Blog Month: February 2022

  • COVID 19 The State Of Supply Chains (Part 2)

    Introduction –

    The first part of this article described the negative effects on Supply Chains as a result of COVID-19. It is crucial to understand the problems faced and the reasoning as to why these problems had a big impact amongst Supply Chains across many different companies. It is only when problems and their origin are understood in detail, effective and adequate solutions can be implemented to prevent the return of future negative effects.

    Now that the negative effects are known and understood to a degree, companies are starting to implement counter measures. Of course, the type of measure implemented depends on the specific company in question. However, the main issue Supply Chains across companies have issues with coping with the effects of the pandemic lies at the current/prior resilience level. Supply Chains simply did not invest sufficiently in the resilience element to minimize these negative effects. Now, how can companies specifically improve their Supply Chain Resilience?

    Increasing Resilience

    According to BizClik Media (2020), the pandemic will not disappear anytime soon. Companies must instead learn to adapt to the business environment. To improve resilience, companies require steady, start to finish appraisal and enhancement and observing. Strong analytical systems must be implemented that monitor constant changes in the marketplace.

    Strong analytical capacity will allow companies to better understand the situation’s complexity, anticipate potential disruption, and quickly develop a response (BizClik Media, 2020).

    See the figure below for a clear visual on how to improve your Supply Chain’s Resilience level in a structured way.

    Figure 1 Operate – Execute – Monitor Cycle (Resilience) https://supplychaindigital.com/supply-chain-2/accenture-building-supply-chain-resilience-amidst-covid-19

    Let’s create a scenario on how to improve the Supply Chain’s resilience using the diagram above. Remember, the end goal of increased Resilience is necessary to enable and increase a company’s ability to respond accordingly to unexpected changes within the demand/marketplace.

    Step 1: Mobilize

    To counter unexpected changes in demand, an initial response plan must be in place that holds specific operating rules. For instance, if demand rises above level X%, automatic notifications must be sent to Suppliers A/B to deliver new products on time. These parameters can be established based on safety/stock margins that are a result of product priority and lead times. Regular flow and depreciation value also play important roles in determining these specific parameters.

    Step 2: Sense

    After creating the fundamental counterplan, risks and implication on the Supply Chain must be identified and analyzed as soon as possible. For instance, if Supplier A uses a specific raw material to create your product that is known to become scarce upon demand increase, inform yourself about alternatives that enable product delivery past these scarcity levels. Diversify risks by looking for ways to counter potential bottlenecks in production and delivery.

    Step 3: Analyze

    It is important to analyze ‘what-if’ scenarios in case of unexpected plan failures. These scenarios must all elements of the Supply Chain including Source, Plan, Make, Distribute, Service. It is best to review these plans and scenarios every couple of months depending on the company to ensure their validity. Furthermore, having multiple perceptions on/off the scenarios and solutions may contribute to increased quality and resilience. The more a company asks itself the questions of what if x will happen, the better the understanding of the possible unexpected obstructions.

    Step 4: Configure

    This final step of this never-ending cycle should include the configuration of the entire counter process. All steps/elements needed in order to facilitate the counterplan should be in place. New transport/backup modalities, alternate materials, backup machinery etc. The more extensive the preparation, the better. This last step really ties in with the third analysis step as the potential disruptive scenarios determined the level of configuration needed.

    Looking ahead

    After continuous focus on Supply Chain optimization to minimize costs and improve efficiency across the board, COVID-19 clearly illustrates that many companies are not fully aware of the vulnerability of their supply chain relationships to unexpected Global changes within the marketplace/demand (Deloitte, 2021).

    Fortunately, new digitalized Supply Chain technologies are showing potential to drastically  improve the visibility across the end-to-end supply chain. It is clear that the current linear model of Supply Chains was not sufficient to be resistant to such global changes as the pandemic. Technologies such as the Internet of Things, artificial intelligence, AVG (Automated Guided Vehicles) are designed to anticipate and meet future challenges.

    Would you like to know more about the state of Supply Chains moving forward? Stay tuned for our next Blog where we will go more in-depth or talk to a ModusLink Expert today by clicking here!.

