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Build your resilient procurement strategy
Have you ever faced a situation where a commercial team has made a business commitment, but the back-end supply chain is not yet established?
In these cases, the onus is often on the procurement department to ensure uninterrupted supplies. Unfortunately, examples like these are becoming more common, as business requirements change and commitments to sustainability increase.
Under the circumstances, procurement professionals are opting to shift arrangements to fix the gap. Altering prioritization of a company's product mix, sharing long term forecasts, or onboarding alternate suppliers, are common short-term tactics.
However, to build a resilient procurement strategy, companies also need to tackle these situations from a mid- and long-term perspective.
Involving procurement professionals during the design phase of the product can help ensure the supply base that’s needed for the product’s success.
If a restaurant chain is looking to add a new item to the menu, getting the procurement team involved early can help to work with suppliers to set key KPIs upfront. Even during a crisis, steady and hassle-free supplies require well-coordinated lead times, minimum order quantities, and an adequate number of suppliers to be qualified upfront.
Companies need to go back to the drawing table on make-versus-buy decisions for key items and products.
Semiconductor shortages have taken the entire industry by storm and companies are considering setting up their own semiconductor fabrication plants. It shows how previous decisions to "buy" products may not hold up in a shortage environment.
Even in less supply-tight environments, make-or-buy decisions can and should be continually reexamined. If a company is looking to venture into a new category, it may go for a "buy" strategy with a third-party manufacturer to test and learn about the new category’s performance. If the product does well, the company could choose to switch to a "make" strategy.
Supplies are currently the weakest link in the chain for most companies. Procurement professionals looking to build a resilient supply chain need to take this as an opportunity to revise corporate strategies with a long-term perspective in mind.
Source: https://www.supplychaindive.com/news/supply-shortages-six-tips-build-resilient-procurement-strategy/606658/
Read MoreIn these cases, the onus is often on the procurement department to ensure uninterrupted supplies. Unfortunately, examples like these are becoming more common, as business requirements change and commitments to sustainability increase.
Under the circumstances, procurement professionals are opting to shift arrangements to fix the gap. Altering prioritization of a company's product mix, sharing long term forecasts, or onboarding alternate suppliers, are common short-term tactics.
However, to build a resilient procurement strategy, companies also need to tackle these situations from a mid- and long-term perspective.
Involving procurement professionals during the design phase of the product can help ensure the supply base that’s needed for the product’s success.
If a restaurant chain is looking to add a new item to the menu, getting the procurement team involved early can help to work with suppliers to set key KPIs upfront. Even during a crisis, steady and hassle-free supplies require well-coordinated lead times, minimum order quantities, and an adequate number of suppliers to be qualified upfront.
Companies need to go back to the drawing table on make-versus-buy decisions for key items and products.
Semiconductor shortages have taken the entire industry by storm and companies are considering setting up their own semiconductor fabrication plants. It shows how previous decisions to "buy" products may not hold up in a shortage environment.
Even in less supply-tight environments, make-or-buy decisions can and should be continually reexamined. If a company is looking to venture into a new category, it may go for a "buy" strategy with a third-party manufacturer to test and learn about the new category’s performance. If the product does well, the company could choose to switch to a "make" strategy.
Supplies are currently the weakest link in the chain for most companies. Procurement professionals looking to build a resilient supply chain need to take this as an opportunity to revise corporate strategies with a long-term perspective in mind.
Source: https://www.supplychaindive.com/news/supply-shortages-six-tips-build-resilient-procurement-strategy/606658/
How companies to navigate supply chain complexities while still serving their customers & growing their business?
Disruption has been the name of the game for more than a year as supply chain leaders have been dealing with changing buyer behaviors, inventory management challenges, labor shortages, weather and pandemic-related uncertainty, cyber security threats and capacity constraints that continue to create significant supply chain volatility. With peak shipping season approaching, companies continue to face supply chain risk as the pressure increases to meet customer and delivery expectations without adding cost.
A traditional inventory replenishment strategy, such as ordering based on historic patterns, is no longer effective in today’s world. Traditional inventory management strategies were designed with all supply chains being linear, reflecting a manufacturer to retailer to end-user process in accordance with reverse logistics. Advancements in technology and the proliferation of e-commerce have created a somewhat cyclic supply chain that can route orders from anywhere.
The increased strain on available resources and the growth of e-commerce creates a greater need to manage by exception. Rather than trying to manage each shipment manually, today shippers can leverage technology to enable true management by exception. For instance, the capacity that is needed per shipment like the 2021 produce season transportation capacity outlook. Exceptions are the one-off issues that arise that may require human intervention to resolve.
There was a time when management by exception and manual management were almost identical. But automation and sequential tendering processes within an advanced transportation management system (TMS) have given rise to the ability to manage by exception.
According to a recent survey fielded by Edelman Intelligence, 94% of supply chain leaders say partnerships with supply chain logistics companies are necessary to get through peak season successfully. The survey also found that 9 in 10 supply chain leaders are seeking 3PLs with a consulting offering that provides guidance in setting up their company’s supply chain.
The evolving supply chain and buying options for consumers is an advantage in the modern world, but without visibility on all inventory throughout a company’s network, it grows more difficult to track. As a result, carrying costs spiral out of control, and stockouts become more likely which means an easier conversation about supply chain risk management.
