Event & News
Climate change will disrupt supply chains much more than Covid
The onset of the coronavirus pandemic caused unprecedented, worldwide supply-chain disruptions, but experts say that's a drop in the bucket compared with the disruptions that climate change will cause. Wildfires in the American West, flooding in China and Europe and drought in South America are already disrupting supplies of everything from lumber to chocolate to sushi rice.
Take, for example, lumber. About a quarter of the lumber consumed in the U.S. comes from Canada, which is seeing severe drought and wildfire conditions. "The wildfires burning in Western Canada are significantly impacting the supply chain and our ability to transport product to market," Canadian lumber producer Canfor Corp. said in July. "As a result, we are implementing short-term production curtailments at our Canadian sawmills”. The homebuilding industry is already suffering severe supply-chain issues due to Covid, and fires are only exacerbating that.
Brazil is now suffering its worst drought in more than a century. That, in part, caused the price of coffee futures to soar in July, nearly double what they were the previous year. While the increase has not been passed on to the consumer yet, experts say it will be shortly. Even sushi rice is getting hit. Two-thirds of America's is grown in California, which faces water shortages due to drought and the wildfires. Rice production involves massive quantities of water.
Extreme weather events also hit supply chains when workers are unable to physically get to their jobs. Workplace disruptions caused by climate change could lead to more than trillion in productivity losses by 2030, according to a recent report from the United Nations Development Program.
To manage these effects, businesses will need to be proactive. Top strategies to mitigate supply-chain risk are often referred to as bridging and buffering. Bridging means bridging the gap with suppliers to make sure communication is strong during a climate crisis. Buffering means having some products in reserve as a buffer and having backup suppliers should the main ones fail.
Source: https://www.cnbc.com/2021/08/19/climate-change-supply-chain-disruptions-how-to-prepare.html
Read MoreTake, for example, lumber. About a quarter of the lumber consumed in the U.S. comes from Canada, which is seeing severe drought and wildfire conditions. "The wildfires burning in Western Canada are significantly impacting the supply chain and our ability to transport product to market," Canadian lumber producer Canfor Corp. said in July. "As a result, we are implementing short-term production curtailments at our Canadian sawmills”. The homebuilding industry is already suffering severe supply-chain issues due to Covid, and fires are only exacerbating that.
Brazil is now suffering its worst drought in more than a century. That, in part, caused the price of coffee futures to soar in July, nearly double what they were the previous year. While the increase has not been passed on to the consumer yet, experts say it will be shortly. Even sushi rice is getting hit. Two-thirds of America's is grown in California, which faces water shortages due to drought and the wildfires. Rice production involves massive quantities of water.
Extreme weather events also hit supply chains when workers are unable to physically get to their jobs. Workplace disruptions caused by climate change could lead to more than trillion in productivity losses by 2030, according to a recent report from the United Nations Development Program.
To manage these effects, businesses will need to be proactive. Top strategies to mitigate supply-chain risk are often referred to as bridging and buffering. Bridging means bridging the gap with suppliers to make sure communication is strong during a climate crisis. Buffering means having some products in reserve as a buffer and having backup suppliers should the main ones fail.
Source: https://www.cnbc.com/2021/08/19/climate-change-supply-chain-disruptions-how-to-prepare.html
Why SMEs need an ERP System
The effects of the pandemic has led to an increased interest in and uptake of ERP solutions. This has been due to the significant increase in home and remote working, the furloughing and self-isolation of employees leading to smaller teams having to process the same amount of work, and managers having to become more involved at the coalface – exposing them to inefficiencies of previous working practices. Implementing ERP can create new and better ways of working and can improve customers’ experiences. In fact, doing so can amount to nothing less than the digital transformation of a business.
Supply chain problems often stem from not being able to accurately forecast sales and stock levels. To remedy this situation, transparency and visibility of a business’s supply chain and understanding any gaps are key, and this is where ERP systems come into their own.
This is where ERP systems can have a big impact by having features which drive forward the effectiveness and efficiency of a business. These include the integration of previously disparate business functions – such as purchasing, inventory, sales and marketing, finance and HR. ERP also offers the opportunity to input direct pricing from suppliers so minimising the chance of eroded margins, keeping customers up-to-date with price information, and avoiding the need to continuously contact suppliers. These features in turn lead to increased productivity, efficiency, and responsiveness on the part of a business, helping to provide a better customer experience and freeing up local resource.
