In global manufacturing, disruptions are everywhere. Obviously, we are in uncharted waters with the outbreak of the Coronavirus. But prior to this crisis, disruptions to manufacturing and the supply chain have been increasing throughout the world. Be it weather, geo-political issues, global warming, consumer preference changes, or now, a worldwide pandemic, we can safely say, disruptors are here to stay. How do manufacturers cope with these disruptors as each brings their own unique set of challenges? It starts with a resilient supply chain.
The supply chain is the spinal cord of a manufacturing operation. If the spinal cord is compromised, some area of the body suffers. Spinal cord integrity and resiliency helps combat disruptors to the body. The same is true with the supply chain. Any type of material from ingredients, components, raw materials into work-in-process through finished goods moves through this supply chain. There is no way around it. In fact, with technology, we have now evolved into having two supply chains. The physical supply chain of inventories and the technical supply chain consisting of all the data and information that has to accompany the movement of inventories. Resiliency and supply chain integrity allows a manufacturing organization to be prepared to combat disruptors. So when we talk about a resilient supply chain what do we mean?
To simply state it, supply chain resilience is the supply chain’s ability to be prepared for unexpected events (disruptors) and being able to respond and recover quickly. The goal is to return to the original status or evolve into a new state to improve customer service, maximize operational efficiency and maximize profits.
A resilient supply chain begins with a number of processes that enable manufacturers to deal with disruptors throughout their supply chain to quickly and continue to ensure supply chain effectiveness.
Management focuses on operating an efficient supply chain that ensures a consistent day to day operation. This at times makes businesses vulnerable when a disruption occurs. While maintaining business as usual operations, processes and plans need to be flexible so that adapting and adjusting to disruption with little or no notice can be done so the supply chain keeps moving. Scenarios and plans must be in place and rehearsed so the supply chain can be intact during a disruption. It is basic risk management or disaster proofing that can keep the supply chain moving through flexibility and ease of change.
System Technology and Processes
Many manufacturing organizations are so focused on maintaining the continuity of day to day business, that they get into “if it isn’t broke, why fix it” mode. And while that may keep the status quo, it might not enable manufacturers to be prepared for disruptions. It’s important to invest in systems and processes that improve real-time visibility throughout all points of the supply chain. There are a number of technologies that can help tie all points of the supply chain together with all other business processes for complete synchronization and to enable the supply chain to bend when needed to manage disruption.
Sophisticated Demand Planning
Historical forecasting, especially on its own is a risky and dangerous way to forecast. Take current world scenarios for example. If a company that produces toilet tissue relies on a historical forecast to plan next year’s production, my response to that is good luck to you. It will be a business disaster. Demand planning systems that offer multiple forecasting methodologies to meet different types of manufacturers’ needs is critical to being flexible and having a resilient supply chain. Forecasting at the item location level in some scenarios can greatly minimize inventory re-deployments. Using intelligent methods to rapidly determine the best scenario for a demand plan helps keep the integrity of the supply chain.
Sales and Operations Planning (S&OP)
Sales and operations planning is one of the most critical steps in ensuring that your supply chain is resilient. S&OP helps align all the necessary supply chain planning functions with all the processes and plans of the rest of the business. New product development, finance, manufacturing, and all groups are included in this process as well as the management team to ensure that all company goals and plans are synchronized with supply chain activities. Having a structured S&OP process in place is a critical step in having the ability to act when disruptions occur.
Supply Chain Intelligence
Manufacturing companies are adding staff with the sole responsibility of analyzing the marketplace and the supply chain for threats and trends that could disrupt the integrity of the supply chain. This gives critical intelligence to those managing the supply chain for continuity and preparedness. This involves monitoring weather, environmental conditions, transportation, fuel prices and other risk factors that can cause a disruption to the business. This intelligence can be used to build plans that can be enacted when a disruption occurs to ensure supply chain continuity.
Supply chain resilience depends on a companies ability to shift rapidly from an efficiency-based operational scenario to one based on maintaining business continuity amidst a disruption. All levels of the operation starting with senior management need to be involved. A team should be assembled to assess the impact of the disruption so the appropriate plan can be activated to ensure customer commitments are met and that business processes continue to operate and that the supply chain continues to move. Operating in this manner allows companies to have an agile and resilient supply chain and become an effective enterprise.