Accenture, MIT work toward supply chain stress test

Accenture and the Massachusetts Institute of Technology (MIT) are co-developing a global test to assess potential supply chain disruptors.

The professional services provider and the university aim to jointly create a supply chain resiliency stress test for assessing operational and financial risks created by major market disruptions, disasters, or other catastrophic events. The effort is inspired by the financial services industry stress tests that became compulsory after the 2008 financial crisis.

Leveraging Accenture’s expertise in supply chain, operations and analytics, and MIT’s research and capabilities in data science, the stress test will quantify supply chain resilience in a single resilience index. The test will be designed to enable companies to quickly identify potential points of failure in their supply chain, assess their related financial exposure, and define appropriate mitigation strategies and actions. 

Because the scenarios are standardized, the intent is for organizations both in the public and private sector to have the ability to benchmark their resilience against peers and competitors across industries. The test is designed to be scalable and adaptable to changing market conditions and customer expectations as supply chains continue to evolve. Global food company Sigma, through its European subsidiary Campofrio, is among the companies working with Accenture and MIT to implement the stress test on its supply chain and provide input and use-case insights to its development.

The stress test begins with the creation of a “digital twin” of an organization’s supply chain, which enables subsequent modeling of various combinations of scenarios and impact that would significantly disrupt the organization’s supply chain capabilities. Such scenarios could include sudden spikes or drops in demand, the shutdown of a major supplier or facility, scarcity of a critical raw material, or disruption of a key port. 

The stress test will be designed to identify both the time it would take for a particular node in the supply chain to be restored to full functionality after a disruption (i.e., “time to recover”), and the maximum duration the supply chain can match supply with demand after a disruption (i.e., “time to survive”).

“The COVID-19 pandemic exposed considerable weaknesses, resulting in severe disruptions in supply chains around the globe, shedding light on the need for intelligent supply chains that prioritize transparency, anticipate new risks and enable faster decision-making,” said Kris Timmermans, senior managing director and Accenture’s global supply chain & operations lead. “Our stress test enables companies to run more than 40 scenarios at one time, providing unprecedented visibility into where and how their supply chains will be impacted during a major disruption.”

“There is a critical need for a global stress test standard to help prevent shortages of vital products and supplies from happening when the next disaster strikes,” said MIT professor David Simchi-Levi, who has published extensively on the need for consistent approaches for identifying and mitigating supply chain risks. The test will allow companies to understand the resiliency of their supply chains, recognize weak links and act quickly to balance the impact of unprecedented events on customers, operations and finances.”

“Managing the impact of COVID-19 required high effort on our side, and in the process, we uncovered several weaknesses in the supply chain we wished we had identified more proactively before,” said Fernando Ibarra, supply chain director of Sigma in Europe. “Working with Accenture and MIT on this groundbreaking project will be key to recognize other potential weaknesses and continue increasing our supply chain resilience.”