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Analysts and industry observers have long warned that the unceasing drive for efficiency in the global supply chain could make it difficult to anticipate or recover from disruptions. During the pandemic, many manufacturers and distributors learned that their cost- and resource-efficient supply chains lacked the resiliency to weather rapid changes. Almost every industry was affected, although some more than others. By some measures, manufacturing—especially industrial manufacturing—was hit particularly hard.
When companies saw the impact of the pandemic on supply chains, many tried to change course quickly to ensure that they could continue production and that customers would receive their orders. Very often, they found that it can be difficult to quickly address challenges that result from many years of managing supply chains for best efficiency but with limited visibility. When supply chain events happened predictably, and customers received their shipments on time, that didn’t matter so much. But when a sudden event like the pandemic, a storm, or a giant container ship getting stuck in the Suez Canal upended the normal course of business, poor visibility made it difficult to confidently take the right next step.
Some manufacturers leaned toward accelerating their reshoring initiatives, but that did not provide a fast remedial measure. Standing up new facilities and developing supplier ecosystems would likely take many months for most businesses. Also, reshoring is not for everyone. It can be counterproductive when companies find it otherwise profitable to maintain a presence in an offshore market. Intuitively, reshoring may appeal, but making strategic decisions and investments based on snap judgments can be risky. Business intelligence tools can help an organization weigh the potential risks, costs, and benefits of a major change like reshoring. However, once again it takes time to acquire and become familiar with these resources and gain proficiency in analytics.
Other organizations made an effort to consolidate their purchasing with fewer suppliers, choosing the most reliable and responsive for continued long-term business relationships. However, if preferred vendors shipped from remote locations, they could increase a company’s vulnerability to supply chain disruptions. Streamlining procurement to deal only with fewer suppliers makes great sense, especially when you also have a reliable way of assessing vendor performance and risks. Many businesses had not previously documented and analyzed vendor-associated risks and now found that both small and large suppliers can come with their own liabilities.
However, we also appreciate that companies want to act quickly. Taking time out for supply chain modeling, stress testing, and analytics may be a hard sell for business managers when your customers are looking for their deliveries or large trading partners are unhappy with your performance.
Over decades of working with manufacturing and distribution companies, Sikich has made an art of helping businesses gain visibility and introduce productive changes in a predictable, results-driven manner. It’s usually just a matter of weeks to assess business processes and propose adjustments in preparation for implementing supply chain management software. In deployment projects, we follow a proven approach that provides pre-built processes ready to go into production.
The solutions we frequently implement, like Microsoft Dynamics 365, typically live in the cloud, where scaling and reconfiguring them to meet changing needs can be accomplished quickly. In addition to supply chain, finance, and other business management capabilities, Dynamics 365 also has a customer relationship management (CRM) component. It’s not limited to customers, however—you can use it to track and manage vendors, too. You can keep vendor commitments and communications at hand, record vendor quality assessments, and store information about vendors’ operations and organizational changes. You can draw on that vendor data when you evaluate the risks associated with your trading partners, and you can correlate it with the financials in Dynamics 365 to see how well vendor relationships serve your business.
Many of the steps involved in ensuring supply chain visibility are relatively uncomplicated. For instance, siloed data get in the way of transparency in many companies. There are only so many commonly used data sources, and Sikich can often make use of standardized integrations or perform easily configured data migrations to connect them or bring all data into one repository. And, depending on your goals and priorities, there are many efficient ways to build dashboards and reports for executives and other key business roles to show you what supply chain performance looks like.
The COVID-19 pandemic has manufacturing leaders rethinking their supply chain strategy. Sikich, in partnership with Microsoft and IndustryWeek, compiled the following based on our Supply Chain Resiliency survey findings to help manufacturers see where they stand compared to their peers, in order to make more informed decisions about future supply chain practices.
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