The modern world of freight management is growing more complex, and finding success depends on around-the-clock scalability, insight into specific market granularities, clear data and visibility, and understanding how to stay strategic. It’s increasingly difficult for companies to plan, source, manage and navigate supply chain complexities while still focusing on what they do best: serving their customers and growing their businesses
Source: https://logisticsviewpoints.com/2021/09/16/supply-chain-risk-management/
Read MoreA traditional inventory replenishment strategy, such as ordering based on historic patterns, is no longer effective in today’s world. Traditional inventory management strategies were designed with all supply chains being linear, reflecting a manufacturer to retailer to end-user process in accordance with reverse logistics. Advancements in technology and the proliferation of e-commerce have created a somewhat cyclic supply chain that can route orders from anywhere.
The increased strain on available resources and the growth of e-commerce creates a greater need to manage by exception. Rather than trying to manage each shipment manually, today shippers can leverage technology to enable true management by exception. For instance, the capacity that is needed per shipment like the 2021 produce season transportation capacity outlook. Exceptions are the one-off issues that arise that may require human intervention to resolve.
There was a time when management by exception and manual management were almost identical. But automation and sequential tendering processes within an advanced transportation management system (TMS) have given rise to the ability to manage by exception.
According to a recent survey fielded by Edelman Intelligence, 94% of supply chain leaders say partnerships with supply chain logistics companies are necessary to get through peak season successfully. The survey also found that 9 in 10 supply chain leaders are seeking 3PLs with a consulting offering that provides guidance in setting up their company’s supply chain.
The evolving supply chain and buying options for consumers is an advantage in the modern world, but without visibility on all inventory throughout a company’s network, it grows more difficult to track. As a result, carrying costs spiral out of control, and stockouts become more likely which means an easier conversation about supply chain risk management.
The modern world of freight management is growing more complex, and finding success depends on around-the-clock scalability, insight into specific market granularities, clear data and visibility, and understanding how to stay strategic. It’s increasingly difficult for companies to plan, source, manage and navigate supply chain complexities while still focusing on what they do best: serving their customers and growing their businesses
Source: https://logisticsviewpoints.com/2021/09/16/supply-chain-risk-management/
If you are a leader with first mile exposure, don’t be left behind.
As consumers, we are familiar with the last mile of the supply chain. For example, if you want to buy a blender, the process is simple: You decide on make and model, place an order online and if it’s in stock, it ships to your door within a few days.
Since the blender is already built, in inventory and the order is digitally connected, you know where it’s shipping from and when it will arrive. You can even get text notifications each step of the way. The digitization of the last mile means you have visibility and any changes will update in real-time.
Unfortunately, the first mile looks a lot like it did 20 years ago, with printed orders, emails, disparate operations systems, phone calls and spreadsheets. This manual coordination means more risk.
If the blender you wanted was not in stock and needed to be built, the supplier would need to order raw materials, contract with factories, build the blender and ship it to the warehouse. This process involves a lot of coordination, people and resources. The build could span many months depending on the product type, material availability, cost and complexity.
While solutions to many of the biggest “first mile” supply chain problems already exist, factors like cost, time and lack of understanding have contributed to executives delaying decisions or choosing to do nothing. Below are a few examples of common first-mile challenges that importers face when operating a manual Import Supply Chain:
1. Disconnected departments, people, and trading partners. Without a common set of systems across the supply journey, coordination becomes challenging both internally and externally;
2. Lack of full visibility to product life cycle. Because many importers aren’t using digital invoices and don’t have real-time systems connected to their suppliers, they lack the ability to make rapid decisions when disruptions occur;
3. Low-resolution analytics. Without advanced analytics, basic supply needs become more challenging and teams often skip key optimization opportunities;
4. Systems of record not current. The average purchase order changes between five to seven times over the supply journey. Without full digitization of purchase orders, enterprise resource planning and other systems will not have accurate information as new changes occur;
5. Higher costs, lower sales. Stale information limits an operator’s ability to take action and course-correct as challenges arise, resulting in poor customer experiences (CX) and lost or canceled sales.
The time for action is now. If you are a leader with first mile exposure, don’t be left behind. Encourage your teams to evaluate the opportunity, establish clear ROI calculations, and make the case to transform your business now.
To truly change the way you operate in a post-pandemic world requires strategic planning, technology and a team that is motivated, aligned and empowered. By ensuring that your entire supply chain is digitized, your team will derive greater efficiency, increased job satisfaction, improved retention of people and knowledge, which will lead to happier partners and happier customers.
Source: https://www.entrepreneur.com/article/380103
Read MoreSince the blender is already built, in inventory and the order is digitally connected, you know where it’s shipping from and when it will arrive. You can even get text notifications each step of the way. The digitization of the last mile means you have visibility and any changes will update in real-time.
Unfortunately, the first mile looks a lot like it did 20 years ago, with printed orders, emails, disparate operations systems, phone calls and spreadsheets. This manual coordination means more risk.
If the blender you wanted was not in stock and needed to be built, the supplier would need to order raw materials, contract with factories, build the blender and ship it to the warehouse. This process involves a lot of coordination, people and resources. The build could span many months depending on the product type, material availability, cost and complexity.
While solutions to many of the biggest “first mile” supply chain problems already exist, factors like cost, time and lack of understanding have contributed to executives delaying decisions or choosing to do nothing. Below are a few examples of common first-mile challenges that importers face when operating a manual Import Supply Chain:
1. Disconnected departments, people, and trading partners. Without a common set of systems across the supply journey, coordination becomes challenging both internally and externally;
2. Lack of full visibility to product life cycle. Because many importers aren’t using digital invoices and don’t have real-time systems connected to their suppliers, they lack the ability to make rapid decisions when disruptions occur;
3. Low-resolution analytics. Without advanced analytics, basic supply needs become more challenging and teams often skip key optimization opportunities;
4. Systems of record not current. The average purchase order changes between five to seven times over the supply journey. Without full digitization of purchase orders, enterprise resource planning and other systems will not have accurate information as new changes occur;
5. Higher costs, lower sales. Stale information limits an operator’s ability to take action and course-correct as challenges arise, resulting in poor customer experiences (CX) and lost or canceled sales.
