SUPPLY CHAIN BEST PRACTICES
What Are We Optimizing For?
Taking action is rarely the hard part. Defining success is.
Procurement decisions increasingly involve several objectives at once: cost, continuity, resilience, sustainability, innovation, working capital and risk.
The problem is not that organizations lack data about these things. The problem is that the objectives can conflict.
A sourcing strategy that maximizes savings may increase concentration. A strategy that maximizes resilience may add cost. A strategy that protects capacity may reduce flexibility elsewhere.
Optimization starts with an objective. So does AI.
Before asking a system for a better answer, the organization has to decide what better means.
That is why decision architecture matters. The objective, constraints and acceptable tradeoffs determine the answer long before the algorithm does.