Manufacturing CFO Summit Series: Improving Supply Chain Oversight

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The coronavirus pandemic has nearly impacted every business in some way or another, and few industries understand this better than manufacturers. At our Manufacturing CFO Summit we held virtually last December, Jesse Allyene, the business applications and Power Platform manufacturing lead at Microsoft, discussed how the pandemic affected supply chain oversight. With the shutdowns and safety protocols in place, supply chain disruption was unavoidable. The only thing left for manufacturers to do is manage the disruption in order to maintain business continuity.

According to Allyene, the pandemic has caused a bifurcation of manufacturing as an industry. Some companies were positively impacted or were experiencing overall growth and increase in demand. These companies had to figure out how they can manage the changes in the supply chain in order to capitalize on the demand they expect.

On the other end, some companies were negatively impacted from a demand perspective. They had to look at ways to cut costs and improve operations while keeping the day-to-day business up and running as well as investing in long-term opportunities.

Supply Chain Trends

So today, manufacturers are utilizing a variety of methods to try to build a more resilient supply chain. Allyene explained that Microsoft has seen “an acceleration in investments around agility.”

Multi-threaded supply chains

For the last couple of decades, manufacturers have invested in supply chain efficiency, with many outsourcing their supply chains overseas. However, they have become multi-threaded with their supply chains before COVID-19. Once the pandemic hit, companies had to focus on their multi-threaded supply chains to continue business operations as normal.

That is one of the largest trends Allyene has seen so far. Another trend focuses on visibility.

Supply chain visibility

Many Microsoft manufacturing customers want to expand the visibility across different tiers of the supply chain to improve efficiency with their customers and suppliers. In addition to the greater visibility, they are pushing for the ability to communicate and collaborate across the supply chain. When you add artificial intelligence to the mix, it multiplies the impact of that visibility when it comes to the top and bottom lines.

E-commerce push

Allyene pointed out that customers drive most of the pressure and innovation on the supply chain side. When the shutdowns went in place due to COVID-19, many manufacturing companies that sold through retailers had to suddenly invest in e-commerce. Most were already planning on looking into it, but once most retailers and retail outlets had to shut down, they had to quickly find a way to meet the demand of their customers.

How much visibility should your supply chain have?

Within a company, visibility all comes down to tearing down the silos that manufacturing companies historically have. By encouraging visibility across the whole organization, and not within your own silo, it’s possible to optimize between inventory and SKU count to actually meet customer expectations when it comes to delivery and product diversity, as well as minimize costs and working capital exposure.

The other side of the visibility coin is the different tiers of the supply chain. The first reaction Allyene often sees when it comes to expanding visibility is the fear that customers will use the visibility against them. However, instead of customers using this info against them, they’re finding that the visibility makes everyone involved happier in the long run. True visibility across the supply chain helps the entire chain to optimize and get a clear signal on what demand is and manage costs for everyone.

In addition, this full supply chain visibility helps the companies, vendors, etc. understand consumer/customer consumption and trends. Even if a company doesn’t traditionally sell to the end user of a product, it’s still really valuable for that company to see what’s happening after a product leaves its hands.

Minimizing costs yet maximizing productivity

Manufacturing companies have a lot of pressure to minimize costs while maximizing productivity even though there may be a shrink in demand. One of the best ways to cut costs overall is a complete digital transformation. Not only does moving everything to a digital format cut costs when it comes to paper, printers, etc., but it also allows organizations to get better visibility into their current processes and streamline them. Fully digitizing and automating workflow processes helps free up man hours to be productive in other areas. Giving employees access to knowledge allows them to get more done in their day, plain and simple.

Technologies to improve supply chain oversight

Our recommendation to improve supply chain oversight is with Microsoft Dynamics 365 for Supply Chain Management. For instance, vendor collaboration portals is a standard feature with Dynamics 365. The portals provide a secure workspace for active collaboration between manufacturers and their suppliers throughout the entire procurement process. This includes functionality to alert vendors for any changes on POS. In addition, you can also attach drawings, notes, instructions that really drives that collaborative active process. It doesn’t just stop at the PO process. You can continue that all the way through receipts with advance shipping notices, receipt acknowledgments, all the way through the invoicing process, matching, and payments.

This space can also be used as a centralized place to store manufacturing schedules, purchasing plans, supply contracts, and pricing negotiations, just to name a few.

With sharing all of this data, it’s natural to wonder about the security of the feature, but be rest assured that the collaboration portals use the same level of security access that Dynamics 365 already requires. In fact, transmitting data via these portals is often more secure than sending them via email or instant messages.

Is your manufacturing company ready to improve supply chain oversight? Please contact one of our Dynamics 365 for Supply Chain Management experts at any time!

This publication contains general information only and Sikich is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or any other professional advice or services. This publication is not a substitute for such professional advice or services, nor should you use it as a basis for any decision, action or omission that may affect you or your business. Before making any decision, taking any action or omitting an action that may affect you or your business, you should consult a qualified professional advisor. You acknowledge that Sikich shall not be responsible for any loss sustained by you or any person who relies on this publication.

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