Supply chain resilience in an unpredictable world

Amid the COVID-19 pandemic, the world cannot afford for manufacturing and distribution to grind to a halt. From the food on our shelves to medical necessities, these sectors are at the heart of our economy and must keep going at all costs.

Many organisations are used to managing known risks disrupting the supply chain, especially where they can predict the likelihood of occurrence and magnitude of impact. But for that special class of disruption, the low-probability, high-impact events like natural disasters, pandemics and other upheavals, organisations don’t know how to mitigate the risk and successfully manage their supply chains and are now trying to find their way through the minefield of issues and challenges with no clear solution.

The key to resiliency

Many analysts and consultants point out that supply chain resilience is going to be the main goal, and many businesses are planning to increase resilience across their supply chain. Resiliency is focussing on the ability of a supply chain to cope with unforeseen events with minimal disruption and quickly recover after it occurs. The key is continuity of supply, production and delivery of products and services to customers.

For some time now, strategy has dictated that securing supply is the number one priority, and relationships can be built from that, working towards, and achieving common goals. Supply chain control is also based on transparency and availability of information – a business can work around issues provided that they have the information early enough. Single local but particularly overseas supplier networks are always at risk of unforeseen events controlling delivery, often with little or no alternative workarounds. The move to a dual or global/local emergency supplier model can be critical to meeting the supply chain demands should any further disruptions occur.

The rush to digital technologies

With global lockdowns and ongoing disruptions driving increased cost and delivery pressure, it comes as no surprise that 70% of businesses experienced supply chain disruptions over the last few years. This was a key finding from SYSPRO’s latest research into disruptions caused by the COVID-19 pandemic. Pre-pandemic technology investments and outdated business models had been partly to blame for these ongoing challenges. In response to pressures, businesses have invested in short-term technology solutions to address the immediate impact of the pandemic. Even though 65% of businesses invested in business systems aimed at meeting order requirements and 64% of businesses invested in business systems to manage inventory control, the supply of inventory was not protected.

The pandemic was a wake-up call for digital laggards. It did not take long for business leaders to realise how technology could improve business operations. According to IDC, there is now a renewed focus on technological innovation with many organisations planning to accelerate their digital transformation efforts and redress their technology deficiencies

When asked about technological investments, 47% of businesses had invested in sensors and IoT networks.  At the same time, only 20% of businesses had invested in data analytics tools to process and analyse the data that they were collecting, while only 5% of businesses had looked into AI and ML to draw any long-term benefit from the data collection. These technologies help with sourcing broader, better data and predicting useful business insights.

Technology systems, such as Enterprise Resource Planning (ERP), are a critical element in business systems to ensure the base planning, execution fact and transactional data are accurate, ensuring a strong platform fuelling analytics. ERP certainly improves the situation by giving manufacturers clearer visibility of reliable local suppliers and their supply chains. Through ERP integration, representatives from different supplier companies can interact on a single platform, optimising the flow and availability of information and driving delivery reliability

If there is surplus stock in the supply chain, the surplus could easily be sold to neighbouring organisations – after all, the function of a manufacturing organisation is to fulfil whatever is identified as a shortage in the economy.

How to manage future supply chains?

Manufacturers are concerned about disruptions and looking to improve the resiliency of their supply chains to handle both global and local disruptions. A supply chain resiliency strategy aims to maintain performance measures during potential disruptions including fulfillment of orders, delivery reliability, and customer satisfaction.

Companies need to review old practices and re-assess how technology can be used to enable and innovate supply chain management processes linking collaborative teams to reach new levels of efficiency and resiliency in manufacturing products. But it will also require solid logical thinking by business leaders to ensure the critical risks are foreseen as best as possible and mitigation measures are maintained.

With digital technologies, organisations can use data to maximize the visibility of demand, inventory, capacity, supply, and finances. Companies with digital platforms, accessible data and analytical capabilities were able to respond more quickly, accurately, and successfully to COVID-19 disruptions.

It seems the pandemic may lead to major changes, such as governments intervening and regulating “key supply chains”, and businesses moving to an era of localised or regionalised supply chains. What will help companies recover is using technology to provide better and faster decisions at digital speed.

The organisations likely to succeed will make the decision to invest in the technology, data, processes, and people that improve efficiency, reduce costs, modernise processes, and speed up decision-making so their supply chains become more adaptable and faster to course-correct based on how conditions change.

By Doug Hunter, Manager: Customer and Ecosystem Enablement for SYSPRO Africa

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