Event & News
Expectations on the future of the supply chain
SUPPLY CHAINS have no doubt encountered considerable disruptions when the coronavirus disease 2019 (COVID-19) crisis hit almost all countries. Seeing several vulnerabilities in the supply chain, organizations have recognized the needed transformations through resilience, technology, and sustainability.
The crisis has evidently substantial impact that it came to no surprise that only 2% of the 200 senior-level supply chain executives (from organizations in the United States with over one billion US dollars in revenues) said that they were fully prepared for the pandemic, according to a survey done by multinational professional services firm Ernst & Young (EY) in late 2020. On the other hand, 57% experienced the impacts of serious disruptions, with 72% reporting a negative effect.
Moreover, the degree of the crisis varied between the sectors. Companies mostly belonging to the life sciences sector, likely because of their essential products, witnessed positive effects with the increase in customer demand (71%) and coming up with new products to market (57%). The entire automotive companies surveyed, however, said they have negative effects.
“Multiple national lockdowns continue to slow or even temporarily stop the flow of raw materials and finished goods, disrupting manufacturing as a result,” Sean Harapko, EY Americas Supply Chain Transformation and Global Supply Chain RPA leader, noted. “However, the pandemic has not necessarily created any new challenges for supply chains. In some areas, it brought to light previously unseen vulnerabilities.” Accenture, meanwhile, looked over the issues on the supply chains in its article on supply chain disruptions at the time of COVID-19.
According to the consulting and professional services firm, supply chains lack global resilience, making them break down in the face of multi-country disruptions.
The supply chain is also becoming more costly due to the less global and e-commerce fulfillment costs. Yet, additionally, its IT system is still expensive to operate, inflexible, and excessively dependent on legacy technologies every so often. Talent gaps persist across the supply chain as well, making it highly reliant on the human workforce. There is also a need for flexibility in the supply chain to cater to the demands of consumers for personalization and customization.
Another matter needed to be addressed in the supply chain is to meet the expectations of stakeholders for sustainability, given the significant impact that supply chains have on the planet.
As vulnerabilities of the supply chain are uncovered, organizations thus stepped up to fill the gaps to survive the crisis.
With the evident disruptions caused by COVID-19 to the supply chains, there is a crucial need to invest in supply chain resilience.
“Over the past decades, the discussion around optimizing supply chains has focused primarily on cost efficiency and commercial best outcomes. However, as recent history has demonstrated, future supply chains will need to begin factoring resilience and adaptability into their calculations,” Mattias Hedwall, global head of international commerce and trade at Baker McKenzie, wrote in an article published by the World Economic Forum.
Technologies already proved themselves as an efficient solution for industries to carry on their operations. In fact, from the said EY survey, 92% did not stop their technological investments even at a time of uncertain economic environments. “This speaks to the value of a digital supply chain in helping enterprises navigate disruptive forces and respond faster to volatile supply and demand,” Mr. Harapko remarked.
“The COVID-19 pandemic has shown the many different ways business can continue to effectively communicate and manage within a remote working environment, which many companies are likely to leverage going forward,” Mr. Hedwall added. “Indeed, those operations with stronger digital infrastructure have fared better in the COVID-19 pandemic than those without.”
Hence, an expectation on the future of the supply chain is the adoption of more advanced technologies, with 64% of the EY-surveyed supply chain executives noting the acceleration of digital transformation due to the pandemic. 52% of the executives also considered that the autonomous supply chain is either here or will be by 2025.
Accordingly, as the supply chain operates with more technologies, there is a need for workforce reskilling. This is the second priority (next to increase efficiency) over the next three years of the executives surveyed by EY.
Source: https://www.bworldonline.com/mapping-supply-chain-transformations-throughout-the-crisis/
Read MoreThe crisis has evidently substantial impact that it came to no surprise that only 2% of the 200 senior-level supply chain executives (from organizations in the United States with over one billion US dollars in revenues) said that they were fully prepared for the pandemic, according to a survey done by multinational professional services firm Ernst & Young (EY) in late 2020. On the other hand, 57% experienced the impacts of serious disruptions, with 72% reporting a negative effect.
Moreover, the degree of the crisis varied between the sectors. Companies mostly belonging to the life sciences sector, likely because of their essential products, witnessed positive effects with the increase in customer demand (71%) and coming up with new products to market (57%). The entire automotive companies surveyed, however, said they have negative effects.
“Multiple national lockdowns continue to slow or even temporarily stop the flow of raw materials and finished goods, disrupting manufacturing as a result,” Sean Harapko, EY Americas Supply Chain Transformation and Global Supply Chain RPA leader, noted. “However, the pandemic has not necessarily created any new challenges for supply chains. In some areas, it brought to light previously unseen vulnerabilities.” Accenture, meanwhile, looked over the issues on the supply chains in its article on supply chain disruptions at the time of COVID-19.
According to the consulting and professional services firm, supply chains lack global resilience, making them break down in the face of multi-country disruptions.
The supply chain is also becoming more costly due to the less global and e-commerce fulfillment costs. Yet, additionally, its IT system is still expensive to operate, inflexible, and excessively dependent on legacy technologies every so often. Talent gaps persist across the supply chain as well, making it highly reliant on the human workforce. There is also a need for flexibility in the supply chain to cater to the demands of consumers for personalization and customization.
Another matter needed to be addressed in the supply chain is to meet the expectations of stakeholders for sustainability, given the significant impact that supply chains have on the planet.
As vulnerabilities of the supply chain are uncovered, organizations thus stepped up to fill the gaps to survive the crisis.
With the evident disruptions caused by COVID-19 to the supply chains, there is a crucial need to invest in supply chain resilience.
“Over the past decades, the discussion around optimizing supply chains has focused primarily on cost efficiency and commercial best outcomes. However, as recent history has demonstrated, future supply chains will need to begin factoring resilience and adaptability into their calculations,” Mattias Hedwall, global head of international commerce and trade at Baker McKenzie, wrote in an article published by the World Economic Forum.
Technologies already proved themselves as an efficient solution for industries to carry on their operations. In fact, from the said EY survey, 92% did not stop their technological investments even at a time of uncertain economic environments. “This speaks to the value of a digital supply chain in helping enterprises navigate disruptive forces and respond faster to volatile supply and demand,” Mr. Harapko remarked.
“The COVID-19 pandemic has shown the many different ways business can continue to effectively communicate and manage within a remote working environment, which many companies are likely to leverage going forward,” Mr. Hedwall added. “Indeed, those operations with stronger digital infrastructure have fared better in the COVID-19 pandemic than those without.”
Hence, an expectation on the future of the supply chain is the adoption of more advanced technologies, with 64% of the EY-surveyed supply chain executives noting the acceleration of digital transformation due to the pandemic. 52% of the executives also considered that the autonomous supply chain is either here or will be by 2025.
Accordingly, as the supply chain operates with more technologies, there is a need for workforce reskilling. This is the second priority (next to increase efficiency) over the next three years of the executives surveyed by EY.
Source: https://www.bworldonline.com/mapping-supply-chain-transformations-throughout-the-crisis/
Lean & Resilience
There has been much commentary about global supply chains not being resilient enough. All the disruptions caused by the pandemic, of course, has contributed to this. One culprit, it is argued, is global supply chains being too lean. Does this mean, companies should abandon lean practices? No. It is possible to be lean, where it makes sense, and resilient.