The time for action is now. If you are a leader with first mile exposure, don’t be left behind. Encourage your teams to evaluate the opportunity, establish clear ROI calculations, and make the case to transform your business now.
To truly change the way you operate in a post-pandemic world requires strategic planning, technology and a team that is motivated, aligned and empowered. By ensuring that your entire supply chain is digitized, your team will derive greater efficiency, increased job satisfaction, improved retention of people and knowledge, which will lead to happier partners and happier customers.
Source: https://www.entrepreneur.com/article/380103
Why outsourcing warehouse operations is more effective?
Warehousing has emerged as one of the most crucial aspects of the modern supply chain and has been a strong pillar especially during the recent lockdowns. With faster technology adoption, leveraging emerging innovations in AI, ML and IoT; warehousing today has evolved to go beyond just a storage facility and is a smarter, service driven operation. While this advancement has helped logistics and supply chain to reach newer heights, for most manufacturers and distributors, it continues to remain an under-utilised logistic service offering. It is important that industries and businesses understand the role and significance of efficient and cost effective warehousing, that can help accelerate the growth of the economy at large.
Here are the 5 benefits of outsourcing warehouse operations that can help businesses adopt leaner and more effective profit models:
1. Optimised resources: This is one of the primary benefits of outsourcing at large, and warehousing in particular. Having a self-managed warehouse operation requires dedicated resources in terms of people, money, time, as well as other extra cost factors. Outsourcing warehouse operations can help business owners and internal departments to be leaner, and focus on the company’s core competency. Company’s can also divert their resources to research, innovation, training and driving new business acquisition, while safely enjoying the benefits of expert warehouse management at a cost advantage, and minimal initial time investment;
2. Optimised operations: Managing warehousing operations is an integral part of the supply chain. Whether it be for temperature sensitive products like food & pharmaceuticals to automotive parts, electronics and garments, the outsourced partner can provide optimsation across the various functions inside the warehouse ensuring that each product and customer is treated with the differentiation they require. Working with an outsourced partner allows cross training and implementation of best practices across various product categories to ensure expert management of storage, put away, retrieval, inventory management, packaging and other customised value added services;
3. Enhanced Market Reach: A self-managed warehouse set-up demands considerable CAPEX investments and resources for continuous management, which could be a roadblock for the business if this is not managed efficiently as importance is not given and additional investment in scale, operations will hurt the company’s top & bottom line. Working with the correct outsourced partner can enable company’s to leverage on the logistics partner’s existing and ever expanding network thus making the product available closer to the company’s end user. Making it easier for quicker expansion without the investment and giving a better visibility of OPEXs;
4. Agility and scalability: Depending upon specific market needs, businesses can choose to scale up or downsize their storage and distribution operations, gain access to long term or project based strategic warehouse locations or even access sector specific expert warehousing solutions for specialised or customised needs, on a short or long term requirement. This can go a long way in helping a business to manage its bottom line, optimise resources while enhancing market reach and meeting specialised consumer demands at a comparatively shorter turnaround time;
5. Access to latest tech enabled services: Outsourcing warehouse operations and management to experts can help businesses to leverage the best in emerging tech innovations, which in turn, can help them enjoy effective and efficient warehouse service. This can mean better storage, packaging, kitting or accurate handling of temperature sensitive cargo, along with a more transparent and engaging business operations. From getting a real time update on cargo movement and storage, to having a dedicated dashboard with regular and well measured inventory status, tech adoption has helped clients to make better and faster decision making;
During the lockdown, a few businesses could operate, warehousing was one of them as it is considered an essential service. In many states, even the operations of non-essential items was allowed to operate inside warehouses. Several companies that managed their own warehouses were adversely affected as they couldn’t get their products to customers. This is driving a shift in the mindset of consumers to look at handing over their operations externally to reputed 3PL service providers, so that they can ensure that there are minimal hiccups in their supply chain.