    Bibliography:

    BizClik Media. (2020, May 17). Accenture: building supply chain resilience amidst COVID-19. Supply Chain Digital. Retrieved November 27, 2021, from https://supplychaindigital.com/supply-chain-2/accenture-building-supply-chain-resilience-amidst-covid-19

    COVID-19: Managing supply chain risk and disruption. (2021, October 5). Deloitte. Retrieved November 26, 2021, from https://www2.deloitte.com/global/en/pages/risk/cyber-strategic-risk/articles/covid-19-managing-supply-chain-risk-and-disruption.html

    G. (n.d.). What impact has COVID-19 had on supply chains & responsible sourcing? Greenstone. Retrieved November 26, 2021, from https://www.greenstoneplus.com/blog/what-impact-has-covid-19-had-on-supply-chains-responsible-sourcing

    Gilkey, J. G. (2021, May 1). The challenges and realities of retailing in a COVID-19 world. Researchgate. Retrieved November 28, 2021, from https://www.researchgate.net/publication/351656064_The_challenges_and_realities_of_retailing_in_a_COVID-19_world_Identifying_trending_and_Vital_During_Crisis_keywords_during_Covid-19_using_Machine_Learning_Austria_as_a_case_study

    Harapko, S. H. (2021, February 18). supply-chain. Ey.Com. Retrieved November 26, 2021, from https://www.ey.com/en_gl/supply-chain/how-covid-19-impacted-supply-chains-and-what-comes-next

    Meyer, A. (n.d.). The Impact of the Coronavirus Pandemic on Supply Chains and Their Sustainability: A Text Mining Approach. Frontiers. Retrieved November 26, 2021, from https://www.frontiersin.org/articles/10.3389/frsus.2021.631182/full

    Netherlands, S. (2021, July 27). COVID-19 impact on supply chains. Statistics Netherlands. Retrieved November 25, 2021, from https://www.cbs.nl/en-gb/dossier/coronavirus-crisis-cbs-figures/covid-19-impact-on-supply-chains

     

  • COVID 19 The State Of Supply Chains (Part 1)

    Introduction Grand disruption

    Delayed shipments because of sea freight disruptions, monthly increasing fuel charges, disconnected communication between transport modalities.. These are all direct effects encountered across Supply Chains that resulted from the introduction of the virus COVID-19.

    It is undeniable that COVID-19 has caused many disruptions across markets. Especially within the Supply Chain industry, the virus has caused some companies to go bankrupt due to their fragile Supply Chain not being able to counter the negative effects caused by the virus. This unforeseen situation, experienced by companies worldwide, has caused management staff to relook and revise their current Supply Chain strategies. What is the current state of Supply Chains? Are there any positive effects that come from the disruption within the industry? Which are the key learning factors to pay attention to? These questions are all covered concisely within this 2-part article.

    Negative effects

    In order to understand the current state of Supply Chains the negative effects incurred must be known. Many Supply Chains faced comparable negative issues because of COVID-19. Ernst & Young LLP (EY US) conducted a survey in late 2020 where they asked approximately 200 senior-level supply chain executives at organizations across many sectors, including consumer products, retail, life sciences, industrial products, automotive, and high-tech companies in the United States with over US$1b in revenues if they experienced positive/negative effects amongst their Supply Chains. Out of these respondents, a staggering 72% stated to have experienced negative or severe negative effects. 18% stated the pandemic had no effect on their company whilst a minor 11% actually stated to have experienced positive effects. See the chart below for a short visual overview of the respondents’ answers (Harapko, 2021).

    Figure 1, Supply-Chain Effects experienced as a result of COVID-19 – 200 Respondents SE (https://www.ey.com/en_gl/supply-chain/how-covid-19-impacted-supply-chains-and-what-comes-next)

    According to this research, many Supply Chains were hit hard by the pandemic. Some companies experienced more negative effects than others. This research stated that, among the respondents, all automotive and nearly all (97%) industrial products companies said the pandemic has had a negative effect on them. Furthermore, 47% of all companies reported the pandemic disrupted their workforce.  These are significant amounts and clearly visualize the struggle experienced by many companies in their later stages.

    Confusion, a lack of understanding.

    The specific negative effects faced by Supply Chains are too many to go into detail. Supplier retraction, fuel charge increases, significant demand increases, modality issues etc., to name a few. Especially in the early stages of the COVID-19, not many organizations understood the virus. It’s nature and the effects on short/long term future were very difficult to predict. As a result, the impact of the negative effects stated accumulated rapidly. It was difficult to implement direct countermeasures as nobody understood precisely how the virus would develop in the future.