The Advantages of Lean.
The operational excellence methodology known as “lean” is centered on preserving value with less work by avoiding waste. Lean speaks of the seven wastes: overproduction, unnecessary transportation, inventory, motion, defects, over processing, and waiting. Lean practitioners believe that when manufacturers stockpile large quantities of raw materials, load up the shop floor with work-in-process, and pack warehouses with finished goods, that the results are more product defects, long and unpredictable lead times, higher costs, and too much cash tide up as working capital.
Lean initially became a popular continuous improvement methodology because of Toyota’s emergence as a leader in the automotive industry. Toyota’s success was attributed in large part to their use of lean. The principles of lean were introduced in the book The Machine That Changed the World. The book was published in 1991. Since then, manufacturers around the world have embraced lean.
In the automotive industry, Kanban warehouses are common. These warehouses are located in close proximity to an OEM’s plant. Tier 1 suppliers are engaged in a collaborative forecasting process with the OEM. They supply inventory to support the next week or two of a plant’s production schedule. Inventory is shuttled from the warehouse to the plant on a just-in-time, just-in-sequence basis. This allows the plant to operate in a very lean manner. This practice, known as vendor managed inventory, is an excellent example of lean.
When Should Inventory be “Fat”?
If disruptions to a global supply chain occur, this can result in a company being unable to meet demand. The global semiconductor shortage, that began in the first quarter of this year, has led major carmakers to announce significant rollbacks in their production. It has forced some to tell Wall Street to expect lower revenues. If automakers had foreseen this shortage and stockpiled semiconductor chips, they would be in far better shape.
Does this make the vendor managed inventory process obsolete? It does not. It does mean that manufacturers need to understand where inventory needs to be buffered (“fat”) and where it can remain lean.
This in turn means that manufacturers need to understand where they are single sourced on key components. In terms of single sourcing, a useful metric is called “revenue at risk.” This metric has a manufacturer do an analysis of how much revenue they would lose if a key component became unavailable for some defined period (a week, a month, or even longer).
When it comes to material availability, companies need to look deeply into their supply base. They can’t just have good knowledge of their Tier 1 suppliers and trust them to manage Tier 2. A single sourced component might become unavailable not because of something that the Tier 1 supplier does, but because they are facing shortages from one of their suppliers.
But the semiconductor shortage impacting the auto industry shows that achieving resilience is more complex than having multiple suppliers. According to Bindiya Vikal, CEO of Resilinc, the semiconductor shortage was a long time in the making. Two big Japanese semiconductors had fires last year, a labor strike affected facilities in Europe, and container shortages and groundings of 747s made it difficult to move chips to auto plants. Resilinc is one provider of risk monitoring solutions that maps a company’s end-to-end supply chain. This risk solution understands which plants are supplying a manufacturer, how goods flow to a manufacturer’s plant, and whether there are choke points – like a port – that a high proportion of raw materials flow through.
The Resilinc solution is one type of supply chain collaboration network (SCCN) solution.
Recently published market research shows that this market has been growing rapidly. In part, this is because some SCCN solutions can provide the kind of robust upstream visibility manufacturers need. When the type of analysis provided by SCCN risk solutions is combined with supply chain design tools, like the solution offered by Coupa, companies can understand where inventory buffers need to be located and how much inventory it makes sense to hold at these buffer sites.
Source: https://logisticsviewpoints.com/2021/09/05/can-manufacturers-be-both-lean-and-resilient/
Read MoreThe Advantages of Lean.
The operational excellence methodology known as “lean” is centered on preserving value with less work by avoiding waste. Lean speaks of the seven wastes: overproduction, unnecessary transportation, inventory, motion, defects, over processing, and waiting. Lean practitioners believe that when manufacturers stockpile large quantities of raw materials, load up the shop floor with work-in-process, and pack warehouses with finished goods, that the results are more product defects, long and unpredictable lead times, higher costs, and too much cash tide up as working capital.
Lean initially became a popular continuous improvement methodology because of Toyota’s emergence as a leader in the automotive industry. Toyota’s success was attributed in large part to their use of lean. The principles of lean were introduced in the book The Machine That Changed the World. The book was published in 1991. Since then, manufacturers around the world have embraced lean.
In the automotive industry, Kanban warehouses are common. These warehouses are located in close proximity to an OEM’s plant. Tier 1 suppliers are engaged in a collaborative forecasting process with the OEM. They supply inventory to support the next week or two of a plant’s production schedule. Inventory is shuttled from the warehouse to the plant on a just-in-time, just-in-sequence basis. This allows the plant to operate in a very lean manner. This practice, known as vendor managed inventory, is an excellent example of lean.
When Should Inventory be “Fat”?
If disruptions to a global supply chain occur, this can result in a company being unable to meet demand. The global semiconductor shortage, that began in the first quarter of this year, has led major carmakers to announce significant rollbacks in their production. It has forced some to tell Wall Street to expect lower revenues. If automakers had foreseen this shortage and stockpiled semiconductor chips, they would be in far better shape.
Does this make the vendor managed inventory process obsolete? It does not. It does mean that manufacturers need to understand where inventory needs to be buffered (“fat”) and where it can remain lean.
This in turn means that manufacturers need to understand where they are single sourced on key components. In terms of single sourcing, a useful metric is called “revenue at risk.” This metric has a manufacturer do an analysis of how much revenue they would lose if a key component became unavailable for some defined period (a week, a month, or even longer).
When it comes to material availability, companies need to look deeply into their supply base. They can’t just have good knowledge of their Tier 1 suppliers and trust them to manage Tier 2. A single sourced component might become unavailable not because of something that the Tier 1 supplier does, but because they are facing shortages from one of their suppliers.
But the semiconductor shortage impacting the auto industry shows that achieving resilience is more complex than having multiple suppliers. According to Bindiya Vikal, CEO of Resilinc, the semiconductor shortage was a long time in the making. Two big Japanese semiconductors had fires last year, a labor strike affected facilities in Europe, and container shortages and groundings of 747s made it difficult to move chips to auto plants. Resilinc is one provider of risk monitoring solutions that maps a company’s end-to-end supply chain. This risk solution understands which plants are supplying a manufacturer, how goods flow to a manufacturer’s plant, and whether there are choke points – like a port – that a high proportion of raw materials flow through.
The Resilinc solution is one type of supply chain collaboration network (SCCN) solution.
Recently published market research shows that this market has been growing rapidly. In part, this is because some SCCN solutions can provide the kind of robust upstream visibility manufacturers need. When the type of analysis provided by SCCN risk solutions is combined with supply chain design tools, like the solution offered by Coupa, companies can understand where inventory buffers need to be located and how much inventory it makes sense to hold at these buffer sites.
Source: https://logisticsviewpoints.com/2021/09/05/can-manufacturers-be-both-lean-and-resilient/
Contract renegotiations are vital for responding to unpredictable developments like shortages, shifts in consumer behavior or shocks like Covid-19, help companies find value in unexpected places, increase efficiency and resilience, and improve supply chain visibility.
There are many reasons manufacturers and distributors may decide to renegotiate their B2B contracts. Perhaps sales figures were much higher or lower than anticipated. Or maybe there was an error in the original contract that prevented companies from getting the most out of their partnership. Over the past year, many companies needed to renegotiate because Covid-19 had such a dramatic effect on markets and workforces.