Source: https://www.indiainfoline.com/article/general-editors-choice/make-or-buy-why-outsourcing-warehouse-operations-is-more-effective-121091300007_1.html
Read MoreHere are the 5 benefits of outsourcing warehouse operations that can help businesses adopt leaner and more effective profit models:
1. Optimised resources: This is one of the primary benefits of outsourcing at large, and warehousing in particular. Having a self-managed warehouse operation requires dedicated resources in terms of people, money, time, as well as other extra cost factors. Outsourcing warehouse operations can help business owners and internal departments to be leaner, and focus on the company’s core competency. Company’s can also divert their resources to research, innovation, training and driving new business acquisition, while safely enjoying the benefits of expert warehouse management at a cost advantage, and minimal initial time investment;
2. Optimised operations: Managing warehousing operations is an integral part of the supply chain. Whether it be for temperature sensitive products like food & pharmaceuticals to automotive parts, electronics and garments, the outsourced partner can provide optimsation across the various functions inside the warehouse ensuring that each product and customer is treated with the differentiation they require. Working with an outsourced partner allows cross training and implementation of best practices across various product categories to ensure expert management of storage, put away, retrieval, inventory management, packaging and other customised value added services;
3. Enhanced Market Reach: A self-managed warehouse set-up demands considerable CAPEX investments and resources for continuous management, which could be a roadblock for the business if this is not managed efficiently as importance is not given and additional investment in scale, operations will hurt the company’s top & bottom line. Working with the correct outsourced partner can enable company’s to leverage on the logistics partner’s existing and ever expanding network thus making the product available closer to the company’s end user. Making it easier for quicker expansion without the investment and giving a better visibility of OPEXs;
4. Agility and scalability: Depending upon specific market needs, businesses can choose to scale up or downsize their storage and distribution operations, gain access to long term or project based strategic warehouse locations or even access sector specific expert warehousing solutions for specialised or customised needs, on a short or long term requirement. This can go a long way in helping a business to manage its bottom line, optimise resources while enhancing market reach and meeting specialised consumer demands at a comparatively shorter turnaround time;
5. Access to latest tech enabled services: Outsourcing warehouse operations and management to experts can help businesses to leverage the best in emerging tech innovations, which in turn, can help them enjoy effective and efficient warehouse service. This can mean better storage, packaging, kitting or accurate handling of temperature sensitive cargo, along with a more transparent and engaging business operations. From getting a real time update on cargo movement and storage, to having a dedicated dashboard with regular and well measured inventory status, tech adoption has helped clients to make better and faster decision making;
During the lockdown, a few businesses could operate, warehousing was one of them as it is considered an essential service. In many states, even the operations of non-essential items was allowed to operate inside warehouses. Several companies that managed their own warehouses were adversely affected as they couldn’t get their products to customers. This is driving a shift in the mindset of consumers to look at handing over their operations externally to reputed 3PL service providers, so that they can ensure that there are minimal hiccups in their supply chain.
Source: https://www.indiainfoline.com/article/general-editors-choice/make-or-buy-why-outsourcing-warehouse-operations-is-more-effective-121091300007_1.html
Micro-fulfillment Strategy to allow lower final-mile costs.
Amazon, Walmart, Walgreens and grocery third-parties like Instacart are investing in micro-fulfillment centers to speed up delivery times, curb final-mile costs and get products closer to consumers. The investment comes as e-commerce sales are expected to reach about 35% of total sales by 2023, according to Edge Retail Insight, a subsidiary of Ascential.
The marketing research firm predicts the in-store share of sales will decline to 62.4% by 2025. This year in-store sales will account for roughly 70% of the total global sales.
Supply chain insiders say micro-fulfillment centers are an essential part of next-day and same-day delivery. Retailers use their physical assets as intermediary fulfillment centers with dark stores and transform some retail stores and clubs into automated warehouses.
Ascential reports that retailers are also likely to reallocate store space to accommodate more online orders. The report said up to one-third of retail space could be transformed into fulfillment centers.
Walmart announced earlier this year plans to build micro-fulfillment centers equipped with automation. Tom Ward, senior vice president of last-mile technology and operations at Walmart, said the retailer is building about a dozen micro-fulfillment centers (MFC) at store locations, including Store 100 on Walton Boulevard in Bentonville. The capital outlay is part of Walmart’s billion expenditures planned for this year.
Ward said the highly automated MFC would allow more orders to be picked at a faster speed. He said the micro-fulfillment center is a compact, modular warehouse built within, or added to, a store location. In addition to fresh and frozen items, an MFC can store thousands of items the retailer knows customers want most, from consumables to electronics. The end goal is to fulfill the order in minutes from the time it is placed. The order will then be picked up by shoppers or dispatched for delivery by third-party or Walmart in-home drivers.
Another benefit of the automated MFC is that one center can facilitate several stores, creating more efficiencies. One big difference for Walmart’s MFC strategy is that the locations are slated for busy stores that require more labor to pick orders. The MFC is also located in closer proximity to customers allowing for lower final-mile costs.
Source: https://talkbusiness.net/2021/09/the-supply-side-micro-fulfillment-centers-newest-retail-supply-chain-strategy/
Read MoreThe marketing research firm predicts the in-store share of sales will decline to 62.4% by 2025. This year in-store sales will account for roughly 70% of the total global sales.
Supply chain insiders say micro-fulfillment centers are an essential part of next-day and same-day delivery. Retailers use their physical assets as intermediary fulfillment centers with dark stores and transform some retail stores and clubs into automated warehouses.
Ascential reports that retailers are also likely to reallocate store space to accommodate more online orders. The report said up to one-third of retail space could be transformed into fulfillment centers.
Walmart announced earlier this year plans to build micro-fulfillment centers equipped with automation. Tom Ward, senior vice president of last-mile technology and operations at Walmart, said the retailer is building about a dozen micro-fulfillment centers (MFC) at store locations, including Store 100 on Walton Boulevard in Bentonville. The capital outlay is part of Walmart’s billion expenditures planned for this year.
Ward said the highly automated MFC would allow more orders to be picked at a faster speed. He said the micro-fulfillment center is a compact, modular warehouse built within, or added to, a store location. In addition to fresh and frozen items, an MFC can store thousands of items the retailer knows customers want most, from consumables to electronics. The end goal is to fulfill the order in minutes from the time it is placed. The order will then be picked up by shoppers or dispatched for delivery by third-party or Walmart in-home drivers.
Another benefit of the automated MFC is that one center can facilitate several stores, creating more efficiencies. One big difference for Walmart’s MFC strategy is that the locations are slated for busy stores that require more labor to pick orders. The MFC is also located in closer proximity to customers allowing for lower final-mile costs.