With ERP software, businesses are able to implement perpetual stock inventories as opposed to annual stock takes, providing greater stock accuracy and enabling the business to increase its revenue and profit, because of the additional trading days freed up as a result of the implementation, alongside efficiencies in picking, organising stock locations, identifying best-sellers and moving stock around to the most efficient location.
ERP systems are no longer the domain only of large enterprises. Small and medium sized businesses are realising how transformative these systems can be in providing better stock control, customer service and ultimately profitability. Cloud technologies, browser-based applications and subscription models are all making ERP systems more accessible and viable for SMEs.
Source: https://supplychaindigital.com/digital-supply-chain/erp-forecasting-helps-weather-supply-chain-pressures-0
Read MoreSupply chain problems often stem from not being able to accurately forecast sales and stock levels. To remedy this situation, transparency and visibility of a business’s supply chain and understanding any gaps are key, and this is where ERP systems come into their own.
This is where ERP systems can have a big impact by having features which drive forward the effectiveness and efficiency of a business. These include the integration of previously disparate business functions – such as purchasing, inventory, sales and marketing, finance and HR. ERP also offers the opportunity to input direct pricing from suppliers so minimising the chance of eroded margins, keeping customers up-to-date with price information, and avoiding the need to continuously contact suppliers. These features in turn lead to increased productivity, efficiency, and responsiveness on the part of a business, helping to provide a better customer experience and freeing up local resource.
With ERP software, businesses are able to implement perpetual stock inventories as opposed to annual stock takes, providing greater stock accuracy and enabling the business to increase its revenue and profit, because of the additional trading days freed up as a result of the implementation, alongside efficiencies in picking, organising stock locations, identifying best-sellers and moving stock around to the most efficient location.
ERP systems are no longer the domain only of large enterprises. Small and medium sized businesses are realising how transformative these systems can be in providing better stock control, customer service and ultimately profitability. Cloud technologies, browser-based applications and subscription models are all making ERP systems more accessible and viable for SMEs.
Source: https://supplychaindigital.com/digital-supply-chain/erp-forecasting-helps-weather-supply-chain-pressures-0
Supply chain organizational resilience
The need for out-of-the-box thinking in supply chains and other elements of a business is vital. Those who regularly examine and reassess their organizational culture and structures, with an innovative eye, will build resilience and remain hyper-vigilant in keeping business functions healthy.
As an example of “out-of-the-box” thinking, organizations that have taken diversity seriously over the years have placed themselves at an advantage to their competitors. They are ones that took the time to actively create diverse candidate pipelines from schools, neighborhoods and parts of the world that they hadn’t engaged with before, built a deeper understanding of those candidate pools, and executed appropriate strategies within those pools during candidate shortages.
The same can be said for supply base diversity. Companies that devoted resources to building pipeline and growth programs among diverse supplier bases were rewarded when supply shortages across the market left many scrambling to source essential goods.
To sustain for the long term and flex to meet the market, businesses must understand their strengths and weaknesses. This enables them to adapt to constant change. Preparation, planning and strategy in a proactive and constantly evolving manner allows them to react smartly to the changing landscape around them.
Flexibility plays a huge role in one of the key aspects of sustained improvement: empowering team members to generate ideas and implement change. Leaders must carefully guide their teams with a strong focus on flexibility, adaptability, trust and communication, to ensure that the changes stick and are effective.
Business leaders who overlook organizational resilience, by contrast, will fall short of goals and leave maximized potential on the table. As organizations begin to understand where they are in their organizational resilience journeys, and bring a sense of adaptability to each component of program implementation and change, leaders can work toward stabilizing current operations, achieving future improvements and growth, and sustaining long-term success.
Source: https://www.supplychainbrain.com/blogs/1-think-tank/post/33569-how-organizational-resilience-benefits-supply-chains
Read MoreAs an example of “out-of-the-box” thinking, organizations that have taken diversity seriously over the years have placed themselves at an advantage to their competitors. They are ones that took the time to actively create diverse candidate pipelines from schools, neighborhoods and parts of the world that they hadn’t engaged with before, built a deeper understanding of those candidate pools, and executed appropriate strategies within those pools during candidate shortages.
