Supply chain disruptions are nothing new. But lately, it seems like they are becoming more of a norm than exception.
The recent images of the enormous Ever Given container ship wedged in the Suez Canal are a case in point. As manufacturers have scrambled to deal with complications related to trade wars and the COVID-19 pandemic, a single ship stuck in one of the world’s busiest waterways for less than a week may have added to all of the other pain by causing months of disruptions to global supply chains.
All of this volatility has rightly led many manufacturers to reconsider supply chain resilience. Rather than simply focusing on finding the lowest cost for the necessary level of quality, they are taking a closer look at risks, including how to value and offset different risks.
The problem is that gaining a clear understanding of the total supply chain and how to balance costs and risks is tricky because there is a lot to consider. And taking seemingly easy steps to reduce risks, such as putting more inventory in place, may not actually be the smartest option.
How can technology help?
Most manufacturers understanding of their supply chain costs start and stop with landed costs. That means they most likely aren’t aware of other costs that add up quickly, such as the costs of the resources who are dealing with exception messages of issuing POs that are coming out of the materials requirements planning (MRP) system. And they may not even know how many exception messages are generated. Without clearer insights across the various layers of the supply chain, balancing costs and risks becomes a guessing game.
That’s where digital technology comes in. Having access to the right supply chain data at the right time is game changing when it comes to supply chain management. At Dploy Solutions, we think about it in terms of a “supply chain control tower” that enables decision makers to see data that is coming from different parts of the supply chain to provide a better understanding of what’s happening in the business so you can pivot accordingly.
Of course, technology isn’t a panacea. In addition to knowing what’s happening, it’s important to take steps that enable you to be more flexible, such as adding new suppliers in different geographies. But the sooner you start building a digital foundation for managing your supply chain, the sooner you can potentially take advantage of things like modeling and predictive capabilities to drive ongoing supply chain optimization.
The key to supply chain digitization success is starting small
It’s important to remember that even with the right technology, a resilient or highly efficient supply chain isn’t a given. Many technology vendors and supply chain experts talk about the importance of capturing as much data as possible and then using tools like analytics to understand what’s happening and make better decisions. But in reality, that’s usually a recipe for becoming overwhelmed and potentially even more confused.
Rather than worrying about the latest buzz around things like big data or Industry 4.0, it’s better to take a pragmatic approach and focus on a few key items, prove that they are helping and then take another step and build upon them and so on. In the near term, that helps you solve your most pressing challenges first. In the long term, it sets you up for success using things like predictive analytics or AI because you will have learned how to pick the right kind of data for the issues you are trying to solve.
Up ahead: Greater flexibility to navigate around supply chain challenges
There’s no denying that overhauling your supply chain approach takes a lot of work. At the same time, you have to navigate challenges related to finding the right people to help or even getting data from suppliers in different countries. But in the end, a good strategy is the only way to ensure you can keep disruptions from global volatility to a minimum while also keeping costs in check so it’s worth doing the work.
Ready for a deeper dive into the role that technology plays in advancing manufacturing and supply chain operations? Listen to Ken Koenemann, TBM Consulting and Dploy Solutions VP of Supply Chain and Technology, discuss key issues from this post and more with Supply Chain Digital on the Supply Chain Podcast, “The Role of Technology in Advancing Supply Chain Operations.”
MANAGING DIRECTOR, GLOBAL SUPPLY CHAIN PRACTICE
TBM CONSULTING GROUP
Brian helps clients make operational improvements, reduce working capital and improve service levels while lowering the overall cost to serve. Brian is instrumental in helping operations and supply chain clients to navigate the emerging technology landscape by working with them to leverage enabling technologies to improve operational performance and profitability.