Source: https://talkbusiness.net/2021/09/the-supply-side-micro-fulfillment-centers-newest-retail-supply-chain-strategy/
When it comes to supply chain resilience, knowledge is power.
The past year has highlighted the importance of organisational resilience – the ability to respond and recover in the face of challenge. We may be emerging from the COVID-19 crisis, but markets remain uncertain. Supply chains in particular face considerable volatility, with demand behaviour changing, increased competition and costs, and shorter, more complex product lifecycles. Trends such as elastic logistics, new technologies, reshoring and circular supply chains are driving changes to operating models.
As a starting point, rather than focusing on discrete aspects of your supply chain such as procurement, logistics or IT, focus on it from end to end. Is your full supply chain capability aligned to your organisation’s strategic objectives? How are the links in the chain interdependent?
A supply chain consists of multiple interdependent elements, from sub-tiers and tier 1 suppliers, through manufacturing, and on to distributors, retailers and finally customers. This creates a house of cards effect: a problem with a sub-tier supplier on the other side of the world can be enough to bring the whole thing tumbling down and stop your production flow.
Given this complex context, it is essential to take a positive, proactive approach to building a resilient supply chain.
Although issues will arise that are out of your control, there is much you can do to protect yourself against them. The most resilient organisations acknowledge that risks are an inherent part of their supply chain, accept they can’t protect against everything, and take a pragmatic, practical approach to addressing vulnerabilities. What are the risks? How likely are they to create a problem? What is their potential impact? Do they need to be resolved immediately, or over time? Are there risks that can’t be fixed but need tracking?
The most effective way to answer these questions is through supply chain mapping. This involves creating a map of the key elements in your supply chain, identifying vulnerabilities and addressing them as appropriate. Focusing on different categories of risk can be a helpful starting point.
As this shows, some risks have external drivers, while others have internal drivers (triggers that are specific to your supply chain). Whether external or internal, it is important to accept that you cannot always predict or prevent these risks. The supply chain picture is extraordinarily dynamic; whether it’s trade disputes or financial instability of a supplier, the issues you face today are likely to be different to those creating complexity in six months’ time. Establish a constant review cycle that enables you to recognise risks early and assess their potential impact on your business.
As already highlighted, your supply chain is only as resilient as its suppliers. Ask them to provide evidence of their own resilience planning and, if a supplier is particularly integral to your operations, carry out desktop assurance and map their supply chain as well as your own.
Supply chain resilience is an essential part of business continuity planning and needs to become business as usual. As well as identifying risks, your supply chain mapping exercise can identify productivity, efficiencies, improvements in service levels and opportunities to optimise inventory. Don’t ignore it!
Think about how you can combine supply chain mapping with business improvement plans. It doesn’t need to be a complicated, expensive exercise and will help you to identify opportunities, as well as vulnerabilities. Could you streamline processes? Could your supply chain design be tweaked to better meet the needs of your business? Could you improve the offshoring/onshoring supply balance?
None of us know the specific challenges that lie ahead for supply chains in the EME market. However, by increasing your understanding of your own supply chain and starting to mitigate the risks, you will be ready to respond and recover. When it comes to supply chain resilience, knowledge is power.
Source: https://www.emeoutlookmag.com/industry-insights/article/570-expert-eye-supply-chain-resilience-are-you-risk-ready
Read MoreAs a starting point, rather than focusing on discrete aspects of your supply chain such as procurement, logistics or IT, focus on it from end to end. Is your full supply chain capability aligned to your organisation’s strategic objectives? How are the links in the chain interdependent?
A supply chain consists of multiple interdependent elements, from sub-tiers and tier 1 suppliers, through manufacturing, and on to distributors, retailers and finally customers. This creates a house of cards effect: a problem with a sub-tier supplier on the other side of the world can be enough to bring the whole thing tumbling down and stop your production flow.
Given this complex context, it is essential to take a positive, proactive approach to building a resilient supply chain.
Although issues will arise that are out of your control, there is much you can do to protect yourself against them. The most resilient organisations acknowledge that risks are an inherent part of their supply chain, accept they can’t protect against everything, and take a pragmatic, practical approach to addressing vulnerabilities. What are the risks? How likely are they to create a problem? What is their potential impact? Do they need to be resolved immediately, or over time? Are there risks that can’t be fixed but need tracking?
The most effective way to answer these questions is through supply chain mapping. This involves creating a map of the key elements in your supply chain, identifying vulnerabilities and addressing them as appropriate. Focusing on different categories of risk can be a helpful starting point.
As this shows, some risks have external drivers, while others have internal drivers (triggers that are specific to your supply chain). Whether external or internal, it is important to accept that you cannot always predict or prevent these risks. The supply chain picture is extraordinarily dynamic; whether it’s trade disputes or financial instability of a supplier, the issues you face today are likely to be different to those creating complexity in six months’ time. Establish a constant review cycle that enables you to recognise risks early and assess their potential impact on your business.
As already highlighted, your supply chain is only as resilient as its suppliers. Ask them to provide evidence of their own resilience planning and, if a supplier is particularly integral to your operations, carry out desktop assurance and map their supply chain as well as your own.
Supply chain resilience is an essential part of business continuity planning and needs to become business as usual. As well as identifying risks, your supply chain mapping exercise can identify productivity, efficiencies, improvements in service levels and opportunities to optimise inventory. Don’t ignore it!
Think about how you can combine supply chain mapping with business improvement plans. It doesn’t need to be a complicated, expensive exercise and will help you to identify opportunities, as well as vulnerabilities. Could you streamline processes? Could your supply chain design be tweaked to better meet the needs of your business? Could you improve the offshoring/onshoring supply balance?