The same can be said for supply base diversity. Companies that devoted resources to building pipeline and growth programs among diverse supplier bases were rewarded when supply shortages across the market left many scrambling to source essential goods.
To sustain for the long term and flex to meet the market, businesses must understand their strengths and weaknesses. This enables them to adapt to constant change. Preparation, planning and strategy in a proactive and constantly evolving manner allows them to react smartly to the changing landscape around them.
Flexibility plays a huge role in one of the key aspects of sustained improvement: empowering team members to generate ideas and implement change. Leaders must carefully guide their teams with a strong focus on flexibility, adaptability, trust and communication, to ensure that the changes stick and are effective.
Business leaders who overlook organizational resilience, by contrast, will fall short of goals and leave maximized potential on the table. As organizations begin to understand where they are in their organizational resilience journeys, and bring a sense of adaptability to each component of program implementation and change, leaders can work toward stabilizing current operations, achieving future improvements and growth, and sustaining long-term success.
Source: https://www.supplychainbrain.com/blogs/1-think-tank/post/33569-how-organizational-resilience-benefits-supply-chains
Emerging competencies for supply chain leader
Our expectations of a supply chain leader have grown dramatically in a generation. From those eight largely functional competencies in the Harvard Business Review in 1992 to a key strategic leader in 26 years is quite an evolution. Finding and developing supply chain leaders will be crucial in the years ahead, especially considering the emerging competencies.
It boils down to four emerging competencies:
• Strategic information technology use,
• Alliance builder,
• Resilience architect, and
• Global social responsibility.
Information technology strategist. Every supply chain leader I spoke with mentioned information technology as a growing component of the job, and a source of both excitement and concern for the future. Whether it’s blockchain, telemetrics, analytics, robotics or the internet of things in manufacturing, the application of digital technology to the supply chain is a key challenge for the future. One supply chain leader at an international mining company described choosing among the possible I.T. initiatives as the key challenge of her role.
Alliance builder. Shaunna Black, an early leader in building supply chain expertise and practices at Texas Instruments, traces the evolution of the role of alliances beginning in the early 2000s. She was in Korea leading a semiconductor operation when, on March 11, 2011, a magnitude 9 earthquake hit northeastern Japan, causing a tsunami that shut down the world’s key supplier of photoresist, a critical component for her company. Shaunna told me about the worldwide cooperation of manufacturers, suppliers, and distributors that resulted in only minimal disruption in the delivery of crucial semiconductors to customers. This was possible because of years of work in building productive alliances in the entire semiconductor supply chain. The need for such collaboration and the alliances on which it rests will only grow.
Resilience architect. The collaboration that Shaunna described arose from years of building collaborative relationships in the global semiconductor supply chain. In his book The Power of Resilience: How the Best Managed Companies Manage the Unexpected, MIT’s Yossi Sheffi describes the rising vulnerability on all sides of the supply chain: more distance, more players, more variety, more technology, more complexity. Companies must look to their chief supply chain officers to ensure that the supply chain is resilient to disruption. For many businesses, supply chain disruption is the largest operational risk.
Social responsibility shareholder. The notion that companies have social responsibilities has been growing. In the last roughly 15 years, social responsibility has expanded to include a company’s supply chain. Tragedies such as the Rana Plaza building collapse in Bangladesh, where more than 1,000 people died, not only disrupt supply chains, they damage reputations and destroy brand equity and shareholder value. Twenty-three years ago, Life magazine featured a photo of a Pakistani boy sewing a Nike soccer ball. The story inside reported that he made six cents per hour. A “Boycott Nike” campaign ensued, and the company lost more than half its market capitalization within a year. It took six years to regain that lost value. In the years since Rana Plaza, many companies have moved aggressively on multiple fronts to build supply chains that stand up to the increasingly strict standards of social responsibility. While no executive can shoulder this whole burden for a company, chief supply chain officers have a large share in understanding the myriad risks and building supply chains that their companies can be proud of.
Source: https://www.supplychainbrain.com/blogs/1-think-tank/post/33535-emerging-competencies-for-chief-supply-chain-officers
Read MoreIt boils down to four emerging competencies:
• Strategic information technology use,
• Alliance builder,
• Resilience architect, and
• Global social responsibility.