While renegotiations are vital for responding to unpredictable developments like shortages, shifts in consumer behavior or shocks like Covid-19, companies should take a broader view of how they can be applied. Renegotiations help companies find value in unexpected places, increase efficiency and resilience, and improve supply chain visibility, all of which executives in the sector rank as top concerns.
When partners have the ability to fine-tune their contracts and make adjustments in real time, they can identify and address weak links in supply chains more quickly, set up rebate systems that account for changing conditions, address each partner’s unique needs and ultimately increase revenue.
Contract negotiation is always difficult, as it requires companies to account for a wide range of contingencies and develop terms that both parties accept. These issues only become more complex in times of crisis — forecasting is more difficult, logistics are thrown into disarray and performance is harder to track. To account for all these variables, it’s necessary for manufacturers and distributors to renegotiate contracts — a process that brings companies into alignment on timetables, performance targets and rebates. When companies agree to renegotiate, they’re often in a stronger position to identify problems, implement more efficient processes and maintain healthy interactions with one another.
Contract renegotiation should lead companies to reframe their relationships. By continually reassessing agreements to keep them in line with what’s happening in the real world, companies demonstrate their commitment to the maintenance of productive and resilient partnerships that work for all parties.
The first step toward a successful renegotiation is determining what your partner’s priorities and pain points are, where your interests overlap and where those interests may diverge. The process of developing and implementing contracts can be arduous, and there’s no reason to make it even more difficult by failing to be upfront about issues that will inevitably arise. Partners have to understand one another before they can work together productively, which is why the renegotiation process should be as transparent and collaborative as possible.
While contracts should always be living documents that are subject to change, companies should make sure they’re based on the best available information. This is why forecasting is central to the renegotiation process — companies need to consider factors such as potential shifts in the economic landscape, changing consumer sentiments and new Covid-19 developments to determine which types of contracts make the most sense.
Partners also need to conduct due diligence on one another to avoid any surprises after the new contract has been signed. To keep track of the renegotiation and how it’s executed, partners should use a centralized digital system that will allow them to gather and analyze large amounts of data, adjudicate disputes and avoid the mistakes that are made when companies use outmoded tracking resources like spreadsheets (which, according to my company’s research, over one-third of supply chain professionals still rely upon).
Source: https://www.forbes.com/sites/theyec/2021/09/03/how-contract-renegotiation-can-make-supply-chains-more-adaptive-and-resilient/
Read MoreWhile renegotiations are vital for responding to unpredictable developments like shortages, shifts in consumer behavior or shocks like Covid-19, companies should take a broader view of how they can be applied. Renegotiations help companies find value in unexpected places, increase efficiency and resilience, and improve supply chain visibility, all of which executives in the sector rank as top concerns.
When partners have the ability to fine-tune their contracts and make adjustments in real time, they can identify and address weak links in supply chains more quickly, set up rebate systems that account for changing conditions, address each partner’s unique needs and ultimately increase revenue.
Contract negotiation is always difficult, as it requires companies to account for a wide range of contingencies and develop terms that both parties accept. These issues only become more complex in times of crisis — forecasting is more difficult, logistics are thrown into disarray and performance is harder to track. To account for all these variables, it’s necessary for manufacturers and distributors to renegotiate contracts — a process that brings companies into alignment on timetables, performance targets and rebates. When companies agree to renegotiate, they’re often in a stronger position to identify problems, implement more efficient processes and maintain healthy interactions with one another.
Contract renegotiation should lead companies to reframe their relationships. By continually reassessing agreements to keep them in line with what’s happening in the real world, companies demonstrate their commitment to the maintenance of productive and resilient partnerships that work for all parties.
The first step toward a successful renegotiation is determining what your partner’s priorities and pain points are, where your interests overlap and where those interests may diverge. The process of developing and implementing contracts can be arduous, and there’s no reason to make it even more difficult by failing to be upfront about issues that will inevitably arise. Partners have to understand one another before they can work together productively, which is why the renegotiation process should be as transparent and collaborative as possible.
While contracts should always be living documents that are subject to change, companies should make sure they’re based on the best available information. This is why forecasting is central to the renegotiation process — companies need to consider factors such as potential shifts in the economic landscape, changing consumer sentiments and new Covid-19 developments to determine which types of contracts make the most sense.
Partners also need to conduct due diligence on one another to avoid any surprises after the new contract has been signed. To keep track of the renegotiation and how it’s executed, partners should use a centralized digital system that will allow them to gather and analyze large amounts of data, adjudicate disputes and avoid the mistakes that are made when companies use outmoded tracking resources like spreadsheets (which, according to my company’s research, over one-third of supply chain professionals still rely upon).
Source: https://www.forbes.com/sites/theyec/2021/09/03/how-contract-renegotiation-can-make-supply-chains-more-adaptive-and-resilient/
Perhaps it’s time for supply chain organizations to start actively recruiting gamers
The current labor shortage is nothing new for supply chain organizations, which have struggled to attract enough younger workers as more and more Baby Boomers retire.
And the pandemic gave that labor shortage risk a new sense of urgency, as it put supply chains under a glaring spotlight. People came to understand not only how vital supply chains are, but that they are also intricately interconnected, incredibly complex, ever-changing puzzles.
So here’s an idea. Perhaps it’s time for supply chain organizations to start actively recruiting from some of the world’s best puzzle solvers: gamers.
Supply chains are very similar to the worlds that gamers face every day on their screens. The games they play are problem-solving exercises on steroids. Gamers must glean information from a range of sources and constantly adapt tactics and strategies on their quest, often teaming up with virtual teammates (or leading virtual teams) to get to the next level. They find and exploit patterns, remotely control robots and vehicles, bring multitasking to whole new levels, and keep their focus on the desired outcome.
It’s a perfect match. And with the general public’s worldwide focus on supply chains, it’s also a big opportunity to entice more young workers with great skillsets into the industry.
But there’s one more big reason gamers might be drawn to the world of supply chains: it’s where they can get their hands on some of the most innovative technology around, like augmented reality, robots, and AI.
Entice Workers With a Tech Future
While the pandemic exposed the weak links in many organizations’ supply chains, it may have also accelerated the industry’s move toward modern systems—including fascinating applications for emerging tech. For example, manufacturers had to quickly implement social distancing for their essential workers, and that often required reconfiguring the factory floor. Some used augmented technology to plan out these changes, so they could see how it would work before they went to the trouble of pushing their machines apart and moving heavy equipment from one place to another.
Virtual and augmented reality were already proving their value in other areas of supply chain, like equipment maintenance. When a machine needs repair, innovative organizations use the technology to ensure the technician they send has the right parts and tools for the job—and once onsite, to provide guidance from a senior technician back at the company’s headquarters.
Employees in supply chain organizations are also at the forefront of using sensors, Internet of Things (IoT) technology, AI, and data analytics to help organizations dramatically improve operations and advance sustainability initiatives. These technologies can help employees prevent equipment breakdowns, optimize delivery routes, reduce waste of perishable products, cut inventory costs, and improve workplace safety.
