Opinions expressed by Entrepreneur the collaborators are his.
Proper supply chain management is critical to the smooth running of the business, agility and profitability. Beyond coordination, resilience is a key quality needed for supply chain management.
Covid-19-related supply chain disruptions have affected most industries. A large number of companies around the world experienced problems during Covid-19, which affected shipping time, costs, efficiency and revenue. These impacts highlight the importance of building a supply chain that can withstand a storm and recover quickly.
Technology is key to this. There is a wide variety of technology that can help supply chain resilience. Let’s explore the global supply chain of today’s world and how you can increase your strength and resilience.
Supply chain challenges in a post-pandemic world
Supply chain management can be tricky, as a minor issue with a chain link can affect the entire network. Unfortunately (or fortunately), Covid-19 has exposed a lot of vulnerability in supply chains as companies succumbed to the pressure of supply, demand, and service capacity shocks.
Although restrictions are being reduced and borders are reopening around the world, there are a number of challenges, such as labor shortages and the availability of equipment. However, in the midst of all this, consumer demands continue to evolve. With the acceleration of e-commerce, customers are used to (and expect) fast delivery and hassle-free experiences.
Companies have been transforming their processes to build more resilient supply chains and stay competitive. Many companies are regionalizing their supply chains to respond to disruptions. Others have begun to explore supply chain technologies to maximize operational efficiency and minimize risks.
Related: New strategies to deal with your supply chain and pandemic-related disruptions
Digital transformation to build a resilient supply chain
As companies adapt to the new normal, they need to prepare their supply chains for the future by reducing complexity and uncertainty. Rising digitalization and advanced technologies will play a critical role in supply chain management. Through the digital transformation, companies can achieve several benefits, including:
- Increased visibility: With the help of the blockchain, advanced tracking solutions, and enterprise resource tracking and planning (ERP), you get better visibility within a supply chain. With high visibility, you get a complete view of your moving inventory, and you can apply proactive risk mitigation measures when needed.
- Improved collaboration: Building close relationships with suppliers ultimately improves transparency along the chain. By continuously collaborating with supply chain participants, you can quickly coordinate processes and respond to change. This requires technology to collect and share data at every step.
- Predictive skills: Data analysis, artificial intelligence (AI), and machine learning (ML) will provide you with predictive capabilities to keep you at the forefront of supply chain risk management. For example, you can adjust inventory decisions by predicting possible interruptions.
Related: Who and what drives your supply chain management?
So how do you get supply chain resilience, or where should you start? If you haven’t changed your processes yet, now is the time to re-evaluate your operations. Here are some key strategies to help you make your supply chain more resilient.
Identify your vulnerabilities
First, evaluate your current supply chain to identify gaps and vulnerabilities. Examples of potential vulnerabilities include:
- Lack of transparency and visibility along the supply chain
- Excessively manual processes, without technology
- Vendor dependency or specific locations
Don’t forget to evaluate your vendors as well: they will carry risks that you need to consider.
Diversify your supply or manufacturing network
If you rely heavily on medium or high risk partners, diversify your network to reduce that risk. For example, the repercussions of the US-China trade war have pushed some companies to expand their manufacturing to Southeast Asian countries such as Vietnam or Indonesia.
Of course, it will take time and money to diversify your network and change your logistics strategies. However, by relying less on a single location, you can make your supply chain more resilient.
Create inventory buffers
Another popular strategy to promote supply chain resilience is to create inventory reserves. Covid-19 has affected delivery time. Inventory buffers help you deal with this and prevent customers from leaving you because of out-of-stock products.
Technology can help with predicting inventory requirements.
Related: Emerging supply chain trends that entrepreneurs need to know
Scale-based technological solutions
Investing in digital technologies is crucial to controlling and optimizing supply chain resilience. Here are some ways to incorporate technology into your supply chain:
- Chatbots and Robotic Process Automation (RPA) to automate repetitive tasks
- Business Resource Planning in the Cloud (ERP) for better visibility and efficient data collection
- Boards for real-time data access and tracking of essential metrics
- Predictive analyzes to identify risks and take proactive measures to address them
- Data analysis to help predict problems before they occur, such as identifying stock issues or individual vendor issues
- Big data to help with:
- Quality control
- Real-time deployment
- Weather patterns
- Prediction and planning
- Warehouse efficiency
- Supply and demand of inventories
- IoT and wearables in stores to help make decisions
Successful supply chain management will continue to include emerging technologies that drive efficiency and automation. Here’s what I hope to see in the future of supply chain management:
- Distributed inventory: Distributed Inventory Flow Forecast (DIFF) predicts the flow of materials, helping companies maximize the rate of order fulfillment and maintain inventory levels.
- Autonomous mobile robots (AMR): While warehouse management systems continue to handle tasks such as scheduling loading / unloading, AMRs may begin to emerge as a method to improve collection processes.
- Delivery of driverless vehicles and drones: Especially important in times of labor shortages, driverless and drone-free delivery options are powerful solutions. This is also great for cost management through delivery to remote and hard-to-reach locations.
- Blockchain: Moving across borders can create transparency issues. Billing, planning, shipping authorization, contracts, volume management and more could be transformed with the use of the blockchain.
- 3D printing: Replicate and produce spare parts, eliminating the need to maintain stock in warehouses pending orders. An agreement with a local 3D printing business could print and deliver the piece quickly.
In today’s changing world, building supply chain resilience is more important than ever. Having the ability to cope with disruptions, continue with regular activities, and keep growing will be supported by a wise selection of technology and implementation decisions.