Information technology strategist. Every supply chain leader I spoke with mentioned information technology as a growing component of the job, and a source of both excitement and concern for the future. Whether it’s blockchain, telemetrics, analytics, robotics or the internet of things in manufacturing, the application of digital technology to the supply chain is a key challenge for the future. One supply chain leader at an international mining company described choosing among the possible I.T. initiatives as the key challenge of her role.
Alliance builder. Shaunna Black, an early leader in building supply chain expertise and practices at Texas Instruments, traces the evolution of the role of alliances beginning in the early 2000s. She was in Korea leading a semiconductor operation when, on March 11, 2011, a magnitude 9 earthquake hit northeastern Japan, causing a tsunami that shut down the world’s key supplier of photoresist, a critical component for her company. Shaunna told me about the worldwide cooperation of manufacturers, suppliers, and distributors that resulted in only minimal disruption in the delivery of crucial semiconductors to customers. This was possible because of years of work in building productive alliances in the entire semiconductor supply chain. The need for such collaboration and the alliances on which it rests will only grow.
Resilience architect. The collaboration that Shaunna described arose from years of building collaborative relationships in the global semiconductor supply chain. In his book The Power of Resilience: How the Best Managed Companies Manage the Unexpected, MIT’s Yossi Sheffi describes the rising vulnerability on all sides of the supply chain: more distance, more players, more variety, more technology, more complexity. Companies must look to their chief supply chain officers to ensure that the supply chain is resilient to disruption. For many businesses, supply chain disruption is the largest operational risk.
Social responsibility shareholder. The notion that companies have social responsibilities has been growing. In the last roughly 15 years, social responsibility has expanded to include a company’s supply chain. Tragedies such as the Rana Plaza building collapse in Bangladesh, where more than 1,000 people died, not only disrupt supply chains, they damage reputations and destroy brand equity and shareholder value. Twenty-three years ago, Life magazine featured a photo of a Pakistani boy sewing a Nike soccer ball. The story inside reported that he made six cents per hour. A “Boycott Nike” campaign ensued, and the company lost more than half its market capitalization within a year. It took six years to regain that lost value. In the years since Rana Plaza, many companies have moved aggressively on multiple fronts to build supply chains that stand up to the increasingly strict standards of social responsibility. While no executive can shoulder this whole burden for a company, chief supply chain officers have a large share in understanding the myriad risks and building supply chains that their companies can be proud of.
Source: https://www.supplychainbrain.com/blogs/1-think-tank/post/33535-emerging-competencies-for-chief-supply-chain-officers
How Port of Los Angeles is working on their current port congestion challange
Congestion at the nation's largest ocean gateways has been going on for nearly a year. Congestion issues have led to delays for shippers who have had to lengthen lead times and in some cases search for alternative import locations.
The short-term recommendations that The Port of Los Angeles is focused on include:
Creating incentives for driving down turn times for trucks, improving dual transitions;
Improving visibility with data tools like the port's Signal or Horizon forecasts
Working with the FMC to pilot improved detention and demurrage using the facility's Port Optimizer tool, and to create a data standard for tracking the issue
Figuring out how to better use capacity, as just 30% of truck appointments use nightside gates.
Seroka's (executive director at the Port of Los Angeles) long-term recommendations include:
Continued meeting with stakeholders through Federal Advisory Committee Act meetings can help to ensure that the government treats the stakeholders as a multi-modal freight environment and not a siloed ecosystem;
The creation of a national port information sharing system, which is an effort that Seroka has championed for years at this point;
Seroka told the administration that tariffs are hurting businesses, specifically the fees on chassis that ports need to increase pool capacity;
A workforce training center that would cost about 0 million for workers to get training and accreditation in jobs the community needs;
Shift the share of infrastructure investment to provide increased funds to the West Coast.
Seroka said that on-dock rail is his first priority for the infrastructure funds at the Port of Los Angeles. This is to be followed by rail and road connectors to ease congestion in those modes, and then "funding on a multi-modal freight system that will take into account the president's executive order on how we're doing this connectivity plan."
Some of the money that has been put aside for broadband in the infrastructure bill could be used for the nationwide port information sharing system. And money set aside for resiliency could be used to modernize electrical systems to ensure they have the ability to power electric vehicles used in the facility, he said.
