Supply Chain Transformation: Optimize and Reduce the Impact of Ongoing Disruptions
By now, just about everyone—from businesses to consumers—have felt the side effects of the ongoing and significant disruption to the global supply chain. In 2021, we experienced product shortages on everything from toilet paper to microchips. And, consumers and businesses alike have battled myriad issues, including empty grocery store shelves, long lead times for purchased products and shipping delays.
Amplified by the pandemic, these issues highlighted the lack of agility within the supply chain to meet the dynamic demand and respond to the regulatory, consumer and environmental impact. Now, moving into 2022, the hope was that most of these issues would dissipate, and the global supply chain would get back on track. However, indications show that supply chain bottlenecks will continue well into this year and beyond—it’s a viewpoint we share and is reflected in the ongoing conversations we’re having with customers. Businesses continue to deal with the impact on their day-to-day operations, and it’s forcing many executives to examine new solutions, technology and processes to help minimize the impact and move their supply chains from a cost-cutting mechanism to a competitive advantage propelling modernization of people, process and technology.
Given the predicted slow recovery of current supply chain woes, what can you do in the near term to address the problem—and avoid roadblocks in the future? Here are three areas of focus that we’ve identified that can help you optimize your supply chain and move the needle:
Automate Tedious, Manual Processes
Despite widespread digital transformation efforts over the past two years, there are so many areas of the supply chain that remain highly manual—for example, packing freight, managing purchase orders and approving requisitions. Automating even one or two manual processes can take some pressure off overworked resources, while also freeing up time your teams can devote to more meaningful tasks. This is especially valuable as companies face not only supply chain challenges but staffing issues as a result of the Great Resignation and ongoing labor shortage.
With so many supply chain processes ripe for automation, it can be difficult to know where to start. If you find yourself in this position, consider low-hanging fruit such as invoicing, accounts payable and accounts receivable processes, as well as any workflows related to uploading forecasts or other external data to ERP systems. Implementing automation in these areas can provide you with quick, easy wins that will show business leaders the ROI that automation can bring.
Rightsize Your Inventory
For several decades, “just-in-time” inventory—where companies keep only the amount of inventory in-house that they need to meet current customer demand—has been the de-facto choice for inventory management. But, with today’s supply chain disruptions and delays, this approach is no longer viable.
To remain agile and navigate the challenges of long lead times and shipping delays, organizations must move to “just-in-case” inventory management. This approach allows companies to have enough inventory on hand to meet current customer needs, while also retaining a bit of a surplus to meet volatile changes in demand. The trick here is making sure inventory levels are not too low and not too high, because either extreme can negatively impact cash flow, your ability to meet customer demand and, subsequently, customer satisfaction.
Striking the right balance requires visibility into inventory on hand, lead times from suppliers, production lead times and an understanding of when goods can be moved. Attaining this level of visibility requires a data and analytics strategy that eliminates traditional data siloes between functions—such as between your procurement, production, warehouse, logistics and your sales/eCommerce front-end. Even incremental changes in this area can make a huge impact, enabling you to rightsize inventory levels while improving demand planning. Ultimately, you want to be in a position where you’re not refusing customer orders or tying up cash in excess inventory.
Reassess Your Supplier Strategy
We continue to see many organizations relying on one supplier for all their product needs. But with today’s challenges, this means that if your only supplier can’t deliver the goods you need, when you need them, then you can’t fulfill customer transactions. Even if it’s not your fault, your business will still take the hit from a customer satisfaction standpoint. If you’re in this boat, consider moving to a multi-sourcing strategy, so you can obtain the materials and goods you need from alternative suppliers, in the event your primary partner can’t deliver.
Additionally, visibility into supplier relations—whether your company is single- or multi-sourcing—is just as important as it is in the inventory management process. Today more than ever, it’s important to know where your raw materials and finished goods are coming from, where products are within the supply chain cycle, and when shipments from your suppliers will arrive. Supplier visibility will not only help you keep your supply chain moving along without interruption and eliminate risk, but also help you meet customer expectations and improve downstream processes as well.
Two ways to achieve this is to open the lines of communication with your partners through a supplier digital exchange and technologies like blockchain, IoT and AI to help you facilitate trade and document supply chain movements and traceability. Better collaboration and transparency will build trust and improve visibility across your supplier ecosystem, while also helping you optimize supply chain processes.
Putting Your Stamp on the Supply Chain
You may not be able to stop product shortages, long lead times and shipping delays, but you can optimize supply chain processes to alleviate some of the pressures on your team and minimize the impact supply chain disruption has on your business. Starting with these three areas can help you transition from where you are today to where you want to be—a company known for its digitally-focused, agile and robust supply chain that continually adapts to overcome the external factors that challenge it.
To learn more about overcoming some of today’s biggest supply chain challenges, check out our new on-demand webinar: How to Overcome Supply Chain Bottlenecks with Digital Transformation.
Megan is the Content Marketing Manager at Navisite with more than 10 years of experience helping brands discover and tell their stories. From working at a global non-profit organization to boutique marketing agencies in Chicago, she champions the power of storytelling across all industries.