It would seem that nothing escaped the impact of the COVID-19 pandemic in 2020, and we are still living through reverberations of supply chain disruption in the final months of 2021. One of the silver linings of the last two years is the increased awareness most C-suite executives now have about their supply chain: how important it is to the company, how it helped them weather the storm, and where it remains vulnerable.
As we begin to wind down 2021 and prepare for 2022, procurement and supply chain professionals should consider the C-suite’s newfound interest in the supply chain and find ways to harness that attention so that the operation as a whole can become more resilient.
Every Supply Chain is Exposed to Supply and Demand Shocks
Supply chain complexity has always existed, and in some cases, it has been exacerbated by the ‘Amazon effect’ as B2B and B2C companies struggle to accelerate their shipment speeds to achieve same-day or next-day delivery. This may drive the supply chain faster, but it also makes it more brittle—especially in the face of acute disruptions. In the past, disruptions were not serious or prolonged enough to force systemic change. Operations professionals used to bear the brunt of this problem alone, but now supply delays and shortages are plastered across newspaper front pages. No supply chain is immune to external shocks, making process design and strategic tech enablement absolutely essential to business continuity.
Executive Leadership Must Transform and Digitize the Supply Chain
If we accept the reality that supply and demand shocks are going to happen, the only logical next step for leaders to take is to ensure that their supply chain is digitally transformed. This means capturing the pulse of the consumer via data-driven means and feeding that demand information into planning systems to ensure that production levels match.
It is also critical for companies to close the gap that so often exists between purchase orders and shipments. The reality of the modern supply chain means purchase orders, whether in a pandemic or not, will change about 52% of the time. This phase of the supply chain often becomes a black hole of manual processes: no visibility, no communication, and no collaboration. Allowing this to continue impacts the top and bottom lines; customers are impacted, leading to reduced revenue, and expensive stopgap solutions have to be used, increasing operating costs without elevating value or profit.
Stop chasing purchase order updates from vendors and suppliers
Companies Need Granular, Real-Time Visibility into Supply Chains and Inventory
When companies are using spreadsheets and emails to manage their supply chain, they will remain trapped in a negative cycle of ‘act, react, trigger, react.’ They forgo the opportunity to be proactive and limit the number of decisions that can be made because the time required to properly inform oneself is a burden. When granular, real-time visibility is missing, people compensate by using broad strokes such as blanket purchase orders. This approach is as expensive and wasteful as it is common, and it is all driven by a desire to prevent the customer from being impacted. Rather than protecting the customer with panic buying and stockpiled inventory, companies should empower their buyers and suppliers to work together to address constant changes in order volume and timing as efficiently as possible.
Thanks to the challenges of 2020 and 2021, executive teams now realize that they need to digitize and transform their supply chains. This will enable buyers to be more strategic and thoughtful and accomplish what they were hired to do. An empowered supply chain is one that is positioned to meet enterprise goals and deliver against – or exceed – customer expectations in a cost-effective manner.
Listen as our supply chain experts discuss the major effects of COVID-19 on the supply chain and how our customers are overcoming their struggles in our latest on-demand webinar. Ready to digitize your supply chain? Contact our team today to get started.
Expert Panel: Supply Chain Performance in 2021
Tune in to this on-demand webinar to hear from a panel of our experts as they discuss what our customers are struggling with this year, and how to grapple with the fallout from COVID-19 on the Supply Chain.