Supply chain leaders were fixated on adjusting and surviving in the early aftermath of the virus’s arrival. With a “new normal” on the horizon, most supply chain leaders wonder what’s next and how to prepare for it.
Many manufacturers’ supply chain management initiatives prior to the COVID-19 pandemic were focused on lowering costs and boosting efficiency, sometimes at the price of flexibility and resiliency. However, the pandemic underscored the weakness of global supply chains to upheavals caused by natural catastrophes, economic volatility, and other dangers, in addition to public health emergencies.
According to the Supply Chain Risk and Resilience Survey by Gartner for 2021, 79% of large firms focus on risk management and resilience. Furthermore, according to Gartner, supply chain risk management will be a significant success driver for more than half of firms by 2025. In addition, several organizations are creating a specialized role to drive the initiative with multimillion-dollar budgets.
Manufacturers need to reevaluate their supply chain strategy and explore these three ideas to prepare for potential disruptions:
Create several levels of contingencies
Different situations necessitate various reactions. Firms must consider their backup plan as a sequence of contingencies with unused capacity built in if their supply chain has a worldwide footprint. Businesses must establish a crisis management team that is responsible for assessing priorities, analyzing tradeoffs, and activating contingencies as needed.
When planning for contingencies, companies should be especially cautious of single-source suppliers. Can companies store excess inventory from the supplier as a buffer in case of an emergency? Is it possible for them to need a single-source supplier to operate in two different locations? Firms should make it a priority to have a backup plan in place at all times.
Also Read: Addressing Risks Associated with Extended Software Supply Chain
Supply chain diversification
Manufacturers can lower their risks by broadening their supply networks, much as investors do by diversifying their portfolios. To reduce the danger of a firm being destroyed by the unavailability of a single supplier, develop a blend of suppliers of various sizes and geographical locations. If a natural disaster or other unforeseen incident compels a supplier to shut its doors or temporarily halt operations, other suppliers will be able to pick up the slack and keep the manufacturing process running smoothly.
Companies should build or improve their monitoring capabilities: By developing best-in-class digital planning skills, weather interruption, obstructions, and strikes may be proactively handled and sometimes even predicted. Control tower solutions deployed across the supply chain provide real-time visibility, allowing businesses to react to changes in the system. As firms transition to the new normal, including flexibility and agility in the supply chain, these monitoring capabilities will be a tremendous competitive advantage.
Enhance visibility
Data is the key to acquiring supply chain visibility. Supply chain experts can begin the process of ensuring that their operations are optimized by gathering the appropriate data at every waypoint.
According to the upcoming commissioned study Accelerate Your Data-Driven Transformation, conducted on behalf of RapidMiner by Forrester Consulting, 39% of respondents said that difficulty understanding or explaining a Machine Learning (ML), Artificial Intelligence (AI), or advanced analytics project ultimately results in negative business consequences. Employing ML to provide actionable insights delivered in a clear and accessible format, enables the leadership to get a quick big picture, and can help to quickly address problems.
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