    According to Greenstone (n.d.), this confusion and lack of understanding resulted in cross-border flows of goods being stalled due to safety precautions needing to be understood and then implemented. Furthermore, local ‘lockdown’ regulations formed a great obstacle that needed to be understood in relation to trade. It was only after this that the natural flow-of-goods could continue to work on operating levels. This phenomenon can be easily identified within food Supply Chains. However, as mentioned before, the negative effects faced by Supply Chains can be seen across all industries. 94% of the Fortune 1000 companies claim to see Supply Chain disruptions because of the coronavirus. 

    Figure 2 COVID-19 Supply Chain effects – Fortune 1000 companies (https://www.google.com/url?sa=i&url=https%3A%2F%2Fsupplychaindigital.com%2Fsupply-chain-2%2Faccenture-building-supply-chain-resilience-amidst-covid-19&psig=AOvVaw1cleCCNUnB1vy8TfDrQvHx&ust=16388950

    The main conclusion that can be given from the experienced negative effects is that the many companies lacked a certain amount of resilience within their Supply Chain structure.

    On the upside, COVID-19 has magnified and identified the present issues within current/former Supply Chain Structures and operations. Now that these issues have been identified, companies can use this knowledge to adjust accordingly for the better and gain a strong competitive advantage as a result. Would you like to know more about the state of Supply Chains moving forward? Stay tuned for our next Blog where we will go more in-depth or talk to a ModusLink Expert today by clicking here!.

    Bibliography:

    BizClik Media. (2020, May 17). Accenture: building supply chain resilience amidst COVID-19. Supply Chain Digital. Retrieved November 27, 2021, from https://supplychaindigital.com/supply-chain-2/accenture-building-supply-chain-resilience-amidst-covid-19

    COVID-19: Managing supply chain risk and disruption. (2021, October 5). Deloitte. Retrieved November 26, 2021, from https://www2.deloitte.com/global/en/pages/risk/cyber-strategic-risk/articles/covid-19-managing-supply-chain-risk-and-disruption.html

    G. (n.d.). What impact has COVID-19 had on supply chains & responsible sourcing? Greenstone. Retrieved November 26, 2021, from https://www.greenstoneplus.com/blog/what-impact-has-covid-19-had-on-supply-chains-responsible-sourcing

    Gilkey, J. G. (2021, May 1). The challenges and realities of retailing in a COVID-19 world. Researchgate. Retrieved November 28, 2021, from https://www.researchgate.net/publication/351656064_The_challenges_and_realities_of_retailing_in_a_COVID-19_world_Identifying_trending_and_Vital_During_Crisis_keywords_during_Covid-19_using_Machine_Learning_Austria_as_a_case_study

    Harapko, S. H. (2021, February 18). supply-chain. Ey.Com. Retrieved November 26, 2021, from https://www.ey.com/en_gl/supply-chain/how-covid-19-impacted-supply-chains-and-what-comes-next

    Meyer, A. (n.d.). The Impact of the Coronavirus Pandemic on Supply Chains and Their Sustainability: A Text Mining Approach. Frontiers. Retrieved November 26, 2021, from https://www.frontiersin.org/articles/10.3389/frsus.2021.631182/full

    Netherlands, S. (2021, July 27). COVID-19 impact on supply chains. Statistics Netherlands. Retrieved November 25, 2021, from https://www.cbs.nl/en-gb/dossier/coronavirus-crisis-cbs-figures/covid-19-impact-on-supply-chains

     

  • Inventory Management & Supply Chain Responsiveness

    Introduction – Identify – Adapt – Scale

    Inventory Management has always played a key part in any successful Supply Chain. Correctly managing inventory levels helps companies to swiftly adapt to unpredictable changes within the marketplace. Volatile demand can cause troubling issues when not handled correctly. These issues can often perpetuate themselves into a strong negative cycle. For instance, let’s say you are a company that sells seasonal jackets. Due to an unusually warm winter, your winter jackets no longer sell as expected. Without adapting to the current demand, your winter jackets will become excess inventory overtime. Storing these jackets/tending to them and selling excess inventory etc., all take time and resources. In addition, the warmer winter raises the sales on your fall jacket collection. As you haven’t updated the inventory on these jackets, you are a significant amount of revenue. These negative effects could have been prevented with an adaptive and responsive Supply Chain. It is crucial for all businesses looking to scale, to understand the importance of having the ability to shift production towards demand.

