, collaboration versus leverage.
The concept of decision-making as a competitive advantage is more relevant than ever as AI-driven insights allow companies to move from reactive “damage control” to proactive management.
The key to unlocking this transformation are "Intelligent Choice Architectures (ICAs)". These are AI-powered frameworks designed to augment human judgement and improve overall enterprise decision-making. Rather than nudging individual decision makers to make better choices, ICAs promise to reshape the entire decision environment.
ICAs augment the expertise of human business leaders–such as supply chain professionals–with the computational power of generative, predictive and agentic AI to provide the enterprise with human-centric AI. They embed decision intelligence across all parts of the enterprise to make data that was previously hidden, widely accessible, and increase its utility to decision-makers.
ICAs expose interdependencies between different choices. They do this by simulating complex scenarios and their cascading effect throughout the supply chain at a scale that humans alone cannot achieve. They also help eliminate biases in procurement decisions, supplier selection, and other critical supply chain actions.
But their value is not just reactive. ICAs are the cornerstone of a proactive, resilient, agile supply chain offering new choices and possibilities, presenting human decision makers with alternative, optimized choices that were unseen or not considered. Integration of AI and data analytics transforms ICAs into self-optimizing systems. They are moving the industry inexorably towards “autonomous supply chains”.
Netherlands-based global semiconductor maker ASML is a pioneer of ICAs. The company found that frequent last-minute fluctuations in demand threaten supply chain efficiency and effectiveness. It now uses digital simulations and probabilistic AI modelling to evaluate trade-offs in its complex semiconductor supply chain investments. ASML’s CIO René Botter says this approach helps it achieve a triple win: supply chain risks mitigated, better utilization, and increased returns on investment.
This and other examples of ICA adoption can be found in research conducted and published by TCS in collaboration with MIT Sloan Management Review.
Product innovation and rapid evolution across the spectrum from mobility and connectivity to energy and finance, mean that technology supply chains will become more, not less, complex. External factors, whether man-made or natural, remain challenging. Large companies with exposure to multiple risks need both mitigation and innovation strategies to secure their supply chains and make them fit for purpose.
By integrating AI agents–the building blocks of ICAs–into workflows and weaving them across their supply chains, companies can boost their ability to capture, share and act on data. This gives them new levels of visibility and improves the quality of their decision-making.
Better decision-making won’t eliminate the VUCA forces, but it does offer a competitive advantage in uncertain times and organizations that harness the right ICAs for this will set themselves apart in future.