None of us know the specific challenges that lie ahead for supply chains in the EME market. However, by increasing your understanding of your own supply chain and starting to mitigate the risks, you will be ready to respond and recover. When it comes to supply chain resilience, knowledge is power.
Source: https://www.emeoutlookmag.com/industry-insights/article/570-expert-eye-supply-chain-resilience-are-you-risk-ready
Don't treat a HUB sourcing strategy as a burden
It's time to stop tossing crumbs to historically underutilized businesses as part of a particular supplier "set aside" clause of a customer's contract or a vague policy on social responsibility.
In the past, the overriding sourcing strategy was to use the HUB supplier "with all things being equal" — an easy way to avoid the work of inclusion. For buyer and supplier alike, it was often a patronizing experience that resulted in little or no long-term engagement, save for an obligatory quote.
Engagement with HUB suppliers often fell to the most junior of buyers, with the focus on non-critical indirect spend. The buyer may have accessed HUB or minority supplier directories or visited a HUB exhibition or conference.
But now, pandemic-related supply gaps and updated sourcing strategies have resulted in a domestic-oriented supply chain, and it's prime time to actively work with HUB suppliers.
Don't treat them as an afterthought or burden. Incorporate them into your critical operations.
Source: https://www.supplychaindive.com/news/hub-suppliers-sourcing-spend-domestic-supply-chain/606119/
Read MoreIn the past, the overriding sourcing strategy was to use the HUB supplier "with all things being equal" — an easy way to avoid the work of inclusion. For buyer and supplier alike, it was often a patronizing experience that resulted in little or no long-term engagement, save for an obligatory quote.
Engagement with HUB suppliers often fell to the most junior of buyers, with the focus on non-critical indirect spend. The buyer may have accessed HUB or minority supplier directories or visited a HUB exhibition or conference.
But now, pandemic-related supply gaps and updated sourcing strategies have resulted in a domestic-oriented supply chain, and it's prime time to actively work with HUB suppliers.
Don't treat them as an afterthought or burden. Incorporate them into your critical operations.
Source: https://www.supplychaindive.com/news/hub-suppliers-sourcing-spend-domestic-supply-chain/606119/
Intelligent Execution Control Tower (IECT) in Supply Chain
More than ever, companies today—especially in the wake of COVID-19—recognize how critical supply chain visibility and resiliency are to managing through disruptions and balancing supply and demand. Such increased visibility is also crucial to helping supply chains become more customer-centric, responsive, and agile—moving from “one size fits all” to enriching the customer experience and enabling new ways of meeting unique customer demands as they continue to evolve.
In the quest for visibility and greater customer centricity, more companies have implemented or are considering rolling out a supply chain control tower. Here’s the problem: supply chain control towers, as many companies define them, often fall short of delivering the full value needed to win in today’s environment. Yes, a control tower does provide visibility. But a true supply chain control tower does so much more.
An effective supply chain control tower should include people, process, new ways of working, technology infrastructure, and data that, combined, enable a company to proactively orchestrate across their supply chain functions to increase enterprise value. Referred to as an Intelligent Execution Control Tower (IECT), it goes beyond dashboards, tool implementation, or one-time activities. Instead, an IECT uses a digital twin with intelligent agents to proactively identify disruptions within a near-term execution window and employs advanced computing to intelligently prioritize and respond to exceptions within the operations. It incorporates cross-functional, continuously evolving capabilities and organizational structure that span the value chain to deliver against key goals and metrics.
We’ll cover two of the four elements of an IECT in this article:
• Use Case-Driven Capabilities.
• New Ways of Working.
Use Case-Driven Capabilities A common starting point for companies when implementing a supply chain control tower is to strive for visibility across the end-to-end value chain. But that’s where most companies stop, which is why they won’t get the value they hoped for. Why? Because end-to-end visibility itself isn’t enough. While visibility is certainly a key control tower capability, an IECT’s value comes from taking action based on that enhanced visibility. This could mean, for instance, using AI/ML capabilities to raise alerts and response actions, moving toward orchestrated remediation that streamlines manual tasks and automates wherever possible to execute complex processes more efficiently.
Importantly, at the outset, a company should define a roadmap based on how the IECT will use visibility, alerts, rapid response, and optimized execution to solve cross-functional, use case-driven problems. In fact, we find that the difference between success and failure with a control tower implementation depends on the level of upfront work to identify, define, and value the use cases and overall vision. These use cases should be driven by the business and clearly structured to deliver a strategic business outcome.
Having a full-scope roadmap defined by value-led use cases allows companies to shift their focus from visibility, for the sake of visibility, to creating a new optimized and autonomous supply chain operational capability. It also allows companies to consider applying the control tower across the entire value chain, not just certain functional areas—the latter of which has been the focus of most traditional control towers.
New ways of working. Traditionally, supply chains have been organized and operated in a linear model with roles such as planners, production schedulers, deployment planners, inventory managers, and logistics and manufacturing managers. It’s only at leadership levels that roles look across the whole value chain to manage any trade-offs between functions to deliver an excellent customer experience. This leads to decision making that emphasizes functional excellence at the expense of enterprise value chain excellence. For example, the manufacturing group might decide to freeze production batches to maximize efficiency. But what if there’s an urgent need to meet customer demands for a different product? No role exists that could evaluate the trade-off on a day-to-day basis and decide to do production changeovers to maximize customer service in favor of efficiency.
