According to McKinsey, Supply-chain disruptions cost the average organization 45% of one year’s profits over the course of a decade. So what is the silver bullet to succeed in this environment? Before 2020, supply-chain was not thought about beyond front-line people within the organization, making sure it ran smoothly. Now, it is a conversation coming up to the boardroom and even the kitchen table.
The truth is, in today’s world, companies that can manage their supply chain effectively can actually gain a competitive advantage; beating the competition in this regard can mean that you sell more thus win more business.
Increase Supply-Chain Visibility
Organizations need to be able to decide and decide fast. In a recent survey, 80% of supply-chain executives said that they need to improve and invest in digital planning to increase supply-chain visibility to make sure that they have the ability to plan and decide.
According to PWC, having a few people in the organization get together and leverage data analytics is a best practice to assess immediate challenges to your suppliers and calibrate the potential impact on your business. In addition, creating awareness and conversations with key team members will go a long way to make technology work for you (and not against you).
Stock Key Inventory for Supply-chain Resilience
It is crucial to stock key inventory so that you are less reliant on critical suppliers. But, at the same time, increasing inventory can be a significant risk since the concept of Safety Stock could cost you in the long run.
Engage in Multi-Sourcing or Dual Sourcing
Another strategy that companies like Airbus are taking is multisourcing or dual sourcing. This means that if one supplier is weak, another can take its place. If your first choice lets you down, can you find an alternate? Could you interchange a “good” for a “better” or a “premium” for “better”?
Shift to Digital Capabilities
While many in the industry lament the ability to find talent, others see it as an opportunity. The people who are leaving spent their careers knowing their products and knowing the right place to get them. The new generation may not do the same things, but these digital natives have unique ways of doing things.
So, in place of the traditional purchasing manager is a portfolio manager who understands AI tools and can make them work for your business. With these tools in place, businesses of all sizes can make better decisions with the help of technology.
The world is changing, and so should your business. With the rapid pace of change in our economy kicked off by COVID-19, it’s more important than ever to be prepared for disruption. To do this, we recommend that you increase supply-chain visibility by connecting all parts of your organization – from suppliers to distributors – with one another. You can also implement AI tools like Intuilize, which can help optimize inventory levels based on demand forecasts or historical data.
You can also engage in multi-sourcing or dual sourcing (or both) and shift towards digital capabilities in your workforce. Let us know what other steps you would consider taking to manage supply chain disruptions now and into the future. Book a call to get started.
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