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Supply Chain Performance

The Importance of Supply Chain Agility

Over the last ten years, we’ve seen one disruption after another. Natural disasters, nuclear power plant meltdowns, war and political strife, and a worldwide invisible crisis thrown in for good measure. Manufacturers looking to compete in this market are adapting with strategies that promote agility within their supply chains.

When you’re agile, you improve resilience in the face of disruptions. You must be able to rethink and reconfigure aspects of your supply chain when issues arise. For example, you may apply the Pareto principle to your supplier base, focusing 80% of your spend on the top 20% of premium suppliers. But what happens when a natural disaster stops production at one of those suppliers? To build supply chain agility, diversify your supplier base, even if it means paying a little higher price from a secondary supplier. That secondary might be the only thing standing in the way of a big disruption if your primary experiences a disruption.

Speaking of suppliers, a great way to improve agility is for buyers to collaborate with them closely on every purchase order. Normally, buyers rely on long email and clerical work to work through POs. That means sending an email, waiting hours or days to receive an acknowledgment, or following up if the acknowledgment isn’t received. Oh by the way, the follow up is also sent via email. If a supplier changes a PO line—let’s say to send a partial shipment—the buyer must look for the email, pull up their spreadsheet, update it, then upload those changes manually to the ERP. Needless to say, there’s not a high level of supply chain agility in this approach.

Buyers and suppliers must be able to communicate seamlessly and work together on each PO within the same dashboard. Otherwise, they’ll remain bogged down in clerical work and not be able to make adjustments quickly when they need to.