Supply Chain: More Resilient and Agile After COVID-19
COVID-19 put a kink in the global supply chain. And it exposed weaknesses with the power to halt the flow of business. Now, as the world takes steps to define a new business-as-usual post-pandemic, manufacturers are rethinking their supply chain.
As a result, instead of relying on overseas suppliers, companies are exploring opportunities to create a more robust and sustainable supply chain closer to home. One with the flexibility to meet changing production needs, and the accessibility to do so with greater reliability.
Now, manufacturers must begin the process for establishing a more resilient supply chain that can endure the unexpected and continue to thrive during times of uncertainty.
To build such a supply chain, a manufacturer’s plan should include three essential components:
- Improve supply chain visibility
- Partner with suppliers that can quickly scale production
- Prepare an action plan for transforming to a more digital ecosystem
Gain Real-time Supply Chain Visibility
Real-time visibility is one of the most sought-after ideals for optimizing the flow of goods and services. For one, it enables supply chain managers to track products from the source of raw materials to the final destination. Also, it empowers companies to seamlessly adapt to disruptions and serve customers with greater confidence.
For example, Forbes published a recent Oxford Economics survey of 1,000 supply chain executives. It found that 49% of Supply Chain Leaders can capture real-time data insights and act on them immediately. 51% use AI and predictive analytics to capture insights. This enables Supply Chain Leaders to react in real time to changing conditions. From widescale disruptions to individual customer complaints.
Of course, achieving this degree of end-to-end visibility has always been a challenge—long before COVID-19. Now, faced with the reality of critical vulnerabilities brought to light by the pandemic, learning how to restructure relationships with suppliers will help companies to better understand the impact of disruptions and react accordingly.
Build A Transparent Supply Network: Top 3 Tactics
Whether you opt to reshore or rely on overseas suppliers, approaching venders as part of a supply network rather than a chain can help to increase visibility. Networking will help to build collaborative, transparent relationships to facilitate proactive decision-making.
Therefore, to help increase visibility with your suppliers, consider these three tactics:
- Understand the pain points of your customers, internal teams, and suppliers.
Prepare a process for gathering pain points that impact your customers, internal teams, and suppliers. For example, set a cadence for distributing a quarterly survey to establish an open line of communications. By understanding specific pain points, you can react quicker and more effectively to mitigate risk to your supply chain.
- Invest in technology and systems to optimize communications and provide easy access to critical assets.
COVID-19 served as a catalyst for many businesses to rethink their supply chain and relationships with suppliers. For example, optimize methods for communicating critical assets and intel between suppliers, internal teams, and critical stakeholders. Invest in technology and systems to create greater transparency and make it easier to communicate essential information.
- Set Key Performance Indicators (KPIs) for success.
Define terms and conditions of a successful vendor relationship. First, identify key suppliers. Then, set clear KPIs to enable real-time tracking of inventory, services, and production capabilities. Measure them on a regular basis. This will provide a more transparent view of suppliers’ flexibility to scale production as needed.
For more information about supply chain KPIs, visit Logistic Bureau’s blog, KPI Key Performance Indicators in Supply Chain & Logistics. You’ll learn best practices for setting KPIs, tips for implementing a hierarchy structure, and additional resources.
Partner With Suppliers That Can Quickly Scale Production
Headlines announcing crisis-level disruption to the heart of electronics manufacturing in China due to the Coronavirus surfaced on CNBC as early as February. Leaders in the industry explained that many consumer goods manufacturers in the U.S. could miss holiday deadlines. Because with factories closed in China, they could not manufacture prototypes, complete testing, or ramp up to full production. As a result, the pandemic created a great deal of market uncertainty that individuals and industries are still struggling to navigate.
For example, many consumers are already experiencing decreased disposable income. Which makes it difficult for consumer goods and electronics manufacturers to predict with confidence production volumes needed to meet the upcoming holiday season.
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Therefore, manufacturers must consider suppliers that can quickly scale production as market demands change.
Minimize costs with a flexible production model
Choose suppliers who can help minimize initial costs with an economical, flexible production model. This can help get back on schedule for the holiday season while minimizing the risk of uncertain demand. Look for suppliers who have the ability to quickly ramp up if demand surges and support lower volumes at price points that don’t damage profits if demand does not return to normal.
For example, consider Xcentric, a leading rapid manufacturer in the U.S. We provide first parts within a few short weeks and can quickly scale up to supply hundreds of thousands of parts per year. We can also bridge the gap to millions of parts per year to help mitigate risk.
Digitize Your Supply Network
Digitizing your supply chain and transitioning from a traditional, enterprise-focused operating model to a digital ecosystem is a major initiative. It will require substantial investment and restrucutring of your organization. We are including it, because the potential benefits to your supply chain merit sharing the information.
Managing a multi-tiered supply chain will always present a challenge. Still, in a world that runs on technology, preparing an action plan for creating a digital ecosystem and digitizing your supply network can help to build a more robust supply chain.
A traditional business operating system (BOS) functions at the enterprise level. It is a hardwired business model of processes and methods of communication. Alternatively, a network BOS is fully digital. Agile and flexible, it provides an optimized, fully accessible digital ecosystem.
What is a digital ecosystem?
A digital ecosystem uses technology to connect your supply chain. Suppliers, customers, stakeholders, internal teams, applications, third-party data providers, and digital assets. All connected via a network-based system to ensure your supply chain function in any global climate.
Digitizing your supply network helps to create a more resilient supply chain by:
- Optimizing all members of the ecosystem with real-time visibility and flexibility to connect with all suppliers on the network
- Providing a single point-of-contact and version of the truth; everyone connected has access to the same information
If you would like to learn more about digitizing your network, please visit Supply & Demand Chain Executive’s post, Intelligent Digital Ecosystems: How to Digitize Your Supply Network. The post does a great job explaining each component of a networked business operating system.
Conclusion and Key Points
COVID-19 revealed a shockingly fragile global economy. And, it served as a catalyst for many businesses to rethink their supply chain. The unexpected disruption impacted businesses of all sizes in nearly every industry and country. In fact, Fortune reported that 94% of Fortune 1000 companies felt the disruption caused by the Coronavirus.  Conversely, the pandemic also showed us how quickly we can adapt to a virtual environment.
Go beyond COVID-19 with a more resilient supply chain. One that can sustain unexpected disruption and thrive in uncertainty. Consider implementing these tactics:
- Increase real-time visibility into your supply chain. Take time to understand pain points of your customers, internal team, and suppliers
- Set KPIs you can measure on a regular basis
- Invest in technology to optimize communications and provide easy access to critical assets
- Partner with suppliers that can quickly scale production. A flexible, agile supply chain will respond quickly to fluctuations in market demand
- Digitize your supplier network. Create a digital ecosystem that connects customers, suppliers, and critical stakeholders