Read below to learn how to strengthen your supply chain, and develop a model that is 'disruption-proof'.
1. Diversify your supply chain
With the increasingly fragile and disruptive nature of global economies and supply chains, it is proving more and more beneficial for large companies to diversify their supply chains - and steer away from the traditional approach of "putting all your eggs in the one basket".
Diversification sounds simple, however finding an alternative manufacturer/ distributor can be very onerous. You may be comfortable with a single trusted supplier, but the reality is you may have to step outside of your comfort zone to 'spread the net wider', and engage new suppliers in order to minimise risk.
In a world where many suppliers and products originate from China, finding an alternative outside of this region can be difficult, but not impossible. The reality is it will likely increase your costs approx 150% (depending on where you source), but diversification does have upsides such as reduced shipping time, cheaper replacement costs and potential lower minimum order quantities.
2. Is there an opportunity for different methods of manufacturing?
Along with the breakout of COVID-19, came challenges to manufacturing processes that had never been experienced before. Lockdowns placed stress on staff inputs, ultimately significantly impacting outputs - leading to an overwhelm of demand and a flow-of effect, creating a large bottleneck in supply chains, globally.
There may be a huge benefit in companies looking into newer technologies. Real-time visability can be seen much better in digitally-enabled supply chains - ensuring that issues can be identified much earlier and therefore enabling fast deployment of backup plans before they spiral out of control.
Unfortunately, many supply chains are not digitally enabled and have proven to be weak under stress/ pressure. However, there are modern technologies such as the following examples that can be leveraged to provide flexibility, agility and capacity to manufacturing processes:
3D printing
Computer numerical control (CNC) - used to replace parts that come from more heavily tooled industries.
In order for a company to become agile and ensure continuity of supply, they must adapt, shift resources and switch manufacturing methods easily. In particular, companies that are supplying critical equipment or consumables used in medical or testing processes, need to have rebust supply chains and back-up plans in place. If any disruption occurs, they must be able to rapidly adapt to ensure that a disrupted supply chain does not mean failure to deliver.
3. Stay Laser-focused on your Stock Levels
It is vitally important for businesses to be aware of the demand impact specific to their own company and industry. They will need act with agility and prepare for fluidity in channel shifts by checking where stock is moving the most and redistribute accordingly.
Many businesses usually avoid over-stocking, however, the ‘just-in-time’ strategy often doesn’t work - particularly when suppliers cannot ship the products due to lockdown or overwhelmed manufacturing capacities.
It’s important more than ever to have accurate forecasting processes in place, in order to foresee disruptions and fast-track the right signals to manufacturing. Businesses will need to accept there may be shortages, so it’s recommended to continue to keep communicating to manage expectations.
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