An Ernst and Young survey of supply chain executives shows that 72% of respondents have experienced a negative effect due to pandemic disruptions.
The cost of these disruptions has been high and varied. But supply chain professionals aren’t strangers to disruption. Pandemic aside, organizations average $184 million in annual losses related to global supply chain disruption.
Because disruption is par for the course, supply chain managers and stakeholders spend a good portion of their time strategizing to avoid risk, withstand impact and get ahead of the waves. But supply chain technology and industry expectations have advanced greatly. In terms of strategy, many companies need to go back to the drawing board. Others never had a true strategy to begin with – but they can’t go forward without one.
Whichever point you’re starting from, let this observation from Forbes be your guiding mantra:
“Organizations best able to manage the pandemic were the ones that embraced digital transformation.”
Disruption is going to happen. But it’s often recoverable. Minimize the impact of negative effects with a new strategic plan.
Strategies for Mitigating Supply Chain Disruptions
Develop a 360-degree understanding of where you are today and where you want to be in three to five years – and beyond. Then, chart your way.
You Are Here: Figure out where you are today
Assess your current supply chain processes, technology and infrastructure. Important questions include:
- Do you have the resources (people, technology) you need to be successful considering today’s challenges?
- Do you have visibility beyond your second tier of suppliers so you can respond quickly to issues in the chain?
- Do you routinely assess your supply chain? Interos reports that most supply chain professionals do not.
- Do you use primarily manual processes in your supply chain operations or do you have a high level of automation in place? Most supply chain professionals still assess operations manually, according to Interos.
- What are your current risks and vulnerabilities? How have they changed due to technology and digitalization? Interos identifies cyber risk, financial risk, environmental and social governance, regulations, operations (natural disasters) and geographic/geopolitical risk as top concerns.
- Where do you regularly have bottlenecks, delays and other concerns in the supply chain? Do you have the technology in place to clearly identify those concerns?
- What disruptors might affect, or already regularly affect, your business? How do you respond today?
If this list has you thinking, “This already looks like a massive undertaking that will result in unrealistic goals and strategies we’ll shelve for never,” keep this in mind: Incremental changes can easily give you greater visibility and improve your supply chain resilience. Right now, you’re just getting the lay of the land.
X marks the Spot: Figure out where you want to end up
Today, digital transformation doesn’t have a true “end point.” It is about evolving as new technologies, opportunities, risks and expectations arise. The words of our time are agility, flexibility, scalability and adaptability. Still, you must set targets to reach within certain timeframes, define the outcomes you expect once you’ve reached them, and then chart the way there.
For example, if you cannot easily identify the bottlenecks and delays in your supply chain, you might plan to have greater insights into that activity within six months. In the next step, charting the way, you’ll identify advanced data analytics as the method. Then, you’ll choose which platform is right for your business.
In terms of disruption-minded goals, you might aim to have better real-time visibility to catch a bottleneck or delay when it happens. In charting your way, you might identify an automated procure-to-pay process that digitalizes and creates instantaneous, actionable data out of trade documents, as well as the Internet of Things (IoT) technology, as your methods. Then, you’ll choose the appropriate tools.
Chart Your Course: Strategize to reach the X
Once you know where you are and where you want to go, determine how you’ll get there efficiently and effectively. You want to plan carefully around any investments you’ll make, particularly with technology. You want to make the best choices for maximum impact.
Digital transformation is at the core of many new supply chain strategies. To be responsive and agile in real time, you need supply chain 4.0 technologies such as the cloud, analytics, artificial intelligence (AI), automation and IoT. Gartner reports that, by 2024, about half of supply chain organizations plan to invest in AI or advanced analytics.
Here are a few examples of resilience-minded goals and their potential courses:
According to Interos, most supply chain experts say visibility is more important now than it was two years ago. Technologies like IoT devices and platforms that automatically aggregate and analyze supply chain data from these devices and other sources can give you real-time visibility over your operations. An automated procure-to-pay process, as with Conexiom’s Platform for Supply Chain, means pertinent information is immediately processed and known, rather than waiting to be opened and understood.
Limited supplier relationships amid shutdowns, shortages and shipping issues have caused a lot of headaches. To solve this, organizations can work to diversify suppliers, localize supply and build in supplier and inventory redundancy. Inventory analytics prove helpful in determining the best safety stock. If a supplier shuts down or runs out of their own inventory, the impact to operations will be minimized.
- Improve process efficiency
Manual and inefficient processes keep businesses from responding quickly and appropriately during disruption. Analyze supply chain and operational data to find improvement opportunities and introduce automation where most effective.
Pack Your Supplies: Choose the right resources and technology
With your objectives in place, it’s time to choose the supplies that will help you get there. Just as you wouldn’t want to journey through a jungle without strong bug spray, you don’t want to pursue digital transformation and greater resilience without the right tools. Your choices must account for your business, culture, strengths and weaknesses. They must address actual needs and fit into actual workflows.
What type of technology would best serve your needs? Which automation platforms? Do you need to add expertise to your supply chain management team, whether that’s additional hires or additional training on new technology and strategies?
Then, where should you begin? A solution such as Conexiom’s Platform for Supply Chain is a simple, effective place to start for companies that rely on manual processes to assess and manage their supply chains. This solution automates the procure-to-pay process, processing trade documents faster so you have visibility over this section of the supply chain in real time. And if you have staff manually processing such documents, you’re more vulnerable to disruption and delays.
Close the digital automation gap in your supply chain.