Part of the “Navigating Disruption Today, Planning for Tomorrow” series
When COVID-19 first struck China, approximately 70% of the world’s resources and products were knocked off the supply chain. Many midsize businesses believed that this interruption would be temporary. Yet, no one could have predicted then that the virus would spread across borders and oceans at such a rapid and unrelenting pace.
Disruption always begins with uncertainty somewhere in the supply chain. Then, once the volatility of panic-induced demand enters the equation, the capacity to deliver products fast enough eventually reaches a breaking point. Midsize businesses can’t get their products out to the consumers that need them.
But the problem is not entirely panic buying nor just the ability to manufacture products fast enough in a new environment of health and safety with additional cleaning, social-distancing, and shift-separation requirements. It’s also about the distribution network and how it gets needed goods to the right hotspots at the right time.
Navigating supply chain chaos with a renaissance of visibility
In many ways, the current pandemic is a wake-up call about risks associated with global and lean supply chains that are focused on cost reduction. According to interim research in March 2020 by Oxford Economics and SAP, nearly one-third of midsize businesses cited the inability to adapt to a rapidly changing marketplace (30%) and lack of coordination between departments (31%) as among the top challenges contributing to meeting their organizations’ strategic priorities.
Over the last few months, I’ve had the privilege of speaking with several supply chain leaders from midsize businesses, many of whom expressed the same concerns as those raised by the Oxford Economics study. We discussed how those challenges impeded their ability to excel in critical areas, which, I believe, still hold true whether dealing with the complexity of today’s disruption or in times of financial prosperity and growth.
- Customer-centricity: Know what customers need, where to find them, and how a shortfall of competing products can impact demand.
- Productivity: Maximize the capacity available across your manufacturing and logistics operations.
- Visibility: Pinpoint where available inventory is located in the supply chain, which customers need it, and how to get it there.
- Sustainability: Take an honest look at the supply chain, and act on much-needed improvements to ensure continuous operations without harming the environment and workforce safety and health.
Taking these steps allows midsize businesses to see what customers are demanding in real time. More importantly, this perspective creates an opportunity to collaborate with retailers, wholesale distributors, and resellers that own point-of-sales information that is not traditionally shared.
When each side of the sales partnership has information that the other does not have, a willingness to collaborate on that insight inevitably emerges. Together, midsize businesses and their partners can optimize the supply chain with data on what is or isn’t on the shelves and whether there are gaps between customer demand and product offerings.
The whole concept of visibility across the supply chain is incredibly important, especially for inventory management. Take, for example, a business with 300 cases of hand sanitizer that need to be allocated across 20 different locations. To ensure the most critical areas receive the right quantities in time, businesses require supply-chain operations that are transparent enough to move forward with a customer-centric, productive, and sustainable strategy.
Turning a painful lesson into a platform for resiliency
COVID-19 unquestionably taught us all a tough lesson about the supply chain. No one knows when midsize businesses, consumers, and the economy will rebound from this pandemic. However, the optimist in me believes that this is a call to do things better today, tomorrow, and for the eventual recovery ahead.
Such changes cannot be established overnight. It takes time, effort, and the right tools to reevaluate the supply chain and pinpoint areas of improvement in terms of quality, capacity, delivery, cost, and responsiveness to shifts in engineering requirements and demand.
But once midsize businesses can find their match with qualified suppliers buyers with solutions such as SAP Ariba Discovery, they can build long-term sourcing relationships that are reliable and, above all, resilient.
Then, they can better match supply to demand to achieve better end-to-end visibility across the extended supply chain, manage exceptions by receiving alerts on issues, and run real-time simulation of different demand or supply situations on-the-fly by leveraging supply chain planning as a service.
For further exploration on how supply chain managers can navigate disruption today while planning for tomorrow, watch our mini-webinar “Stabilize Supply Chain Today and Build a Resilient Foundation for the Future.”
This blog is part of a series offering suggestions to help small and midsize companies weather the challenges related to the pandemic. You may also be interested in learning about the financial implications of this current landscape by reading “How Midsize Businesses Can Avoid the Cash-Flow Crunch – Today and Tomorrow.”