3 Ways to Bolster Your Supply Chain
Organizations across industries have spent decades optimizing supply chains for maximum profit, but the pandemic highlighted almost overnight how little attention these companies have paid to resilience. As production and mobility of goods experienced historic disruptions, demand quickly exceeded supply and forecasts have failed to produce reliable information for months.
We're all learning, and there's no single action that can prevent another supply chain crisis like the one brought on by the pandemic. However, the following measures can mitigate the impact of the pandemic and any other catastrophic disruptions.
1. Optimize the product mix. The pandemic didn't just change the way customers bought items—it changed what they bought. Must-haves took center stage as luxuries fell by the wayside, and this shift should prompt you to look carefully at your own product mix.
Artificial intelligence (AI) and data-driven solutions can help you break down your product catalog into high-value, highly reliable products all the way to low-value goods with highly sporadic demand. This process helps production and operations managers plan better and decide which SKUs to eliminate or localize to certain areas or seasons.
2. Achieve end-to-end visibility of operations. If one broken link in the supply chain can stall the entire system, you need to reexamine the flow of materials and goods from sourcing and transformation to distribution. The goal is to create an anti-fragile system that can withstand numerous significant impacts.
Tie real demand to actual, end-to-end capacity, which incorporates constrained resources, dependency on these raw materials, delivery lead times, and even the mode of transportation. Use various brokerage firms to ensure non-reliance on singular delivery partners. Chalk out alternative modes of transportation in case one method experiences a disruption, such as the nearly week-long blockage of the Suez Canal in March 2021.
3. Invest in technology to tie in existing data that captures demand, capacity, and supply behavior. In 2021, there's even less room for manual data capture. Physical trucking logs, for example, are heavily reliant on humans to manually translate information into digital data. These error-prone processes cause discrepancies and dirty data problems, which ultimately impact decision-making.
Today, industrial businesses are continuously improving their material flow and free cash flow strategies. Failure to improve leads to losses in revenue, market share, or customer business.
Digital transformation and automation, however, have fallen short on expected output and bottom-line gains. The few successful projects have failed to scale globally, and the gains have been unsustainable.
Executives are no more prepared to make the right decisions around capital expenditures and working capital today than they were before. This has led to larger unsold inventory piles, more operational costs, and unfulfilled customers. In addition, AI-based software can optimize routes and shipment of goods.
If your employees are constantly crunching numbers, their time isn't well spent. To mitigate the supply chain risks facing 2021 and beyond, you'll need to invest in the kinds of time-saving technology and data-driven solutions that will help your organization make better-informed decisions and plan for the future.