Supply chain strategies will never be the same. The major disruptions of 2020 and beyond have driven companies to re-imagine their supply chains, focusing on flexibility and agility. Reliability is on the right track and costs are coming down, but there is no returning to the old normal. There’s only the New Abnormal. Here’s what it looks like and how to level up your supply chain performance.
Three Factors of the New Abnormal
In the early days of the pandemic, demand for goods, parts, and materials skyrocketed. In response, companies broadened their supplier base, investing in at least two for many critical parts. Fast forward almost three years: many companies are now left carrying excess inventory as demand has tapered off.
Forget the Past
Historical data is no longer the reliable predictor it was before 2020. Instead, invest in accurate, forward-looking visibility.
Manual Touchpoints Are a Liability
When companies converted to remote work in 2020, manual and paper processes were exposed. These teams experienced delays in information, including knowledge about part demand and supply changes. They became even more over-reliant on clerical staff to navigate highly complex systems that were prone to error. In the New Abnormal, digital automation solutions are the gold standard for this clerical work and boosting supply chain performance.
Strategies for Tomorrow In the New Abnormal
Yesterday’s strategic approaches are not only outdated; they’re also costly. To navigate the New Abnormal, here are a few strategies to consider.
Agility is the Goal
Buyers and suppliers must be continually aligned as changes are made. This is only possible with technology that gives an up-to-date view of what’s happening on both sides, so supply chain leaders can quickly make adjustments according to ongoing changes. This kind of agility is impossible with traditional processes that rely on one-sided portals, emails, and spreadsheets. Today’s advanced software solutions provide real-time collaboration, exception prioritization, and continual alignment.
This type of solution transformed one company’s supply chain during the pandemic. They used hot lists to identify which parts were most critical on any given day, and a feature called “radar” to identify urgent tasks. Technology allowed them to make it through the pandemic with factory downtime.
Balance Cost and Risk
It’s tempting to hear the word recession and immediately start chasing cost-cutting, especially in the area of supply. It’s common to invest heavily in only a few suppliers that give the lowest price, but this presents one major drawback: the risk of that supplier experiencing a disruption. In the New Abnormal, you must mitigate this risk by eliminating single points of failure in your supply. You must diversify your supplier base.
Companies that once relied only on deep relationships with a small number of key suppliers have changed their approach. They now focus on qualifying second and third sources for key components, despite higher costs. Then, when one supplier has a delay or stoppage, there is an alternate to pick up the slack. Even more strategically, top teams make sure their supplier base is also diversified geographically, to avoid disruptions due to natural disasters or other regional events. To collaborate with a broader supplier base through real-time visibility, these teams are kickstarting their improvement efforts through digitization.
Hold Supply and Demand Accountable
Establish critical performance metrics like responsiveness, on-time delivery, and accuracy forecasts or deliveries so that both sides are accountable. Collaboration solutions can measure and monitor this data, provide transparency, and enable quicker, smarter decisions based on a comprehensive understanding of each team’s performance.
Collaboration Is the Key
Today’s environment requires mutual visibility into inbound and outbound supply, as well as three- and four-way purchase order (PO) matching. Suppliers must be able to see new PO requests and changes in real time, then send acknowledgements confirming price, quantities, and dates—all from the same software.
Over half of all POs will change in their lifetime, even after the supplier sends confirmation. Collaboration networks provide communication between buyers and suppliers within the context of each PO. Supply chain teams then have a clear view of inbound supply that has been mutually verified and aligned all along the way.
Level Up Supply Chain Performance
SourceDay stops supplier misses before they lead to costly delays and bottlenecks. Companies using our solution have reported over 70% reduction in late orders and over 35% increase in on-time in-full deliveries. We provide collaboration and automation to navigate today’s New Abnormal. Ready to learn more? We’re ready to show you. Request a demo today to speak with our team.