With widespread supply chain disruption causing turmoil across the country, supply chain professionals need to become more resilient in the face of change to come. But to build this resilience, teams need to be able to build more visibility into your supply chain. With this visibility, teams will have the ability to gain greater access to their data, and work better with suppliers, vendors, and stakeholders across the business.
Our Supply Chain Resilience Survey uncovered four factors behind the major challenges organizations are seeing in creating a more visible supply chain.
Even with the continued supply chain disruption taking hold, our survey found that organizations still do not feel prepared for what may come next. Of the 201 supply chain professionals who responded to our survey, 63% feel only moderately prepared or unprepared for change. What makes this more dire is the fact that 79% of respondents find themselves reacting to change daily or weekly, with challenges such as changes in production quantity, quality defects, and changes in work pattern causing particular stress for organizations. And often, reacting can take up to several days.
For organizations who are unprepared for challenges around the corner, the impact can be massive. Martin Weis, supply chain expert and Partner at McKinsey and Co, describes this as the “bullwhip effect” – where small hiccups early in the supply chain can cause much larger waves at the consumer level.
Respondents saw disruption result in higher operating costs (59%), lost revenue (54%), and missed customer deadlines (44%). Overall, an inefficient supply chain can impact the company by adding additional costs, increase the challenges of meeting customer demand, and result in lost revenue.
This enlarged impact makes it that much more important to identify the root causes of trouble. 39% of respondents say that manual processes are the main root cause behind slow reaction times to change, and 20% identified disconnected core systems. Respondents called out sourcing (50%), logistics (48%), and demand planning (48%) as the areas that are most at risk without solving these challenges.
What lies behind both of these factors is a lack of visibility into critical data. When information is siloed in impenetrable core systems or offline manual processes, teams cannot access what they need to pivot and adjust workflows when disruption comes. As one survey participant said, “The data transparency is the first step that we need in our organization.” That can’t come with disconnected systems and manual processes as roadblocks.
Going forward, organizations have a good sense of the obstacles that will come in the future. Regardless of the nature of disruption, the most respondents (27%) called out supplier and vendor management as their biggest upcoming challenge. This is always a struggle when sourcing and procurement teams don’t have visibility into the supplier data they need, meaning they can’t find a new supplier or compare productivity to optimize their sourcing process. Having real-time visibility into supplier data, performance metrics and contract information is critical to reducing risks and ensuring that they are procuring the right materials and products in the right quantity, quality at the right time and cost.