An IECT breaks from this traditional model by bringing a new ”network planner” role that spans functional siloes and focuses on customer, product, and market. On a day-to-day basis, the network planner has the visibility and authority to make trade-off decisions that result in a superior customer experience and sustainable business value—even if it negatively affects certain functional KPIs and performance drivers.
In addition to potentially new roles, an IECT often requires new skills. For example, the supply chain workforce must be skilled in digital and analytics so their job can become more exception-driven and managed through a well-defined governance model. Supply chain professionals must be able to work effectively alongside AI, ML, and robotic process automation to increase the IECT’s overall business impact, efficiencies, and speed. In fact, this combination of cross-functional knowledge plus advanced analytics skills to “tweak” the engines to solve segmented goals is a key IECT success factor.
Source: https://www.scmr.com/article/the_new_essential_for_supply_chains_intelligent_execution_control_tower_par
Read MoreIn the quest for visibility and greater customer centricity, more companies have implemented or are considering rolling out a supply chain control tower. Here’s the problem: supply chain control towers, as many companies define them, often fall short of delivering the full value needed to win in today’s environment. Yes, a control tower does provide visibility. But a true supply chain control tower does so much more.
An effective supply chain control tower should include people, process, new ways of working, technology infrastructure, and data that, combined, enable a company to proactively orchestrate across their supply chain functions to increase enterprise value. Referred to as an Intelligent Execution Control Tower (IECT), it goes beyond dashboards, tool implementation, or one-time activities. Instead, an IECT uses a digital twin with intelligent agents to proactively identify disruptions within a near-term execution window and employs advanced computing to intelligently prioritize and respond to exceptions within the operations. It incorporates cross-functional, continuously evolving capabilities and organizational structure that span the value chain to deliver against key goals and metrics.
We’ll cover two of the four elements of an IECT in this article:
• Use Case-Driven Capabilities.
• New Ways of Working.
Use Case-Driven Capabilities A common starting point for companies when implementing a supply chain control tower is to strive for visibility across the end-to-end value chain. But that’s where most companies stop, which is why they won’t get the value they hoped for. Why? Because end-to-end visibility itself isn’t enough. While visibility is certainly a key control tower capability, an IECT’s value comes from taking action based on that enhanced visibility. This could mean, for instance, using AI/ML capabilities to raise alerts and response actions, moving toward orchestrated remediation that streamlines manual tasks and automates wherever possible to execute complex processes more efficiently.
Importantly, at the outset, a company should define a roadmap based on how the IECT will use visibility, alerts, rapid response, and optimized execution to solve cross-functional, use case-driven problems. In fact, we find that the difference between success and failure with a control tower implementation depends on the level of upfront work to identify, define, and value the use cases and overall vision. These use cases should be driven by the business and clearly structured to deliver a strategic business outcome.
Having a full-scope roadmap defined by value-led use cases allows companies to shift their focus from visibility, for the sake of visibility, to creating a new optimized and autonomous supply chain operational capability. It also allows companies to consider applying the control tower across the entire value chain, not just certain functional areas—the latter of which has been the focus of most traditional control towers.
New ways of working. Traditionally, supply chains have been organized and operated in a linear model with roles such as planners, production schedulers, deployment planners, inventory managers, and logistics and manufacturing managers. It’s only at leadership levels that roles look across the whole value chain to manage any trade-offs between functions to deliver an excellent customer experience. This leads to decision making that emphasizes functional excellence at the expense of enterprise value chain excellence. For example, the manufacturing group might decide to freeze production batches to maximize efficiency. But what if there’s an urgent need to meet customer demands for a different product? No role exists that could evaluate the trade-off on a day-to-day basis and decide to do production changeovers to maximize customer service in favor of efficiency.
An IECT breaks from this traditional model by bringing a new ”network planner” role that spans functional siloes and focuses on customer, product, and market. On a day-to-day basis, the network planner has the visibility and authority to make trade-off decisions that result in a superior customer experience and sustainable business value—even if it negatively affects certain functional KPIs and performance drivers.
In addition to potentially new roles, an IECT often requires new skills. For example, the supply chain workforce must be skilled in digital and analytics so their job can become more exception-driven and managed through a well-defined governance model. Supply chain professionals must be able to work effectively alongside AI, ML, and robotic process automation to increase the IECT’s overall business impact, efficiencies, and speed. In fact, this combination of cross-functional knowledge plus advanced analytics skills to “tweak” the engines to solve segmented goals is a key IECT success factor.
Source: https://www.scmr.com/article/the_new_essential_for_supply_chains_intelligent_execution_control_tower_par
A combined agile and lean supply chain is possible
When supplies are abundant and external variables are “predictable” the notion is to act on cutting down on expenses. However, organizations that have undergone a digital transformation know that a combined agile and lean supply chain is possible.
Digital transformation is necessary to regain a hold on inventory management, yet it requires C-level buy-in. At the height of the pandemic, there was a rush to stop the bleeding by testing and implementing new technologies, but as companies have now settled in for the long haul, they have quickly reverted to slow and lengthy decisions and implementations. As more time passes, there is less incentive for leadership to approve new technologies. That stall to move forward will leave companies more vulnerable when another “black swan event” arrives and upends the way businesses operate.
It’s time to take the necessary steps to be as best prepared as possible for whatever may come next. When done right, digital transformation in the supply chain makes your organization even more efficient today while meeting the challenges of the unknown. Yes, making the digital transformation can be intimidating, but five steps are essential for making a smooth transition that will enable having both a lean and an agile environment to have a more resilient supply chain.
