The unexpected disruptions to supply chains due to the Covid-19 epidemic happened very quickly and some manufacturers had difficulties finding alternative suppliers to keep their factories running.
Now that we are moving past the most acute phase of the pandemic and planning for recovery, CEOs need to take a long, hard look at supply chain reliability and risks. Here are some changes they can make.
Artificial intelligence can power supply chain performance
Businesses that suffered a shortfall in raw materials or parts due to the pandemic realized just how costly this could be. Improving the ability to analyze internal data and external sources of big data can help businesses to stay ahead of supply chain disruptions.
Harnessing artificial intelligence and machine learning for predictive and prescriptive analytics tools enables the use of model risk scenarios and early-warning technologies to develop responses. For example, in the event of a natural disaster, digital tools can help to predict which suppliers, plants and distribution centers are likely to suffer damage so companies can prepare contingency plans and relocate inventory.
Carlos Moncayo is one of the founders and CEO of Inspectorio, a leader in the use of artificial intelligence to power supply chain performance. Its software empowers businesses from multiple industries to optimize their quality, sustainable and compliance operations.
Increase supply chain flexibility to build resilience
The Covid-19 pandemic put a spotlight on companies that already had flexible production lines. Luxury goods manufacturers in countries like France and Italy could overhaul their operations to make urgently needed medical gear and hand sanitizer. Reacting quickly to disruptions requires a flexible ecosystem of suppliers and partners that can handle unexpected shortfalls and even produce new products.
Companies with flexible supply chains can expand their output capacity by optimizing operations. For instance, a highly flexible supply chain can meet customer demand for customization. Today customers can design a one-of-a-kind product online and have it delivered in a short amount of time.
Leverage data to improve visibility
During the pandemic, manufacturers started demanding more visibility into the supply chains of their suppliers. Leveraging data across the supply chain gives more real-time visibility into a variety of different areas such as finances, demand, capacity, supply, and inventory throughout the ecosystem.
Being able to leverage data in real-time means understanding what data is most critical, what it means, and what to do when exceptions happen. If you can proactively manage exceptions before they happen, you can save time and money while keeping customers happy.
Break down communication silos
It is important to break down communication silos. For example, different departments may have data fragments relating to the same transaction. With so many documents required for a single consignment, there could be many reasons for delays when they are all located in different departments. Production teams may keep order data, legal officers may keep contracts, and logistic managers may have the freight details.
Collaborative platforms, tools and cloud-based supply chain applications can all help to boost information sharing and decision-making. Today’s digital environment requires a collaborative approach to managing a supply chain. You need to develop an ecosystem that integrates the capabilities of each partner.
Take advantage of process innovations
Some businesses are relocating parts of their supply chains and others are bringing some production back in-house. Any change offers the opportunity to make some process improvements.
As part of the change, you can revisit the assumptions that underpinned your original processes. It is often a challenge for companies with existing production lines that are fully depreciated to invest in newer and more competitive plants and equipment.