On the floor in many factories, employees manage robots on the assembly line and use AI and IoT to quickly identify production problems. Instead of searching for hard-to-source and often costly parts for older machinery, they can now create replacement parts with 3D printers. In the warehouse, inventory can now be measured not by people scanning barcodes, but by controlling drones that count items as they fly by shelves.
The supply chain sector provides a real-world proving ground for the latest technology. That gives supply chain organizations an incredible opportunity to attract younger employees—and will especially appeal to those with unique skillsets honed by years of navigating complex game challenges.
Younger Workers’ Priorities
People in early stages of their careers want to work for organizations that give them experience they can build upon. They won’t see old-school systems, paper spreadsheets, and manual processes as a springboard to professional growth.
Younger generations also want to work for organizations that are committed to environmental issues, and the supply chain is on the front lines of sustainability. A strong corporate mandate to meet stringent sustainability goals will go a long way in attracting employees for supply chain roles. But you can’t manage what you can’t see, and new technologies give organizations visibility into environmental impact and connect the dots to make meaningful improvements.
Consider the appeal of logistics. The supply chain professionals who manage the transport of products from factories or warehouses to customers are really playing the most complex game of Tetris imaginable, loading trucks as efficiently as possible and in a way that minimizes fuel usage and emissions. They design and redesign routes and delivery schedules based on a constant barrage of data—and increasingly tap powerful machine learning capabilities to identify the best course of action.
Modern technology is key to all of this, bringing together the relevant data in an easy-to-use dashboard so that employees can make decisions quickly. For example, the system might send an alert that a shipment of supplies is going to be late to a factory in Germany—and with access to comprehensive information, an employee can analyze whether replacing those parts with others from a supplier further away makes sense in terms of cost, production schedules, carbon footprint, and other dimensions.
Expanding the Labor Pool
Companies that use modern systems in their supply chain will have an easier time attracting younger employees, and they’ll be able to recruit from a larger labor pool.
For many of these roles, a college degree isn’t necessary. What’s crucial is critical thinking skills. Supply chain organizations need employees who can quickly analyze what’s happening and weigh the options, consequences, and ramifications of each potential action. Those are skills that come with practice and experience.
Of course, gamers are just one example of a potential labor pool that organizations may be overlooking. As jobs on the factory or warehouse floor shift away from physical labor and heavy lifting to operating robots and drones and managing self-driving vehicles, those roles can be filled by a more diverse group of employees, including older workers and those with physical disabilities.
There has truly never been a more exciting time to be in the supply chain sector. For innovative supply chain organizations, it’s a huge opportunity to bring in a new generation of tech-savvy employees ready for the challenges ahead.
Source: https://www.scmr.com/article/need_supply_chain_staff_hire_gamers
Read MoreAnd the pandemic gave that labor shortage risk a new sense of urgency, as it put supply chains under a glaring spotlight. People came to understand not only how vital supply chains are, but that they are also intricately interconnected, incredibly complex, ever-changing puzzles.
So here’s an idea. Perhaps it’s time for supply chain organizations to start actively recruiting from some of the world’s best puzzle solvers: gamers.
Supply chains are very similar to the worlds that gamers face every day on their screens. The games they play are problem-solving exercises on steroids. Gamers must glean information from a range of sources and constantly adapt tactics and strategies on their quest, often teaming up with virtual teammates (or leading virtual teams) to get to the next level. They find and exploit patterns, remotely control robots and vehicles, bring multitasking to whole new levels, and keep their focus on the desired outcome.
It’s a perfect match. And with the general public’s worldwide focus on supply chains, it’s also a big opportunity to entice more young workers with great skillsets into the industry.
But there’s one more big reason gamers might be drawn to the world of supply chains: it’s where they can get their hands on some of the most innovative technology around, like augmented reality, robots, and AI.
Entice Workers With a Tech Future
While the pandemic exposed the weak links in many organizations’ supply chains, it may have also accelerated the industry’s move toward modern systems—including fascinating applications for emerging tech. For example, manufacturers had to quickly implement social distancing for their essential workers, and that often required reconfiguring the factory floor. Some used augmented technology to plan out these changes, so they could see how it would work before they went to the trouble of pushing their machines apart and moving heavy equipment from one place to another.
Virtual and augmented reality were already proving their value in other areas of supply chain, like equipment maintenance. When a machine needs repair, innovative organizations use the technology to ensure the technician they send has the right parts and tools for the job—and once onsite, to provide guidance from a senior technician back at the company’s headquarters.
Employees in supply chain organizations are also at the forefront of using sensors, Internet of Things (IoT) technology, AI, and data analytics to help organizations dramatically improve operations and advance sustainability initiatives. These technologies can help employees prevent equipment breakdowns, optimize delivery routes, reduce waste of perishable products, cut inventory costs, and improve workplace safety.
On the floor in many factories, employees manage robots on the assembly line and use AI and IoT to quickly identify production problems. Instead of searching for hard-to-source and often costly parts for older machinery, they can now create replacement parts with 3D printers. In the warehouse, inventory can now be measured not by people scanning barcodes, but by controlling drones that count items as they fly by shelves.
The supply chain sector provides a real-world proving ground for the latest technology. That gives supply chain organizations an incredible opportunity to attract younger employees—and will especially appeal to those with unique skillsets honed by years of navigating complex game challenges.
Younger Workers’ Priorities
People in early stages of their careers want to work for organizations that give them experience they can build upon. They won’t see old-school systems, paper spreadsheets, and manual processes as a springboard to professional growth.
Younger generations also want to work for organizations that are committed to environmental issues, and the supply chain is on the front lines of sustainability. A strong corporate mandate to meet stringent sustainability goals will go a long way in attracting employees for supply chain roles. But you can’t manage what you can’t see, and new technologies give organizations visibility into environmental impact and connect the dots to make meaningful improvements.
Consider the appeal of logistics. The supply chain professionals who manage the transport of products from factories or warehouses to customers are really playing the most complex game of Tetris imaginable, loading trucks as efficiently as possible and in a way that minimizes fuel usage and emissions. They design and redesign routes and delivery schedules based on a constant barrage of data—and increasingly tap powerful machine learning capabilities to identify the best course of action.
Modern technology is key to all of this, bringing together the relevant data in an easy-to-use dashboard so that employees can make decisions quickly. For example, the system might send an alert that a shipment of supplies is going to be late to a factory in Germany—and with access to comprehensive information, an employee can analyze whether replacing those parts with others from a supplier further away makes sense in terms of cost, production schedules, carbon footprint, and other dimensions.
Expanding the Labor Pool
Companies that use modern systems in their supply chain will have an easier time attracting younger employees, and they’ll be able to recruit from a larger labor pool.
For many of these roles, a college degree isn’t necessary. What’s crucial is critical thinking skills. Supply chain organizations need employees who can quickly analyze what’s happening and weigh the options, consequences, and ramifications of each potential action. Those are skills that come with practice and experience.
Of course, gamers are just one example of a potential labor pool that organizations may be overlooking. As jobs on the factory or warehouse floor shift away from physical labor and heavy lifting to operating robots and drones and managing self-driving vehicles, those roles can be filled by a more diverse group of employees, including older workers and those with physical disabilities.
There has truly never been a more exciting time to be in the supply chain sector. For innovative supply chain organizations, it’s a huge opportunity to bring in a new generation of tech-savvy employees ready for the challenges ahead.