Source: https://www.supplychaindive.com/news/biden-port-administration-congestion-infrastructure/604961/
Read MoreThe short-term recommendations that The Port of Los Angeles is focused on include:
Creating incentives for driving down turn times for trucks, improving dual transitions;
Improving visibility with data tools like the port's Signal or Horizon forecasts
Working with the FMC to pilot improved detention and demurrage using the facility's Port Optimizer tool, and to create a data standard for tracking the issue
Figuring out how to better use capacity, as just 30% of truck appointments use nightside gates.
Seroka's (executive director at the Port of Los Angeles) long-term recommendations include:
Continued meeting with stakeholders through Federal Advisory Committee Act meetings can help to ensure that the government treats the stakeholders as a multi-modal freight environment and not a siloed ecosystem;
The creation of a national port information sharing system, which is an effort that Seroka has championed for years at this point;
Seroka told the administration that tariffs are hurting businesses, specifically the fees on chassis that ports need to increase pool capacity;
A workforce training center that would cost about 0 million for workers to get training and accreditation in jobs the community needs;
Shift the share of infrastructure investment to provide increased funds to the West Coast.
Seroka said that on-dock rail is his first priority for the infrastructure funds at the Port of Los Angeles. This is to be followed by rail and road connectors to ease congestion in those modes, and then "funding on a multi-modal freight system that will take into account the president's executive order on how we're doing this connectivity plan."
Some of the money that has been put aside for broadband in the infrastructure bill could be used for the nationwide port information sharing system. And money set aside for resiliency could be used to modernize electrical systems to ensure they have the ability to power electric vehicles used in the facility, he said.
Source: https://www.supplychaindive.com/news/biden-port-administration-congestion-infrastructure/604961/
Supply Chain Management future trends
Supply chain is one of the most quickly developing business industries. And yet even in 2021 it faces, so many challenges related to different working aspects starting with inventory control and ending with retail. However, it is easy to eliminate all of the challenges and boost supply chain companies’ performance. You are wondering how it is possible? Well, thanks to the technologies and custom solutions.
These days to have an ERP is not enough, you need more modern and smart solutions to perform warehouse management. And the Internet of Things is exactly what you need! By integrating lots of various sensors and cloud-based software to monitor the collected data you can turn your warehousing into a whole new level. Also various devices can be used to track goods and packages on every stage of delivery and to track the conditions inside the packages.
According to Gartner by 2023 at least 50% of all supply chain companies worldwide are going to use AI for daily operations. So now is the right time to think about AI implementation for your business. AI powered software can help you ensure more efficient inventory control and management. Also such smart systems can predict new consumer preferences, forecast goods demand, and save operational costs by preventing the company from buying unnecessary goods.
Robotics is no longer a fantasy, it is here and it is actively used for processes automation in the supply chain. Let’s take Amazon, it has integrated more than 200,000 robotic vehicles that are responsible for moving packages throughout inventories. And we predict that it is only the beginning of the robotics era. Soon even middle size and growing companies will consider this technology for their business.
Now it is impossible to imagine a successful company without software. And the trends we named above are not the only ones to consider. After all, there are cloud migration, blockchain, layered technologies, machine learning and agile supply chain. And they all can be used to your advantage.
Source: https://przen.com/pr/33417260
Read MoreThese days to have an ERP is not enough, you need more modern and smart solutions to perform warehouse management. And the Internet of Things is exactly what you need! By integrating lots of various sensors and cloud-based software to monitor the collected data you can turn your warehousing into a whole new level. Also various devices can be used to track goods and packages on every stage of delivery and to track the conditions inside the packages.
According to Gartner by 2023 at least 50% of all supply chain companies worldwide are going to use AI for daily operations. So now is the right time to think about AI implementation for your business. AI powered software can help you ensure more efficient inventory control and management. Also such smart systems can predict new consumer preferences, forecast goods demand, and save operational costs by preventing the company from buying unnecessary goods.
Robotics is no longer a fantasy, it is here and it is actively used for processes automation in the supply chain. Let’s take Amazon, it has integrated more than 200,000 robotic vehicles that are responsible for moving packages throughout inventories. And we predict that it is only the beginning of the robotics era. Soon even middle size and growing companies will consider this technology for their business.
