Business Automation and Software Blog

Supply Chain Optimization During Disruption

Posted by Robert Baran on Wed, Oct 28, 2020 @ 11:00 AM

It’s no secret or surprise that the 2020 coronavirus pandemic has changed how businesses run, consumers shop, and suppliers deliver. What had seemed like a fairly balanced system of supply and demand has experienced significant ripple effects. Businesses who had previously relied on global sourcing are now working on supply chain optimization during these disruptions. Is it time to broaden supplier choices, or source more locally? How much inventory—from raw materials to finished products—should they stock? Supply chains are in crisis.

A recent report suggests that this supply chain crisis can be attributed to a lack of mapping and flexibility around the multiple layers of global supply chains, and a lack of diversification in sourcing strategies. Although no business can predict when a public health crisis might occur, conducting supply chain risk management strategies and the adoption of technology have shown to be vital when disruption occurs.

Building Risk Management and Business Continuity Strategies

We’ve seen some companies better manage mitigating the impact of these disruptions, and the key to their success has been in preparation. By developing and implementing supply chain risk management and business continuity strategies, these companies were able to diversify their supply chains from a geographic perspective to reduce the supply-side risks from any one country or region.

Supply chain risk management involves elements of human intelligence as well as data collection and organization. Businesses can then paint a clear picture of the fundamental structure of the supply chain as well as the key contacts, suppliers, and stakeholders.

Not only has this become essential to all businesses, it is also likely to remain a top priority after the immediate threat of COVID-19 begins to recede. With uncertainty around US-China trade tensions, a well-thought-out strategy provides businesses with an opportunity to assess how to best respond to future disruptions.

The Need for Digitizing for Supply Chain Optimization

Another thing the pandemic has highlighted is the need for Industry 4.0 technologies within manufacturing sectors to enable agile and flexible production systems and supply chains. With advances in areas such as analytics, cloud computing, and Internet of Things (IoT) devices, organizations can strategize and become more resilient to future disruptions through digitalizing their supply chain.

ERP systems and other technology designed for manufacturers provide organizations with improved visibility of the reliable local suppliers and their supply chains. The use of automated business systems supports efficient management of procurement and sourcing policy changes, improved distribution, and better decision-making based on relevant and accurate real-time data.

By accessing and relaying real-time information, insights, and trends through ERP, businesses can act instantly and decisively, increasing responsiveness, lead times, and overall productivity. This improved operational agility enables businesses to pivot more quickly and smoothly during the disruptions. In times of disruption, the power and benefits of a fully integrated ERP system cannot be underestimated.

What Does the Future Hold for Supply Chain?

Over the years, supply chains have predominantly focused on minimizing costs, reducing inventories, and driving up asset utilization. While these factors have made organizations more competitive within the marketplace, they have removed the buffers and flexibility to absorb disruptions and delays.

COVID-19 has stressed the interconnectedness of the global supply chain, highlighting the risks associated with a diversified manufacturing model, especially as it pertains to essential life-saving goods, such as pharmaceuticals, medicines, and medical instruments. The COVID-19 pandemic has illustrated many of the weaknesses of relying on cheaper global suppliers, showing that diverse and regionalized supply chains would better protect against global disruptions in the future.

There is always going to be a requirement for certain goods and raw materials to be manufactured and transported globally. However, localized supply chains in essential industries such as medical equipment, pharmaceuticals, and personal protective equipment could provide security for governments and local manufacturers.

Are you struggling with supply chain optimization? Access the smartest information, insights, and trends about your business with the right ERP and distribution software for your organization’s needs. Get started now with the help of our software experts.

Topics: supply chain optimization