Source: https://www.scmr.com/article/need_supply_chain_staff_hire_gamers
Supply Chain Efficiency
The past 18 months has proven that the unthinkable really can happen, and the whole world has had to deal with previously unseen levels of disruption without any real guidelines. The pandemic has demonstrated how seriously production is affected when supplies aren’t available, travel is restricted, and when less (or no) workers are allowed on the floor, among many other difficulties.
While we may not be able to predict the next global pandemic, improving the efficiency of manufacturing, procurement activities and stock management will provide a significant level of resilience against potential future disruption.
During "normal" conditions, many supply chains likely operate with inefficiencies that aren’t even noticeable, but as soon as disruption strikes, they are difficult to fix quickly. This is why a thorough risk assessment and evaluation of efficiency should be regular practice for supply chains.
Efficiency doesn’t just concern operational and manufacturing processes; it also requires you to think of your procurement activities and stock management through a lens of efficiency.
Inefficient businesses, especially manufacturers, have a huge carbon footprint. With the Paris Agreement in place and governments all over the world targeting net zero, new environmental goals can’t be met without change to the activities of supply chains across all industries in terms of manufacturing and logistics.
While the future will likely bring specific regulations or procedural changes that will affect the way supply chains do business, ensuring efficiency now will mean that such changes will probably require less of an overhaul. Reducing waste and grouping deliveries are just a couple of ways in which supply chains can be both more efficient and more environmentally friendly.
Even in times of slow trade, you still have bills and wages to pay, and this requires a steady cash flow. One way in which many supply chains are not efficient is through storing excess stock. While it may seem practical to have a healthy backup of components in case of supply issues, excess stock just sitting in storage is impeding your cash flow. Storing excess components will increase your warehouse costs and unused components could even become obsolete during storage, meaning you will be looking at a financial loss.
One of the central principles of efficiency is reducing waste. Wasteful use of materials, resources and labor are all inefficient processes that directly result in higher costs to your business. If your production processes are more efficient, then you will waste less materials, only order the parts you need, and use your labor more effectively.
In order to be less wasteful, you must ruthlessly evaluate your processes, carry out risk assessments and plan comprehensively. Making your production processes more effective may mean additional investment in new technology or employees, but the long-term gains will far outweigh the initial cost.
Supply chain efficiency encompasses more than just your production processes. Rather, it is a mindset with which all activities need to be approached. If you can improve your efficiency, you can expect long-term reduced costs, resilience against unforeseen disruption and a supply chain that is kinder to the environment.
Source: https://epsnews.com/2021/08/30/the-importance-of-supply-chain-efficiency/
Read MoreWhile we may not be able to predict the next global pandemic, improving the efficiency of manufacturing, procurement activities and stock management will provide a significant level of resilience against potential future disruption.
During "normal" conditions, many supply chains likely operate with inefficiencies that aren’t even noticeable, but as soon as disruption strikes, they are difficult to fix quickly. This is why a thorough risk assessment and evaluation of efficiency should be regular practice for supply chains.
Efficiency doesn’t just concern operational and manufacturing processes; it also requires you to think of your procurement activities and stock management through a lens of efficiency.
Inefficient businesses, especially manufacturers, have a huge carbon footprint. With the Paris Agreement in place and governments all over the world targeting net zero, new environmental goals can’t be met without change to the activities of supply chains across all industries in terms of manufacturing and logistics.
While the future will likely bring specific regulations or procedural changes that will affect the way supply chains do business, ensuring efficiency now will mean that such changes will probably require less of an overhaul. Reducing waste and grouping deliveries are just a couple of ways in which supply chains can be both more efficient and more environmentally friendly.
Even in times of slow trade, you still have bills and wages to pay, and this requires a steady cash flow. One way in which many supply chains are not efficient is through storing excess stock. While it may seem practical to have a healthy backup of components in case of supply issues, excess stock just sitting in storage is impeding your cash flow. Storing excess components will increase your warehouse costs and unused components could even become obsolete during storage, meaning you will be looking at a financial loss.
One of the central principles of efficiency is reducing waste. Wasteful use of materials, resources and labor are all inefficient processes that directly result in higher costs to your business. If your production processes are more efficient, then you will waste less materials, only order the parts you need, and use your labor more effectively.
In order to be less wasteful, you must ruthlessly evaluate your processes, carry out risk assessments and plan comprehensively. Making your production processes more effective may mean additional investment in new technology or employees, but the long-term gains will far outweigh the initial cost.
Supply chain efficiency encompasses more than just your production processes. Rather, it is a mindset with which all activities need to be approached. If you can improve your efficiency, you can expect long-term reduced costs, resilience against unforeseen disruption and a supply chain that is kinder to the environment.
Source: https://epsnews.com/2021/08/30/the-importance-of-supply-chain-efficiency/
Asset track-and-trace will put resiliency at the organization.
Since the advent of the COVID-19 crisis, supply chains have been in a state of turmoil, with several factors impacting the health of logistics businesses at large. A black swan event with a persisting effect on daily operations for nearly two years, the pandemic has spun off disruptions similar to falling dominoes, creating issues that strain freight movement globally.
Industry stakeholders struggle under the weight of a massive increase in freight prices due to rising consumer demand, even as logistics service providers (LSPs) fight to find container capacity to move cargo. Port congestion and intermodal hub holdups have become commonplace as freight capacity crunch, pandemic-induced regulations and spiking demand continue to put pressure on movement.
These supply chain issues are universal, reflecting in the intermodal trucking market as well, as fleet owners contend with uncertainties in the environment beyond anything they have operated in before. The issue is compounded by the rise in the price of new tractors and trailers, brought about by halting production at OEMs.
This, again, is a consequence of the pandemic. Shortages in auto parts like semiconductor chips and commodities like copper and steel, followed by COVID-19 breakouts in manufacturing facilities, meant OEMs had to shut doors for weeks at a stretch, impacting production.
The trailer market is no different. An ACT report on trailers showed that the ratio of trailer orders to tractor orders has been abysmally low, recorded at roughly 0.65 in June. In any typical year, the ratio would be close to 1.5 — over twofold higher than the current state. This is an important indicator as it shows the pressure the trailer market is under due to the order pause that is prevalent in trailer production. With this being an ongoing situation, trailer availability in the market will be in heavy duress all the way to 2022.
This working environment creates a problem for fleet operators and intermodal trucking firms. The market is hot in terms of freight rates, making it an opportune time for carriers to increase their gross revenue by capitalizing on spiking demand. However, running into issues with increasing the size of their fleet — by buying or leasing assets — is increasingly becoming a problem.
To circumvent this paradoxical situation, companies must look to increase the visibility they have within trucking operations. Track-and-trace capabilities will help fleet management gain visibility over assets, allowing them to calculate asset uptime and efficiency. In a standard setup, the truck-to-trailer ratio within an intermodal fleet would be roughly 1:3. However, meticulous optimization can help reduce this ratio even when hauling identical freight volumes.
Consider a fleet with an asset strength of 15,000 chassis, registering 2% asset growth annually. This would mean the fleet would be adding roughly 300 new chassis every year and close to 1,500 in five years. A new chassis costs anywhere from ,000 to ,000, translating to million in capital investment over a five-year period. Add maintenance and refurbishing costs for the existing assets, and the company stands to spend a few million dollars more to maximize uptime.