Now it is impossible to imagine a successful company without software. And the trends we named above are not the only ones to consider. After all, there are cloud migration, blockchain, layered technologies, machine learning and agile supply chain. And they all can be used to your advantage.
Source: https://przen.com/pr/33417260
Agile or Lean In The Supply Chain?
As the pandemic wore on, organizations began the slow shift from lean to reducing supplier risk. Inventories went from lean to being beefed up, and there was a willingness to spend the money to make sure the demand was met and that organizations could deal with a supplier change from four weeks to a year. No company wanted to be handicapped from materials shortages. An agile supply chain became the necessity to keep the economy flowing, and the best way to achieve the move between lean and agile was by migrating to digital processes.
As this shift continued, the need for resilient supply networks became the priority. Yes, the pandemic showed how the digital transformation could keep organizations operating according to need, but now there were questions around the length of time needed to transform.
Traditional project approaches, legacy systems, and processes are taking too long, and C-suite executives are now at the point where they have begun to question the increased costs necessary to trust service levels as well as the speed at which they can drive end-to-end transformation. This uncertainty plagues every organization across the globe and it is clear that the systems and processes of the past have failed to prepare for the desired future state.
It seems like businesses are forced to choose their supply chain management depending on external factors. Go lean or go agile. It’s one or the other. There might be some opportunities lost by going lean—orders that can’t be filled, for example, because there isn’t enough supply on hand—but it is still a lot more cost-effective than going agile.
With the right digital transformation, there is no reason why a company can’t do both, be lean and agile at the same time. If your company is going through a digital supply chain transformation, and you’re looking at ways to build resilient supply chain networks, you should be able to pull whatever leverage you need at any time.
Source: https://www.forbes.com/sites/paulnoble/2021/08/11/agile-or-lean-in-the-supply-chain-you-can-have-both/
Read MoreAs this shift continued, the need for resilient supply networks became the priority. Yes, the pandemic showed how the digital transformation could keep organizations operating according to need, but now there were questions around the length of time needed to transform.
Traditional project approaches, legacy systems, and processes are taking too long, and C-suite executives are now at the point where they have begun to question the increased costs necessary to trust service levels as well as the speed at which they can drive end-to-end transformation. This uncertainty plagues every organization across the globe and it is clear that the systems and processes of the past have failed to prepare for the desired future state.
It seems like businesses are forced to choose their supply chain management depending on external factors. Go lean or go agile. It’s one or the other. There might be some opportunities lost by going lean—orders that can’t be filled, for example, because there isn’t enough supply on hand—but it is still a lot more cost-effective than going agile.
With the right digital transformation, there is no reason why a company can’t do both, be lean and agile at the same time. If your company is going through a digital supply chain transformation, and you’re looking at ways to build resilient supply chain networks, you should be able to pull whatever leverage you need at any time.
Source: https://www.forbes.com/sites/paulnoble/2021/08/11/agile-or-lean-in-the-supply-chain-you-can-have-both/
Resilience must be compatible with cost effectiveness.
Yet supply chain resilience is not a blank check exercise. Resilience must be compatible with cost effectiveness. Resiliency is compatible with efficiency when it optimizes for cost effectiveness on an expected value basis, rather than unit costs assuming successful shipment. Decades of scrutiny on supply chain efficiency have addressed easy wins. Supply chain experts must dig deeper into the data to discern where resilience and cost effectiveness intersect.
Resilience optimized for cost effectiveness is value accretive enhancing long-term competitiveness. There are several ways to mitigate these disruptions, while maintaining or improving competitive position:
1. Reexamine the true costs of your supply chain structure and policy
Existing policies and strategies optimized solely for operating costs may be suboptimal when considering variability and disruptions. For instance, plant that lay dormant for two months due to unavailability of a SKU that was both small and inexpensive. Apply a standard policy limiting days inventory across all SKUs regardless of unit costs, storage costs and supply chain disruption considerations. Now the plant can adjust its policy to reflect holding and replacement costs.
2. Improve supply chain visibility
Businesses often know their direct suppliers well, but rarely have visibility into their full supply chain network. Disruptions that occur far upstream can ripple down and magnify challenges for downstream partners. Gaining a comprehensive view helps identify and mitigate inherent risks. Supply chain mapping and risk assessment tools are emerging to solve these issues.
