At the start of 2020, when experts were busy providing their “20/20 vision,” no one predicted a global pandemic that would bring the global economy to a virtual standstill within weeks. Demand for goods and services became highly variable. The supply of critical materials was uncertain. Labor and resource capacity in manufacturing and logistics turned severely constrained.
This highlighted flaws in many global supply chains that have been “leaned out” and stretched to reduce costs. As a result, the pandemic has made supply chains the center of attention in daily presidential briefings, corporate boardrooms and even my family dining table. Supply chains have become, if they were not already, a strategic topic.
As found in the IDC report, “Resilient Supply Chain Planning for a Disruptive World,” “Companies that invest in resilience, supply chain transformation, and supply chain planning software will outperform those that do not.”
What must change?
As the IDC article points out, “we have long talked about the importance of visibility, agility, and resiliency”, but not until now have they becomethetop priorities in an increasingly disruptive world. Here’s the impact of each priority:
Visibilitythrough all tiers of your supply chain:
- Which suppliers are at risk?
- What are my alternate sources of supply for key resources?
- Where is my inventory?
- Are all shipments on time?
- Where are there demand spikes and of which products?
Agilityto sense, predict and respond to change:
- Identify and switch to alternate suppliers
- Collaborate across companies and departments to design anywhere and build anywhere
- Adjust manufacturing to respond to changing demand
- Redirect shipments in transit
Resiliencyto minimize and mitigate risk
- Develop and implement supply chain risk management and business continuity strategies
- Diversify supply chains, from a geographic perspective, to reduce the supply-side risks of a single country or region
- Multisource valuable commodities or strategic components to lessen reliance on one supplier
- Adopt an inventory optimization strategy across the business network to buffer against disruptive events
- Balance of-shoring, near-shoring and on-shoring strategy
Without a doubt, unexpected disruptions will continue to occur. The cause of disruption will vary depending on the event, such as pandemics, geopolitical or trade conflicts, natural disasters, or limited natural resources availability.
Now more than ever, supply chains need to beresilientandagileto survive in the current global environment, while demonstrating the predictive intelligence andvisibilityto thrive in the new normal.
Supply chain executives must make informed decisions confidently, quickly, and accurately while benefiting from a transparent value chain that senses, predicts, and responds to global dynamics.
To learn more, check out the IDC report titled “Resilient Supply Chain Planning for a Disruptive World.” And as for my “20/20 Vision?” I’d like to see it in the rear-view mirror.
Richard Howells, Vice President – Solution Management for Digital Supply Chain, SAP
I’ve been working in the supply chain management and manufacturing space for over 25 years, and I’m responsible for driving the market direction and positioning of SAP’s Supply Chain Management and IOT solutions. Prior to joining SAP in 2004, I spent 15 years with Marcam Solutions where I was VP of Marketing for the companies Process ERP solutions. I have also implemented ERP and SCM systems at companies such as Nestle, Gillette, Colgate Palmolive, Rohm & Haas, Wyeth, Royal Worcester Spode, and Dairy Crest. I hold a Bachelor of Science degree in Computer Science from the University of Mid Glamorgan in the UK. Follow me @howellsrichard