What Steps Can Manufacturers Take to Improve Responsiveness of Their Supply Chain?

Summary

A combination of intensely competitive global markets, constantly evolving consumer demands and unsettling international geopolitical events means manufacturers cannot rely on conventional models to optimize efficient supply chains.
 
Supply chain managers have realized that their existing processes are not sufficient to buffer them from the disruption caused by unpredictable events such as the recent Coronavirus pandemic. Instead, companies should aim to redesign their supply chain and supply chain planning processes to be more responsive so that they can better cater to their customers’ requirements in real time.

Doing this can safeguard a supply chain from the demand fluctuations brought about by unpredictable events and deliver huge value in terms of efficiency and cost reductions. It can also provide benefits for the end customer in the form of a more personalized and streamlined service, instead of merely offering a mass-produced product and potentially inconsistent delivery methods. That is why, from the manufacturers and the customer’s point of view, boosting responsiveness across the entire supply chain is a win-win situation.

So what are the steps involved in improve supply chain responsiveness?

Assess your company culture and executive process

Companies must first evaluate their maturity level. If they are starting from a level of maturity based on manual processes and spreadsheet-based planning, then that transformation will take some effort and require buy-in from different organizations. Therefore, one of the first steps is to get executive buy-in to any supply chain transformation initiative.

Company culture and organizational collaboration are key drivers of a more responsive supply chain, according to this article in Supply Chain Brain. Improved collaboration, which includes the sharing of data, provides supply chain leaders with the intelligence necessary to accurately and consistently predict future demand.

Research has established that manufacturers with multiple reporting channels and many decision-makers battle to share information effectively. Supply chain leaders must have the authority to own decision-making throughout the supply chain and across all locations by embracing a so-called "plan centrally and execute locally" model.

Most companies know that today's market environment requires them to become more responsive and agile. Still, few understand the necessary changes to supply chain processes are required if they want to fully benefit from the efficiency that comes with true responsiveness.

Define a goal

To develop an ROI (Return on Investment), companies must define a goal based on what the end result looks like and what steps need to be taken. This is necessary because it will require a transformation across multiple departments simultaneously over time. Therefore, the first step of executive buy-in is to define the goal–make sure there is a plan and set the parameters of how that can transform the organization.

Buy-in and investment in technology

Once you have buy-in to the process, it is essential to combine the transformation with technology and the need to invest in relevant applications that will help support that process. It is possible for companies to invest in multiple point solutions for different parts of the process (for example forecasting, master production scheduling or collaboration) but it is not always the best strategy.
 
Because of the collaborative nature and the breadth of the process, companies should look at investing applications that are part of a platform. The reason is that the platform gives the ability for these different organizational groups to work together more cohesively and for the data to flow more seamlessly. That’s one of the steps that they should look at as they begin to assess the technology."

Look at technology cohesively and apply it intelligently

Optimization technology is key. Because the problems in supply chains are so complex, there are so many possible outcomes and inputs within the process if you manage it manually. The only way to manage the complexity of supply chains is to apply automation and optimization in meaningful ways. When companies think about transforming their strategic planning process, they need to work with application providers that have experience in how to correctly apply advanced technologies like Machine Learning and Artificial Intelligence. Avoid the pitfall of applying advanced technology just for its own sake.

Sophisticated modern supply chain technologies ensure a more flexible, adaptable approach to supply chain management. A so-called “plug and play” approach to supply chain technology has seen technology vendors develop tailored and niche supply chain solutions. Radical transparency and real-time visibility are now possible with the help of IoT, AI, blockchain and advanced analytics.

Multi-sourcing for the supply chain win

If the pandemic taught us anything, its that relying on a single-source supplier is risky. If a crucial supplier can no longer meet requirements due to increased demand, factory closures, shipping and border delays or bankruptcy, an entire supply chain can be impacted and severely disrupted.

To prevent subsequent supply chain bottlenecks and production delays, many manufacturers are ensuring they are not dependent on single supplier for critical product components. Supply chain diversification or multi-sourcing involves sourcing a product, part or material from different suppliers. This means the demand can be split across multiple vendors to reduce risk and relieve pressure.

Supply chain technology can help support strategic design of the supply network to determine optimal ways to add diversification without excessive cost. Additionally, even in worst-case scenarios where constrained supply is impacted, companies can benefit from real-time and accurate updates of supply problems to allow more time to develop contingency plans.

Keep expanding the end goal

Supply chain leaders need to consider a variety of factors before moving forward and to increase the maturity of their planning processes to achieve greater levels of resiliency and responsiveness. This might involve a simple, yet effective self-monitoring process on incremental value delivered. Are they getting the value expected at each step of the process agreed upon to ensure healthy expansion and evolution, or are they going about it in a short-sighted manner? Each supply chain leader much have an end goal in mind that engages all critical stakeholders and leverages an integrated and collaborative process supported by a platform-based technology."
 
Technology is helping address many of the recent issues behind the supply chain crisis. Innovations in optimization, AI, process automation and analytics can provide tremendous value and make supply chains more resilient. Technology also offers numerous additional benefits, such as reducing costs, speeding up the flow of goods, improving health and safety in the workplace, and minimizing waste and emissions.