Over the past year and a half, we've experienced supply chain delays and disruptions around the globe. The cost of shipping containers has skyrocketed, the timing of deliveries has blurred, and new outbreaks of COVID-19 are slowing turnaround rates, causing yet more uncertainty. While this has caused a lot of pain, it's also been a wake-up call, causing us to think differently – and look for new opportunities to optimize supply chains in our next normal.
The pandemic exposed pre-existing risks that were flying under the radar, causing manufacturers to take a deeper look into their supply chains. This resulted in a paradigm shift related to how organizations view risk, structure, and untapped value within their supply chains leading organizations to adopt new practices and tools to prepare for future disruptions and strengthen their market position.
Leveraging the tools of Industry 4.0
As Canadian manufacturers work to re-evaluate their supply chains, they are discovering that leveraging the tools within Industry 4.0 has become a key component of their supply chain transformation.
This isn't just the latest buzzword; it's an industrial shift. The move to digitally transform industry is being augmented by 5G, which will improve the speed at which we send and receive data, and will enable the broader use of technologies like blockchain, the Internet of Things (IoT) and machine learning (ML) in the industrial realm.
This shift will be invaluable to the supply chain, particularly when it comes to managing inventory, logistics, and contracting strategies on a global scale. For example, through the use of analytics and other Industry 4.0 tools, a Canadian-based company could now anticipate that a metallurgical Coke shortage in China will cause a steel shortage in six months – rather than discovering through a missed shipment or waiting for communication to progress through the layers of suppliers where by then it's far too late to plan accordingly.
But there's also transformation that can happen at very little cost, such as building risk/reward sharing into your contracts with suppliers. This could include offering an incentive to strategic suppliers for priority shipments in a time of crisis or pre-establishing financial penalties for late deliveries. Regardless of your relationship with your supply base, pre-emptive measures can go a long way in ensuring your organization maintains priority.
A responsive, flexible supply chain is created through an ecosystem of partners, through risk and reward, and through end customer-driven demand – supported by technologies and tools such as 5G, blockchain, cloud-based services and intelligent forecasting design.
Additionally, tracking and tracing capabilities have been accelerated through the Internet of Things, allowing manufacturers to track products via sensors for a wide variety of applications.
Tying this together is a centralized interface or dashboard that can bring together data from siloed, legacy systems in real time – whether that's data from your suppliers or from internal departments. Basically, it's a one-stop-shop for your data that keeps things simple and relevant.
There are several platforms available on the market that can centralize data from multiple legacy systems, with customizable dashboards for individual users-from the CEO to the director of quality management. This can help users see the flow of products, parts or components through the organization, and through the supply chain, identifying and predicting bottlenecks – alerting in real time to anything that's immediately relevant to each department.
Envisioning the future state of your supply chain
Having a responsive, flexible supply chain allows you to keep up with the pace of disruption – whether it's a pandemic, a natural disaster, geopolitical risks, new industry regulations or as simple as a ship stuck in the Suez Canal. You don't need to see or even understand everything going on behind the scenes; using simple score sheets or dashboards, KPIs and alerts can help you plan your business and give you an edge on your competitors.
The right technology – and trusted relationships with suppliers – allows you to better anticipate swings in supply and demand for scenario-driven management of the supply chain.
It can also ensure redundancies are in place, providing flexibility to come up with alternative solutions rather than to overreact to current market conditions, and help meet regulatory compliance.
For example, an increasingly growing number of OEMs are auditing and holding suppliers accountable for the use of conflict minerals and counterfeit products. Supply chain transformations utilizing Industry 4.0 methodologies and tools provide increased visibility into the suppliers of your suppliers through as many tiers as your business demands, enabling advanced visibility to better plan your business.
While this may sound like a massive undertaking, companies of any size can benefit from supply chain transformations – and it doesn't have to be a multimillion-dollar CapEx expenditure. So start small with an end-game in mind, make changes that are accessible and take steps toward building a more resilient, flexible supply chain.
We help clients transform their supply chains, increase their resilience and manage risks.
Please contact us to find out more.