3. Enhance supply chain flexibility
Economies of scale optimize on short-term costs but may introduce supply chain rigidity. For example, fixed warehouse arrangements are efficient with predictable, stable supply but inappropriate for the seasonal variability common for retail and e-commerce businesses.
4. Enhance mitigation strategies.
Data analytics that incorporate sensors, real-time data and machine learning can fine tune risk mitigation strategies and enable adjustments in dynamic, rapidly changing situations. Technology platforms provide procurement professionals with insight into supplier options with ongoing capacity to reduce vulnerability and exposure.
Over the past year, COVID-19 has acted as a catalyst for re-evaluating supply chain strategies. In the long run, incorporating resiliency will yield cost savings. It will require short-term investment in the right tools and strategies, but it will enhance long-term competitive positions. A well-designed strategy will be accretive in both short- and long-term timelines. Technologies that support resiliency will become an integral part of building a modern, competitive supply chain.
Source: https://www.sdcexec.com/software-technology/supply-chain-visibility/article/21533133/ngp-capital-why-rethinking-resilience-is-key-to-reevaluating-your-supply-chain-strategy
Read MoreResilience optimized for cost effectiveness is value accretive enhancing long-term competitiveness. There are several ways to mitigate these disruptions, while maintaining or improving competitive position:
1. Reexamine the true costs of your supply chain structure and policy
Existing policies and strategies optimized solely for operating costs may be suboptimal when considering variability and disruptions. For instance, plant that lay dormant for two months due to unavailability of a SKU that was both small and inexpensive. Apply a standard policy limiting days inventory across all SKUs regardless of unit costs, storage costs and supply chain disruption considerations. Now the plant can adjust its policy to reflect holding and replacement costs.
2. Improve supply chain visibility
Businesses often know their direct suppliers well, but rarely have visibility into their full supply chain network. Disruptions that occur far upstream can ripple down and magnify challenges for downstream partners. Gaining a comprehensive view helps identify and mitigate inherent risks. Supply chain mapping and risk assessment tools are emerging to solve these issues.
3. Enhance supply chain flexibility
Economies of scale optimize on short-term costs but may introduce supply chain rigidity. For example, fixed warehouse arrangements are efficient with predictable, stable supply but inappropriate for the seasonal variability common for retail and e-commerce businesses.
4. Enhance mitigation strategies.
Data analytics that incorporate sensors, real-time data and machine learning can fine tune risk mitigation strategies and enable adjustments in dynamic, rapidly changing situations. Technology platforms provide procurement professionals with insight into supplier options with ongoing capacity to reduce vulnerability and exposure.
Over the past year, COVID-19 has acted as a catalyst for re-evaluating supply chain strategies. In the long run, incorporating resiliency will yield cost savings. It will require short-term investment in the right tools and strategies, but it will enhance long-term competitive positions. A well-designed strategy will be accretive in both short- and long-term timelines. Technologies that support resiliency will become an integral part of building a modern, competitive supply chain.
Source: https://www.sdcexec.com/software-technology/supply-chain-visibility/article/21533133/ngp-capital-why-rethinking-resilience-is-key-to-reevaluating-your-supply-chain-strategy
How can Small and Medium Enterprises (SMEs) increase their profitability utilising supply chain principles
Why is supply chain management critical for success, and how can Small and Medium Enterprises (SMEs) increase their profitability utilising its principles?
Supply chain management impacts two primary areas of a business:
• Functional: Businesses exist to meet the needs of their customers and extract value in compensation for their efforts. To guarantee that value is given and received, businesses must achieve the functional goal of efficiency, ensuring minimal friction throughout the supply chain in delivering products to customers, from procurement and manufacturing, receiving, warehousing, logistics and fulfilment, and reverse logistics (returns). Happy customers = More business = Higher performance and profits.
• Financial: Cost-effectiveness- the ability to do more with less is a significant financial goal. Creating optimal or near-optimal processes allow for better forecasting and coordination, which reduces costly redundancies, overstocks, and stockouts. Minimal waste= More cost efficiency = Higher performance and profits
There are five core principles that SMEs can apply in the development of a supply chain strategy:
• Segment your customers: Using historical data, businesses should segment individual or similar customer groups based on their needs, purchasing habits, and average spending. This will allow the company to anticipate demand better, maintain adequate stock, and adapt its supply chain to deliver value to each segment efficiently and profitably.