While asset management sounds like a capital sink, it could get a lot worse with the current conditions, in which trailer orders run the risk of being turned down and deliveries held up for several months. In this scenario, it makes sense for companies to look at optimizing capacity in their existing assets. Asset track-and-trace allows management to do more than gain visibility over freight movement. By understanding real-time asset status and keeping tabs onc freight that needs hauling, fleet operators easily can match capacity with volumes, even automating the process to a great extent.
Asset tracking can also reduce idling like in drayage operations — a common occurrence today thanks to port congestion and delays in loading and unloading at the dock. By having visibility into possible delays, companies can look at shortening hauling cycles by reducing dwell times, eventually improving asset productivity.
Preventative maintenance is another benefit, with asset tracking helping companies avoid equipment breakdown and the resulting logistics chaos. Operations managers who track assets will receive notifications on annual maintenance actions per asset, helping easily manage maintenance workflows. When the tracking system monitors an asset for a period of time, it can theoretically provide predictive insights into required maintenance actions — irrespective of scheduled maintenance.
Due maintenance will ensure assets have longer life cycles, further reducing the need for asset-related capital expenditure. This is true of the industry at large as trailer life cycles have improved dramatically, with expected life spans now hovering at around 12-15 years, up from eight to 10 years a decade ago.
Having visibility over assets has an overarching impact on company bottom lines and future-proofs businesses from being ruined by market uncertainties. Asset track-and-trace will continue to be relevant even in a fair-weather market, as increasing uptime directly correlates to running sustainable operations — a reality dawning on every stakeholder looking to put resiliency at the center of his or her organization.
Source: https://www.freightwaves.com/news/viewpoint-visibility-key-during-times-of-supply-chain-disruption
Read MoreIndustry stakeholders struggle under the weight of a massive increase in freight prices due to rising consumer demand, even as logistics service providers (LSPs) fight to find container capacity to move cargo. Port congestion and intermodal hub holdups have become commonplace as freight capacity crunch, pandemic-induced regulations and spiking demand continue to put pressure on movement.
These supply chain issues are universal, reflecting in the intermodal trucking market as well, as fleet owners contend with uncertainties in the environment beyond anything they have operated in before. The issue is compounded by the rise in the price of new tractors and trailers, brought about by halting production at OEMs.
This, again, is a consequence of the pandemic. Shortages in auto parts like semiconductor chips and commodities like copper and steel, followed by COVID-19 breakouts in manufacturing facilities, meant OEMs had to shut doors for weeks at a stretch, impacting production.
The trailer market is no different. An ACT report on trailers showed that the ratio of trailer orders to tractor orders has been abysmally low, recorded at roughly 0.65 in June. In any typical year, the ratio would be close to 1.5 — over twofold higher than the current state. This is an important indicator as it shows the pressure the trailer market is under due to the order pause that is prevalent in trailer production. With this being an ongoing situation, trailer availability in the market will be in heavy duress all the way to 2022.
This working environment creates a problem for fleet operators and intermodal trucking firms. The market is hot in terms of freight rates, making it an opportune time for carriers to increase their gross revenue by capitalizing on spiking demand. However, running into issues with increasing the size of their fleet — by buying or leasing assets — is increasingly becoming a problem.
To circumvent this paradoxical situation, companies must look to increase the visibility they have within trucking operations. Track-and-trace capabilities will help fleet management gain visibility over assets, allowing them to calculate asset uptime and efficiency. In a standard setup, the truck-to-trailer ratio within an intermodal fleet would be roughly 1:3. However, meticulous optimization can help reduce this ratio even when hauling identical freight volumes.
Consider a fleet with an asset strength of 15,000 chassis, registering 2% asset growth annually. This would mean the fleet would be adding roughly 300 new chassis every year and close to 1,500 in five years. A new chassis costs anywhere from ,000 to ,000, translating to million in capital investment over a five-year period. Add maintenance and refurbishing costs for the existing assets, and the company stands to spend a few million dollars more to maximize uptime.
While asset management sounds like a capital sink, it could get a lot worse with the current conditions, in which trailer orders run the risk of being turned down and deliveries held up for several months. In this scenario, it makes sense for companies to look at optimizing capacity in their existing assets. Asset track-and-trace allows management to do more than gain visibility over freight movement. By understanding real-time asset status and keeping tabs onc freight that needs hauling, fleet operators easily can match capacity with volumes, even automating the process to a great extent.
Asset tracking can also reduce idling like in drayage operations — a common occurrence today thanks to port congestion and delays in loading and unloading at the dock. By having visibility into possible delays, companies can look at shortening hauling cycles by reducing dwell times, eventually improving asset productivity.
Preventative maintenance is another benefit, with asset tracking helping companies avoid equipment breakdown and the resulting logistics chaos. Operations managers who track assets will receive notifications on annual maintenance actions per asset, helping easily manage maintenance workflows. When the tracking system monitors an asset for a period of time, it can theoretically provide predictive insights into required maintenance actions — irrespective of scheduled maintenance.
Due maintenance will ensure assets have longer life cycles, further reducing the need for asset-related capital expenditure. This is true of the industry at large as trailer life cycles have improved dramatically, with expected life spans now hovering at around 12-15 years, up from eight to 10 years a decade ago.
Having visibility over assets has an overarching impact on company bottom lines and future-proofs businesses from being ruined by market uncertainties. Asset track-and-trace will continue to be relevant even in a fair-weather market, as increasing uptime directly correlates to running sustainable operations — a reality dawning on every stakeholder looking to put resiliency at the center of his or her organization.
Source: https://www.freightwaves.com/news/viewpoint-visibility-key-during-times-of-supply-chain-disruption
Will widespread supply chain problems persist into next year?
A supply chain crunch that was meant to be temporary now looks like it will last well into next year as the surging delta variant upends factory production in Asia and disrupts shipping, posing more shocks to the world economy.
Manufacturers reeling from shortages of key components and higher raw material and energy costs are being forced into bidding wars to get space on vessels, pushing freight rates to records and prompting some exporters to raise prices or simply cancel shipments altogether.
The cost of sending a container from Asia to Europe is about 10 times higher than in May 2020, while the cost from Shanghai to Los Angeles has grown more than sixfold, according to the Drewry World Container Index.
The spread of the delta variant, especially in Southeast Asia, is making it difficult for many factories to operate at all. In Vietnam, the world’s second-largest producer of footwear and clothing, the government has ordered manufacturers to allow workers to sleep in their factories to try to keep exports moving. Even mighty Toyota Motor Corp. is affected. The automaker warned this month it will suspend output at 14 plants across Japan and slash production by 40% due to supply disruptions including chip shortages.
On the other side of the planet, companies in the U.K. are grappling with record low levels of stock and retail selling prices are rising at the fastest pace since November 2017. Germany’s recovery is also under threat. A key measure of business confidence in Europe’s largest economy, released on Wednesday by the Munich-based Ifo institute. fell by more than economists had predicted with the drop blamed in part on shortages for metals, plastic products and semiconductors, among other goods.
Big retailers tend to have long-term contracts with container lines, but Asian production relies on networks of tens of thousands of small and medium-sized producers who often arrange shipping through logistics firms and freight forwarders. They in turn have been struggling to secure space for clients as vessel owners sell to the highest bidders.