    Correctly managing inventory levels requires a responsive Supply Chain, but what exactly does that mean? According to IGI Global(n.d.), A responsive Supply Chain can be defined as a Supply Chain that is able to shift its production to unpredictable customer demand. How do Supply Chains do this? One way to realize a responsive Supply Chain is to correctly manage inventory levels.

    Inventory Management

    Correctly Managing Inventory levels can be a struggle, depending on the marketplace and products in question. See below the best ways you can effectively improve your inventory Management by making your Supply Chain more responsive.

    Improve Supplier relationships

    Products that require multiple raw materials or parts from different Suppliers are heavily reliant on the active Supplier relationships. Companies that trade in those products ought to continuously look for ways to improve their Supplier relationships. This can be done through ways such as specialized contracting/transparency improvements/on-site visits etc. These are all ways to improve the Supplier relationships so that the flow of required parts/raw materials can be done as fluently as possible. Having a better understanding of your supplier’s business position (and vice versa) allows a company to better anticipate and forecast required elements for their end products. This maximizes the throughput speed at which new materials can be ordered and received, in turn increasing your adaptability to the marketplace.

    Figure 1(Supplier Relationship Management) Significance of Healthy Supplier Relationship. (n.d.). from http://www.strategicsourcing.pk/2015/12/significance-of-healthy-supplier.html

    Risk Management

    Another way to improve inventory control and build Supply Chain responsiveness is through effective risk management. Especially in turbulent times and strong unforeseen events such as COVID-19, the element of risk management is crucial for any business not looking to fall into a spiral of negative effects. Supply Chains are able to manage risks by having multiple production facilities/acquiring different logistical partners/correctly managing their staff/capacity levels, etc. It is important to always look for ways to minimize risks. This will minimize the negative effects incurred when facing unforeseen events. As a result, less pressure will be put on your business which gives breathing room for improvement and correction. Especially for SME’s (Small-Medium-Enterprises) looking to invest in new technology, a detailed risk analogy of the sought-after investment must always be made prior to continuing business. Automation and digitalization are important elements in Supply Chains nowadays. Despite the importance of these elements, never invest without a proper risk-return analysis. Investments made correctly with low risks (e.g., Material Resource Planning IT systems) allow companies to increase the improvement of their inventory management.

    Outsourcing

    A method to the improvement of Supply Chain performance and inventory management that has become increasingly popular over the years is the concept of Outsourcing. Companies such as ModusLink are Supply Chain experts with years of accumulated Industry knowledge. Companies within the Supply Chain Outsourcing industry often have big teams of professional Supply Chain Experts that allow them to often effectively take over whole Supply Chains. Some companies can also be price-competitive, increasing the attractiveness of outsourcing your Supply Chain. These companies use their extensive network, Supplier relationships and vast IT-infrastructure to massively increase the Supply Chain responsiveness and Inventory Management. Companies that outsource effectively gain the ability to spend resources elsewhere. This allows their business to flourish in a short-time period and more importantly, increase their ability to scale effectively.

    These three elements are important ways to Increase a Supply Chain’s responsiveness and in turn, increase inventory management. There are plenty of other ways a business can improve its Supply Chain Strategy. Would you like to know more about these innovative strategies and how you are able to implement these within your Supply Chain? Stay tuned for our next Blog or talk to a ModusLink Expert today by clicking here!.

    Bibliography:

    Amsler, S., O’Donnell, J., & Cole, B. (2021, February 11). inventory management. SearchERP. Retrieved November 24, 2021, from https://searcherp.techtarget.com/definition/inventory-management

    Significance of Healthy Supplier Relationship. (n.d.). Strategic Sourcing. Retrieved December 3, 2021, from http://www.strategicsourcing.pk/2015/12/significance-of-healthy-supplier.html

    Walts, A. (2021, October 29). Your Essential Guide to Effective Inventory Management + 18 Techniques You Need to Know. The BigCommerce Blog. Retrieved November 21, 2021, from https://www.bigcommerce.com/blog/inventory-management/

    What is Responsive Supply Chain | IGI Global. (n.d.). IGI. Retrieved December 3, 2021, from https://www.igi-global.com/dictionary/building-a-strategic-framework-for-retail-supply-chain-analytics/52748