1. Data foundation is critical, but data cleansing is not.
Traditional processes are broken. To be agile, the network should be able to understand data accurately and send signals with supply chain updates. But legacy systems and processes cannot keep up with the amount of manual data cleansing required to be efficient.
To create a consistently agile supply chain, organizations have to understand their data across systems, both in-house and with your supplier network. As long as you understand your data, you can use existing data, incomplete and dirty, to drive outcomes more effectively and still carve a path to be agile and lean.
2. Digitizing the supply chain.
Shipping physical goods from supplier to supplier to user needs an efficient system. If you aren’t getting the most from your data and if new systems are dependent on human data entry, the supply chain weakens. A digital supply chain means digitized goods, processes, and logistics. Yes, it requires taking manual processes and transitioning to a digital one, but once you lay the data foundation, you are enabling that data can be understood, intelligence presented to a human expert, and the “why” of decisions can be accounted for across the supply network.
3. Strategic supplier alignment.
The important part of resiliency is the ability to interact and understand the operational risk. When shipments are predictable, they can be planned for, but if the shipment is now 40 weeks out instead of the regular four weeks, supply chain management is thrown off the rails. With digital transformation, it is easier to align with your suppliers. In a digitized supply chain, when you realize you need certain items, your supplier also can know it by sharing your data easily across platforms. The system will keep all parties in the loop with the changes. By building this network that allows you to be both agile and lean, you can pivot on demand.
4. Change management and understanding intentions across organizations
Change management is really about incentive alignment. As you’re undergoing a digital transformation, procurement will have different incentives than operations or financial. When the incentives don’t align with the goals you’re trying to achieve, you end up creating silos. And silos can’t scale to your real-time needs.
Understanding how to bridge and align incentives takes you back to being both agile and lean. You can drive out costs and trust your risk is as low as possible.
In this step, you see how the other three steps build upon each other. Procurement can save money with strategic supplier alignment, for example, which is built through a digitized supply chain and a solid data foundation.
5. Speed and changing the dynamic of the supply chain.
Executing the digital transformation of the supply chain can’t wait. It is a time-consuming project. But putting it off for years or turning to the technology solutions of the past just means that you won’t be able to react and readjust your supply chain when the next “black swan event” comes along, and this will ultimately be a major detriment when it comes.
Source: https://www.forbes.com/sites/paulnoble/2021/09/07/top-five-ways-to-become-agile-and-lean-in-your-supply-chain/
Read MoreDigital transformation is necessary to regain a hold on inventory management, yet it requires C-level buy-in. At the height of the pandemic, there was a rush to stop the bleeding by testing and implementing new technologies, but as companies have now settled in for the long haul, they have quickly reverted to slow and lengthy decisions and implementations. As more time passes, there is less incentive for leadership to approve new technologies. That stall to move forward will leave companies more vulnerable when another “black swan event” arrives and upends the way businesses operate.
It’s time to take the necessary steps to be as best prepared as possible for whatever may come next. When done right, digital transformation in the supply chain makes your organization even more efficient today while meeting the challenges of the unknown. Yes, making the digital transformation can be intimidating, but five steps are essential for making a smooth transition that will enable having both a lean and an agile environment to have a more resilient supply chain.
1. Data foundation is critical, but data cleansing is not.
Traditional processes are broken. To be agile, the network should be able to understand data accurately and send signals with supply chain updates. But legacy systems and processes cannot keep up with the amount of manual data cleansing required to be efficient.
To create a consistently agile supply chain, organizations have to understand their data across systems, both in-house and with your supplier network. As long as you understand your data, you can use existing data, incomplete and dirty, to drive outcomes more effectively and still carve a path to be agile and lean.
2. Digitizing the supply chain.
Shipping physical goods from supplier to supplier to user needs an efficient system. If you aren’t getting the most from your data and if new systems are dependent on human data entry, the supply chain weakens. A digital supply chain means digitized goods, processes, and logistics. Yes, it requires taking manual processes and transitioning to a digital one, but once you lay the data foundation, you are enabling that data can be understood, intelligence presented to a human expert, and the “why” of decisions can be accounted for across the supply network.
3. Strategic supplier alignment.
The important part of resiliency is the ability to interact and understand the operational risk. When shipments are predictable, they can be planned for, but if the shipment is now 40 weeks out instead of the regular four weeks, supply chain management is thrown off the rails. With digital transformation, it is easier to align with your suppliers. In a digitized supply chain, when you realize you need certain items, your supplier also can know it by sharing your data easily across platforms. The system will keep all parties in the loop with the changes. By building this network that allows you to be both agile and lean, you can pivot on demand.
4. Change management and understanding intentions across organizations
Change management is really about incentive alignment. As you’re undergoing a digital transformation, procurement will have different incentives than operations or financial. When the incentives don’t align with the goals you’re trying to achieve, you end up creating silos. And silos can’t scale to your real-time needs.
Understanding how to bridge and align incentives takes you back to being both agile and lean. You can drive out costs and trust your risk is as low as possible.
In this step, you see how the other three steps build upon each other. Procurement can save money with strategic supplier alignment, for example, which is built through a digitized supply chain and a solid data foundation.
5. Speed and changing the dynamic of the supply chain.
Executing the digital transformation of the supply chain can’t wait. It is a time-consuming project. But putting it off for years or turning to the technology solutions of the past just means that you won’t be able to react and readjust your supply chain when the next “black swan event” comes along, and this will ultimately be a major detriment when it comes.
Source: https://www.forbes.com/sites/paulnoble/2021/09/07/top-five-ways-to-become-agile-and-lean-in-your-supply-chain/