Buyers agree. In Germany, more than half of the 3,000 firms polled by the Association of German Chambers of Industry and Commerce expected widespread supply-chain problems to persist into next year.
Chinese companies that spent decades shifting production of lower-value components to cheaper labor markets in South and Southeast Asia now face the headache of trying to get those parts to factories where they can be assembled into finished products.
As factories succumb to lock-downs, manufacturers are forced into a game of whac-a-mole, switching raw materials from one country to another. Some have resorted to air-freighting materials such as leather to factories to keep production lines rolling.
Source: https://www.bloomberg.com/news/articles/2021-08-25/the-world-economy-s-supply-chain-problem-keeps-getting-worse
Read MoreManufacturers reeling from shortages of key components and higher raw material and energy costs are being forced into bidding wars to get space on vessels, pushing freight rates to records and prompting some exporters to raise prices or simply cancel shipments altogether.
The cost of sending a container from Asia to Europe is about 10 times higher than in May 2020, while the cost from Shanghai to Los Angeles has grown more than sixfold, according to the Drewry World Container Index.
The spread of the delta variant, especially in Southeast Asia, is making it difficult for many factories to operate at all. In Vietnam, the world’s second-largest producer of footwear and clothing, the government has ordered manufacturers to allow workers to sleep in their factories to try to keep exports moving. Even mighty Toyota Motor Corp. is affected. The automaker warned this month it will suspend output at 14 plants across Japan and slash production by 40% due to supply disruptions including chip shortages.
On the other side of the planet, companies in the U.K. are grappling with record low levels of stock and retail selling prices are rising at the fastest pace since November 2017. Germany’s recovery is also under threat. A key measure of business confidence in Europe’s largest economy, released on Wednesday by the Munich-based Ifo institute. fell by more than economists had predicted with the drop blamed in part on shortages for metals, plastic products and semiconductors, among other goods.
Big retailers tend to have long-term contracts with container lines, but Asian production relies on networks of tens of thousands of small and medium-sized producers who often arrange shipping through logistics firms and freight forwarders. They in turn have been struggling to secure space for clients as vessel owners sell to the highest bidders.
Buyers agree. In Germany, more than half of the 3,000 firms polled by the Association of German Chambers of Industry and Commerce expected widespread supply-chain problems to persist into next year.
Chinese companies that spent decades shifting production of lower-value components to cheaper labor markets in South and Southeast Asia now face the headache of trying to get those parts to factories where they can be assembled into finished products.
As factories succumb to lock-downs, manufacturers are forced into a game of whac-a-mole, switching raw materials from one country to another. Some have resorted to air-freighting materials such as leather to factories to keep production lines rolling.
Source: https://www.bloomberg.com/news/articles/2021-08-25/the-world-economy-s-supply-chain-problem-keeps-getting-worse
5 Capabilities of Tomorrow's Chief Procurement Officers
The role of the procurement professional has historically been based around cost control and the timely purchases of goods and services, but today’s CPO (Chief Procurement Officer) is responsible for a far wider breadth of responsibilities.
CPOs are now expected to enable growth through new business approaches; build deeper and more collaborative relationships with suppliers; enable greater sustainability, resilience and innovation; and harness new technologies such as artificial intelligence and machine learning to help business leaders make better decisions and deliver improved outcomes.
The CPOs who are leading the pack possess the right balance of vision, purpose, collaboration and flexibility to drive enterprise-wide transformation, and are building high-performing procurement teams consisting of a far wider array of skills, knowledge and experience.
Following are five core capabilities that forward-looking CPOs are prioritizing to help transform their businesses and meet today’s challenges:
1. Willingness to take risks and disrupt the status quo;
Corporate leadership today is largely about driving change. And while procurement leaders traditionally have focused on establishing and maintaining disciplines and methods designed around cost management and compliance, increasingly they are becoming champions of break-through innovation and business transformation. The inherent nature of innovation involves experimentation, calculated risk-taking and uncertainty. New approaches should be viewed as learning experiences, and any unexpected setbacks seen as stepping-stones to company and personal leadership growth;
2. Focusing on agility and adaptability.
To remain competitive in today’s volatile economic environment, companies must evolve and pivot faster than before. Holding on to outdated technologies and manual processes can result in businesses being left behind. Leading CPOs have recognized the need to develop best-of-breed digital ecosystems which allow multiple innovative technologies to work together, and deliver superior user experiences for both their teams and business stakeholders. Procurement needs to become an agile and adaptable function, embracing the uncertainty that is at the heart of business today, while seeing each challenge as an opportunity to revisit models and processes, and increase both the top and bottom lines;
3. Building new types of teams.
Successful CPOs are ensuring that a wide range of voices are heard across their teams, with people from different backgrounds bringing fresh perspectives, insights and experiences to the table. Rather than hiring managers with many years of procurement domain experience in various category roles, transformative leaders are actively seeking to recruit new talent with well-developed business or functional expertise, exceptional digital literacy, sales or relationships management experience, or consultancy backgrounds with strong, creative problem-solving skills.
4. Redefining procurement’s role.
Procurement leaders are now often called in to help teams across the business with increasingly complex supply challenges, partnering with I.T., H.R., finance and or legal enables procurement to drive digital transformation across all functions. Indeed, the career paths of tomorrow’s CPOs are likely to involve working in different areas of the business to develop relationship building, account management expertise as well as sales and change management skills that are increasingly needed to fulfill the broader mission of the procurement function.
5. Aligning resources to corporate priorities.
One of the biggest challenges CPOs face today is that their functions need to take on a more strategic role, rather than focusing primarily on day-to-day transactional activities. Procurement leaders are prioritizing opportunities with the greatest impact on the entire organization, whether that’s leading the way on stakeholder experience, digital transformation or the environmental and social governance (ESG) agenda through responsible, transparent and sustainable business practices.
To help guide more strategic thinking, leading CPOs are using new technologies that free up their talent to focus on the more human aspects of procurement, such as relationship management, supplier innovation and business partner problem-solving, while at the same time exceeding stakeholder expectations created by the consumerization of enterprise buying.
Source: https://www.supplychainbrain.com/blogs/1-think-tank/post/33572-the-capabilities-that-todays-cpo-needs-to-succeed
Read MoreCPOs are now expected to enable growth through new business approaches; build deeper and more collaborative relationships with suppliers; enable greater sustainability, resilience and innovation; and harness new technologies such as artificial intelligence and machine learning to help business leaders make better decisions and deliver improved outcomes.
The CPOs who are leading the pack possess the right balance of vision, purpose, collaboration and flexibility to drive enterprise-wide transformation, and are building high-performing procurement teams consisting of a far wider array of skills, knowledge and experience.
