Traditional supply chains experience hurdles at every step, such as delays and product spoilage. Not to mention, some issues aren’t usually evident until the goods reach their destination. In the food industry, companies lose around $400 billion of food every year before it gets to the stores.
The COVID-19 pandemic only exacerbated these challenges, with up to 94 percent of the Fortune 1000 companies experiencing disruptions in their supply chains. This turbulence underscored the need for effective leadership and digital transformation, as revealed in a recent report by Harvard Business Review Analytic Services (HBRAS).
Titled “Reevaluating Digital Transformation During Covid-19,” HBRAS report found that top companies and leaders are now focusing on operational agility to improve processes within their business models. They’re investing in technology to ensure optimal supply chain visibility while empowering teams to spot and fix their operations issues.
Here are six key strategies supply chain leaders are using to optimize and improve their supply chains.
Innovative leaders are using new technologies and tools to create a fluid and interconnected network that unlocks opportunities for improving efficiency and agility. This digitization brings about a seamless supply chain, which is key to ensuring faster delivery, optimal agility, transparency, efficiency, and reduced risk.
In addition to companies leveraging advanced analytics and AI, many supply chain and IT leaders in the industry are also leveraging low-code tools to gain end-to-end transparency into their supply chain. Low-code also makes it easy to deploy business tools that are necessary for today’s digital environment, especially from those closest to the work.
Influential leaders in the industry are setting and more closely tracking performance standards, such as on-time delivery, quality, and product availability, to meet customer demands and remain competitive. This is vital in delivering more value to their businesses while reducing risks and complexities.
These leaders are using different metrics and KPIs, as well as process performance indicators, to allow deep dives into root causes. This involves creating custom dashboards and graphs for the key metrics they’re following. This allows for real-time monitoring and full-visibility of different processes to know when to take action and what actions to take.
While the data-driven revolution is sweeping across different industries, supply chain leaders are also using analytics to improve their processes. They use granular data from various sources to holistically view all their activities, resulting in better decision-making and operational agility.
This requires more than looking at the traditional internal data on supply chain management (SCM) and Enterprise Resource Planning (ERP) systems. It’s about gaining visibility into the data within these systems through practical data analysis that covers critical areas, such as sales, inventory, sourcing, manufacturing, transportation, warehousing, and point of sale.
These leaders aim to create a data-fluent organization by using tools that measure the right metrics or KPIs. More importantly, the tools provide contextualized insights that are transparent and easy to understand. This allows teams to take action as well as save time and money.
When the pandemic hit, it squeezed businesses into new workflows and models. The HBRAS Report also showed that 91 percent of organizations changed their operating models. These changes, along with changing regulations and complex supplier networks, affected their logistics operations, particularly with the reduced workforce in warehouses.
However, the crisis offered executives an opportunity to revamp their workflows and operations to ensure logistics efficiency. They have eliminated manual processes by investing in customized low-code applications for efficient collaboration. Besides building operational agility, supply chain leaders have embraced ingenuity and used connected data to gain actionable insights into their logistics processes.
Gaining end-to-end visibility of your supply chain means understanding the entire process, starting at material procurement from suppliers to delivering end-products to customers. However, this is difficult when 20 percent of leaders say that their existing workflows are ineffective or outdated, as Harvard Business Review Analytic Services found.
Effective leaders are improving their supply chain visibility by investing in technology, measuring results, building a network, and eliminating pain points. They’re using streamlined monitoring processes to ensure usability and efficiency while creating an integrated view across the entire enterprise. This makes it easier for them to detect issues and provide solutions as needed.
Great leaders understand that finding the right balance between demand and supply is essential in inventory optimization. For that reason, they’re using flexible tools and workflows to get an accurate overview of their inventory at all stages of the supply chain. Such tools allow for real-time forecasting, smooth planning for peak buying times, and safety stock replenishment.
About 40 percent of supply chain professionals are using network and inventory optimization tools in their operations. Also, 54 percent of leaders believe that inventory management technology can add a competitive advantage to their organizations.
For example, the HBRAS report cites a German metal distribution company that automated its inventory system and digitized its supply chain to boost efficiency pre-COVID — this allowed them to adjust to the pandemic without impacting their operations.
Traditionally, supply chain leaders only played a tactical role, such as managing shipping routes, fuel costs, and warehousing equipment. Today, supply chain leaders’ role has even been amplified with the increasing need for digital transformation in fast-paced business environments.
According to Harvard Business Review Analytic Services’ report, 18 percent of supply chain executives plan to invest in digital transformations to manage their supply chain more effectively. This was a 2-percent increase from the pre-COVID-19 figure. Some of them have invested in low-code platforms like QuickBase to simplify and automate their supply chain processes to ensure reliability and efficiency. Consequently, inspiring followers and laggards.