For many enterprises, their siloed, traditional Supply Chain Management (SCM) systems are proving to be their downturn when trying to operate in unprecedented circumstances, preventing business continuity and resilience. Supply chains evolve over time, in some eras more quickly than others.
The coming years will likely be one of those eras of dramatic transformation thanks to a combination of accelerating technology development and widespread experimentation with new operating models.
With global lockdowns and ongoing disruptions driving increased pressure, it comes as no surprise that 70% of businesses experienced supply chain disruptions over the last few years. Pre-pandemic technology investments and outdated business models had been partly to blame for these ongoing challenges.
Russia’s invasion of Ukraine and intensified COVID-19 lockdowns within China have disrupted supply chain networks and exacerbated cost pressures that were already building up during the pandemic recovery.
The Ukraine crisis and imposed Russian sanctions will create a knock-on effect across the supply chain, and businesses will be impacted by material shortages, material cost increases, demand volatility, logistics and capacity constraints as well as cybersecurity breaches.
Even companies without a direct supplier connection in Russia or Ukraine will experience debilitating disruption across industries from energy to agriculture.
Overcoming disruption and gaining control through ERP
In the crucial short term, however, companies can navigate the risks by improving their visibility beyond their immediate suppliers and stocking up on key materials.
The need for full visibility along the supply chain is critical as it enables manufacturers and distributors to adapt and adjust as effectively as possible, providing desperately needed certainty to their production planning processes.
Optimum visibility levels can be achieved through technologies such as ERP, which integrates solutions such as Material Requirements Planning solutions, supply chain portals and data analytics.
Manufacturers and distributors have found it difficult to replace or replenish their inventory and equipment or machinery, due to supply-chain disruptions globally.
Importers and exporters have also found it challenging to deliver or bring in goods across most international borders, as the seaports, which is the main route for international exchange of goods, have been impacted by restrictions and the slowdown of industrial activities of major trading partners.
Incorporating technology and supply-chain digitalisation
It’s no secret that manufacturers and distributors have been slow adopters of digital transformation. However, the pandemic has created a sense of urgency around starting their digitisation journey, implementing technology and processes to maintain some form of continuity.
Digital transformation is an essential step for improving and creating new operating models, influencing almost all areas of supply chain management.
A recent report suggests that supply chain crisis can be attributed to a lack of mapping and flexibility around the multiple layers of global supply chains and a lack of diversification in sourcing strategies.
Although companies cannot predict when the next crisis might occur, conducting supply chain risk management strategies and the adoption of technology have shown to be vital when disruption occurs. In the manufacturing business, success depends on how well the businesses manage their Supply Chain Management process.
Because they move on a tight schedule to complete the order, they need their partners and suppliers to supply them with the right type and amount of resources at the necessary time.
What the Covid-19 pandemic has highlighted is the need for Industry 4.0 technologies within manufacturing sectors to enable agile and flexible production systems and supply chains.
With advances in areas such as analytics, cloud-computing and Internet of Things (IoT) devices, organisations can strategise and become more resilient to future disruptions through digitalising supply chain.
Suppliers can be connected to an ERP system so that you can keep in touch and track raw materials orders on their way to a location. Centralising your warehouse is another step you can take to ensure that materials are shipped quickly to various locations.
Raw materials can be received into a central warehouse then shipped to locations quickly. Technology designed for manufacturers, such as ERP systems, provide organisations with improved visibility of the reliable local suppliers and their supply chains.
The use of automated business systems supports efficient management of procurement and sourcing policy changes, improved distribution and better decision-making based on relevant, and accurate real-time data.
The future of supply chains
Supply chains over the years have predominantly focused more on minimising costs, reducing inventories and driving up asset utilisation.
While these factors have made organisations more competitive within the marketplace, they have removed the buffers and flexibility to absorb disruptions and delays. However, the importance of ERP Supply Chain Management can’t be stressed enough.
As the laws of the Supply Chain are evolving day by day to become more complicated. Fast-track change in customers’ behaviour, fluctuating demand, shorter product lifecycle, and new regulatory compliances are crippling the competency of traditional supply chains.
Resilient companies have no choice but to get ahead of the twin challenges of technological change and shifting global dynamics. Armed with the right ERP tool, manufacturing companies have the upper hand in identifying trends early, adapting processes, re-configuring supply chains and collaborating with new trading partners.
Companies that can use these tools effectively will be engineered for speed and agility and have the upper hand at influencing their future.
By Mark Wilson, Chief Executive Officer, SYSPRO EMEA&I