• Customise logistics based on segments: Adapting the logistics requirements based on customer location, product size, and additional service requirements like installation will ensure optimal delivery and profitability for each sub-segment. Doing this analysis will help determine whether a central logistics base (hub model) is required, or it has to be decentralized.
• Develop demand forecasts: While historical data is beneficial to segmenting your current customer needs, anticipating future demand is critical to streamlining costs. Utilizing data from parallel market signals and quickly adjusting demand planning can ensure that a business is prepared to meet changing needs. Having raw materials sourcing processes, especially materials and services contracts, mapped to demand forecasts is imperative.
• Reduce costs: Strategically managing costs across the supply chain from suppliers to third party logistics will reduce the total cost of production and delivery. For example- bundling items for delivery based on proximal location can reduce the cost of fulfillment.
• Analyse performance: Measure, analyse, adapt. Keeping track of performance metrics across the entire supply chain will allow easy identification of areas that need improvement, expose areas of redundancies, and improve overall ability to reach the end-user effectively, efficiently, and economically.
The benefits of creating an effective and efficient supply chain cannot be overstated, and its impacts, positive or negative, is often the defining success point, especially in industries with thin margins. Research has shown that companies with efficient and well-managed supply chains have a significantly higher-than-average revenue growth than competitors. A smooth supply chain process ensures that your business can consistently anticipate and provide for the customers’ needs in a way that exceeds the expectations of the customer while positioning your company for growth. It also creates a formidable competitive advantage to set your business apart.
Source: https://www.thisdaylive.com/index.php/2021/08/08/supply-chain-the-underestimated-driver-of-business-profitability/
Read MoreSupply chain management impacts two primary areas of a business:
• Functional: Businesses exist to meet the needs of their customers and extract value in compensation for their efforts. To guarantee that value is given and received, businesses must achieve the functional goal of efficiency, ensuring minimal friction throughout the supply chain in delivering products to customers, from procurement and manufacturing, receiving, warehousing, logistics and fulfilment, and reverse logistics (returns). Happy customers = More business = Higher performance and profits.
• Financial: Cost-effectiveness- the ability to do more with less is a significant financial goal. Creating optimal or near-optimal processes allow for better forecasting and coordination, which reduces costly redundancies, overstocks, and stockouts. Minimal waste= More cost efficiency = Higher performance and profits
There are five core principles that SMEs can apply in the development of a supply chain strategy:
• Segment your customers: Using historical data, businesses should segment individual or similar customer groups based on their needs, purchasing habits, and average spending. This will allow the company to anticipate demand better, maintain adequate stock, and adapt its supply chain to deliver value to each segment efficiently and profitably.
• Customise logistics based on segments: Adapting the logistics requirements based on customer location, product size, and additional service requirements like installation will ensure optimal delivery and profitability for each sub-segment. Doing this analysis will help determine whether a central logistics base (hub model) is required, or it has to be decentralized.
• Develop demand forecasts: While historical data is beneficial to segmenting your current customer needs, anticipating future demand is critical to streamlining costs. Utilizing data from parallel market signals and quickly adjusting demand planning can ensure that a business is prepared to meet changing needs. Having raw materials sourcing processes, especially materials and services contracts, mapped to demand forecasts is imperative.
• Reduce costs: Strategically managing costs across the supply chain from suppliers to third party logistics will reduce the total cost of production and delivery. For example- bundling items for delivery based on proximal location can reduce the cost of fulfillment.
• Analyse performance: Measure, analyse, adapt. Keeping track of performance metrics across the entire supply chain will allow easy identification of areas that need improvement, expose areas of redundancies, and improve overall ability to reach the end-user effectively, efficiently, and economically.
The benefits of creating an effective and efficient supply chain cannot be overstated, and its impacts, positive or negative, is often the defining success point, especially in industries with thin margins. Research has shown that companies with efficient and well-managed supply chains have a significantly higher-than-average revenue growth than competitors. A smooth supply chain process ensures that your business can consistently anticipate and provide for the customers’ needs in a way that exceeds the expectations of the customer while positioning your company for growth. It also creates a formidable competitive advantage to set your business apart.
Source: https://www.thisdaylive.com/index.php/2021/08/08/supply-chain-the-underestimated-driver-of-business-profitability/