Following are five core capabilities that forward-looking CPOs are prioritizing to help transform their businesses and meet today’s challenges:
1. Willingness to take risks and disrupt the status quo;
Corporate leadership today is largely about driving change. And while procurement leaders traditionally have focused on establishing and maintaining disciplines and methods designed around cost management and compliance, increasingly they are becoming champions of break-through innovation and business transformation. The inherent nature of innovation involves experimentation, calculated risk-taking and uncertainty. New approaches should be viewed as learning experiences, and any unexpected setbacks seen as stepping-stones to company and personal leadership growth;
2. Focusing on agility and adaptability.
To remain competitive in today’s volatile economic environment, companies must evolve and pivot faster than before. Holding on to outdated technologies and manual processes can result in businesses being left behind. Leading CPOs have recognized the need to develop best-of-breed digital ecosystems which allow multiple innovative technologies to work together, and deliver superior user experiences for both their teams and business stakeholders. Procurement needs to become an agile and adaptable function, embracing the uncertainty that is at the heart of business today, while seeing each challenge as an opportunity to revisit models and processes, and increase both the top and bottom lines;
3. Building new types of teams.
Successful CPOs are ensuring that a wide range of voices are heard across their teams, with people from different backgrounds bringing fresh perspectives, insights and experiences to the table. Rather than hiring managers with many years of procurement domain experience in various category roles, transformative leaders are actively seeking to recruit new talent with well-developed business or functional expertise, exceptional digital literacy, sales or relationships management experience, or consultancy backgrounds with strong, creative problem-solving skills.
4. Redefining procurement’s role.
Procurement leaders are now often called in to help teams across the business with increasingly complex supply challenges, partnering with I.T., H.R., finance and or legal enables procurement to drive digital transformation across all functions. Indeed, the career paths of tomorrow’s CPOs are likely to involve working in different areas of the business to develop relationship building, account management expertise as well as sales and change management skills that are increasingly needed to fulfill the broader mission of the procurement function.
5. Aligning resources to corporate priorities.
One of the biggest challenges CPOs face today is that their functions need to take on a more strategic role, rather than focusing primarily on day-to-day transactional activities. Procurement leaders are prioritizing opportunities with the greatest impact on the entire organization, whether that’s leading the way on stakeholder experience, digital transformation or the environmental and social governance (ESG) agenda through responsible, transparent and sustainable business practices.
To help guide more strategic thinking, leading CPOs are using new technologies that free up their talent to focus on the more human aspects of procurement, such as relationship management, supplier innovation and business partner problem-solving, while at the same time exceeding stakeholder expectations created by the consumerization of enterprise buying.
Source: https://www.supplychainbrain.com/blogs/1-think-tank/post/33572-the-capabilities-that-todays-cpo-needs-to-succeed
Resiliency and ability to predict surges in demand and the agility to leverage their supply chain
As a result of the vaccine rollouts, the .9 trillion stimulus package, restrictions starting to be lifted, shops opening, and the possibility of children returning to school and employees going to work, you can almost smell the money burning a hole in people’s pockets.
This urge to spend is known as “revenge spending.” It usually follows an unprecedented event as people seek to reclaim control and a sense of normalcy.
When it comes to “revenge spending,” the sales forecast can be thrown out of the window. In fact, a forecast based on last year’s spending would result in shortages of the very items people are looking for (as they were not buying them for the past 18 months). And carrying excess inventory of everything, just in case the demand appears, is cost prohibitive.
So, what are some areas of focus that we should be thinking of to ensure we have the solutions in place to address these challenges?
Improve visibility into actual demand
The challenges of responding to fluctuating demand has been highlighted by the recent shortages in the automotive industry due to the highly publicized chip shortages. During the pandemic, the demand for new cars literally “crashed.” Now, as the demand has come back, due to the increased demand for other smart products such as consumer electronics, the auto manufacturers simply can’t get the semiconductors they need to meet the demand. This has resulted in a supply/demand imbalance for new vehicles.
Put risk mitigation strategies in place
If your source for a hot product or a critical part for that hot product suddenly shut down, you need to have contingency plans in place. By making risk management a natural part of the sourcing and procurement process and identifying alternative sources of supply by balancing off-shore, near-shoring, and on-shore suppliers and contract manufacturers, you can significantly reduce the risk of disruption. Companies are also incorporating inventory optimization strategies across the business network to establishing inventory safeguards at strategic decoupling points, and buffer against disruptive events.
Enable the agility to respond to change with synchronized planning and execution.
As well as having the visibility into swings in supply and demand, it is equally important to have the ability to react to the opportunities and risks they may bring. We saw during the pandemic that the clock speed of planning processes has sped up. Where once we may have had a monthly planning cycle, we moved to weekly or – in extreme cases – daily planning.
This requires business planning systems that can rapidly, simulate scenarios and re-plan based on changing market dynamics, and the flexibility to execute these changes across manufacturing and logistics processes.
Improve connectivity, collaboration, and visibility with partners
At the end of the day, no business operates alone and relies on a business network of contract manufacturers, suppliers, 3PL’s and other trading partners to meet changing customer demands and needs. By connecting with these trading partners, and communicating in real time, you can leverage the power of the network to respond to changes in supply and demand.
As customers start to flex their spending muscle, businesses must be in a position to take advantage of the opportunity and ensure their products are available to meet the demand. This will require the resiliency and ability to predict surges in demand and the agility to leverage their supply chain to deliver the goods.
Source: https://internetofbusiness.com/the-rise-of-the-revenge-economy/
Read MoreThis urge to spend is known as “revenge spending.” It usually follows an unprecedented event as people seek to reclaim control and a sense of normalcy.
When it comes to “revenge spending,” the sales forecast can be thrown out of the window. In fact, a forecast based on last year’s spending would result in shortages of the very items people are looking for (as they were not buying them for the past 18 months). And carrying excess inventory of everything, just in case the demand appears, is cost prohibitive.
So, what are some areas of focus that we should be thinking of to ensure we have the solutions in place to address these challenges?
Improve visibility into actual demand
The challenges of responding to fluctuating demand has been highlighted by the recent shortages in the automotive industry due to the highly publicized chip shortages. During the pandemic, the demand for new cars literally “crashed.” Now, as the demand has come back, due to the increased demand for other smart products such as consumer electronics, the auto manufacturers simply can’t get the semiconductors they need to meet the demand. This has resulted in a supply/demand imbalance for new vehicles.
Put risk mitigation strategies in place
If your source for a hot product or a critical part for that hot product suddenly shut down, you need to have contingency plans in place. By making risk management a natural part of the sourcing and procurement process and identifying alternative sources of supply by balancing off-shore, near-shoring, and on-shore suppliers and contract manufacturers, you can significantly reduce the risk of disruption. Companies are also incorporating inventory optimization strategies across the business network to establishing inventory safeguards at strategic decoupling points, and buffer against disruptive events.
Enable the agility to respond to change with synchronized planning and execution.
As well as having the visibility into swings in supply and demand, it is equally important to have the ability to react to the opportunities and risks they may bring. We saw during the pandemic that the clock speed of planning processes has sped up. Where once we may have had a monthly planning cycle, we moved to weekly or – in extreme cases – daily planning.
This requires business planning systems that can rapidly, simulate scenarios and re-plan based on changing market dynamics, and the flexibility to execute these changes across manufacturing and logistics processes.
Improve connectivity, collaboration, and visibility with partners
At the end of the day, no business operates alone and relies on a business network of contract manufacturers, suppliers, 3PL’s and other trading partners to meet changing customer demands and needs. By connecting with these trading partners, and communicating in real time, you can leverage the power of the network to respond to changes in supply and demand.
As customers start to flex their spending muscle, businesses must be in a position to take advantage of the opportunity and ensure their products are available to meet the demand. This will require the resiliency and ability to predict surges in demand and the agility to leverage their supply chain to deliver the goods.
Source: https://internetofbusiness.com/the-rise-of-the-revenge-economy/