The Covid-19 pandemic has been a wake-up alarm for many global manufacturers and supply chain leaders and most of them are still in the reactive phase with this crisis. But it will be wrong to completely attribute the challenges that most of the Supply Chain leaders are facing right now, to the pandemic totally, as many of them were existing challenges which the crisis has brought out in the open. It’s allowing them to focus on the issues which have been previously neglected and making them pull one last trick out of the bag or totally rethink their supply chain strategies on a whole. As Deloitte in a recent report rightly terms the Covid-19 as the ‘black swan’ event for the global supply chains that finally fuels their overall transformation into a more resilient and scalable one.
In the initial days of the crisis, most of the global firms were facing a major challenge that many experts has termed as the “Supply Shock”, i.e. the declining supply volumes and shutting down of their supplier’s units created a panic amongst a majority of the global brands in analyzing their production feasibility and to understand what demands could be met. As per a report in the early February 2020, by Dun & Bradstreet - “938 of the Fortune 1000 companies had a tier one or tier two supplier in China impacted by the virus.” As the pandemic went into a global crisis mode and nations started implementing large scale lockdowns, it worsened the situation for the global supply chains, with new emerging challenges of unprecedented demand for certain items (due to panic buying amongst consumers), delay in shipments on-route and even the future orders, delay in invoice settlements, even decrease in overall order volumes, ad-hoc business continuity planning and much more. Institute of Supply Chain management reported that “Nearly 75 percent of companies reported supply chain disruptions in either because of coronavirus-related issues in mid-March.”
But not all of them were facing equally daunting challenges, some were a bit better prepared at the mitigation of the issues raised by this crisis than others. Were they any special? What gave them an edge in this situation? The answer is a more resilient, smarter and highly connected digital based supply chain management framework that put them in a better position than many of their counterparts with the visibility, data and connectivity to find in-prompt solutions and take more enhanced decisions at critical times. Boston Consulting Group even in their recent report reciprocated the same, stating “Companies that have adopted digital supply chain technologies are 25 percent better prepared to respond to the crisis than those lagging in digitization.”
And when we talk about digital supply chains to tackle these kind of crisis situations more efficiently we have to talk about “cloud supply chains” due to the sheer fact of its infinitely scalability, faster and easy setup (with minimal infrastructure needs) and high end-to-end connectivity. In the times of crisis, you need a setup that you can easily scale or modify or keep running with minimal need for physical inspections or disruptions and can access from anywhere, any time and almost any device from something just as simple as a web browser. That is the amount of flexibility that “cloud based supply chains” provide you.
Let’s have a look at the ways the ‘new normal’ for global supply chains can be enabled by cloud-based frameworks:
In times of crisis, visibility and data can be the ultimate savior. If the right data is not available to take immediate decisions, the crisis sometimes blows up in proportions and immediately cascade into major supply chain disruptions. Hence organizations need to have an overall visibility into real-time data from all their operational units like their inventory levels across warehouses & DCs, demand spurges, locations with labor or product crunch or high demand, capacity planning, freight carrier performances insights and rates, labor productivity insights, supplier pipeline and much more. But having all this data, connected together at one place demands for a unified data setup that needs to bring the supply chain industry out of the era of working units of silos and take them into an era of highly connected systems and end-to-end visibility on the cloud infrastructure.
Cloud based supply chains give organizations the flexibility to access their highly connected supply chain network from anywhere through something as simple as a web browser or a smartphone. So during times of need they are always prepared and have all the tools available with them to access their supply chain data from anywhere and take crucial decisions. Also, as many of the organizations will soon be looking for solutions to make their supply chains more accessible and ensure business continuity with the new normal of reduced physical interactions, cloud based solutions will give them a boost in that particular aspect. New implementations of solutions or workforce onboarding becomes seamless, faster and easier with cloud based solutions and requires minimal physical interaction or infrastructure changes. Due to similar reasons the implementation costs reduce multi-fold too for cloud solutions.
Demand and supply shocks were one of the major challenges for global supply chains during these few months. Apart from the fact that cloud supply chains help leaders in better predicting and planning the productions or inventory with their smarter all-round analytical insights, but also gives them the flexibility to scale up and down their operations with ease as and when needed. Cloud solutions are capable of handling infinite level of scalability and thus is well equipped with supporting any demand surge and also allow organizations to scale up their operations easily with very minimal changes in the system required and that too can be performed from the ease of one’s laptop screen. To give an example, an immediate request of adding a new freight carrier which otherwise might take months can be done in a matter of few days if the cloud SCE solution provider already have a pre-installed EDI interaction setup with the carrier data stream.
Last few blogs we had looked into the new era of supply chain operations, focused on reduced human interaction, increased efficiency and more collaboration of smarter technologies like AI, Automated Mobile Robots (AMRs), drones to say a few. As we move into the next phase of business continuity for many organizations after the crisis, where processes like contactless deliveries, social distancing norms among workforce become part of the ‘new normal’ of their supply chains, cloud based infrastructure will ultimately form the major framework on which these technologies are set to evolve. All of the new technologies like AI, bots or drones need a highly connected, faster and end-to-end network for real-time interactivity, and cloud based supply chains’ easy integration capability provides them exactly that and even more with the high scalability feature.
The current scenario might prove as a boon for many supply chain leaders as it gives them the opportunity to rethink and reorganize their supply chain strategies. The aim should now be to smoothly phase out of their outdated processes and equip their businesses with a smarter, more technologically enhanced and resilient supply chain framework that is always prepared for weathering out any future storms. And, cloud based technologies will be the major enabler for their digital supply chain dreams.
Ready for the change? Or still unsure of how to start the journey? Our experts, here at the award-winning cloud based supply chain suite of Highway 905 might be able to help you out. Schedule your first free consultation today!