Unanticipated change. This is a daily reality for professional supply chain teams, but when multiple unexpected disturbances happen at once, it can upend entire industries and negatively impact the global economy.
Take the current disruption in global supply chain operations and international trade. Caused in large part by COVID-19, the situation has been exacerbated by a logjam of container ships in North America, shutdowns of production lines because of material shortages, high consumer demand for finished products, and the labor shortage. Even changes in one country—like the curbs on electrical use in Chinese factories—is felt throughout the global supply chain.
The disturbance in the chain has mushroomed into what is now being dubbed The Great Supply Chain Disruption. Raw materials, toilet paper, auto parts, critical components—even Christmas gifts—free-float in a logistics chain that feels like it’s come unmoored. While experts predict this severe disruption to continue well into 2022, there are steps companies can take right now to soften the impact of the chaos.
If you are a supply chain professional, your first order of business should be to build resiliency. In this post, we will show you how by reviewing the basics of resilience as it relates to the supply chain and global logistics. We will also introduce you to tools that can help you excel during the current upheaval—and any future global supply chain disruptions.
What Is a Resilient Supply Chain?
A supply chain that is resilient is a system that has just-in-time visibility into the work and processes of companies. If the system is set up and run right, supply chain companies can react swiftly and adjust seamlessly to unexpected changes, like those caused by the COVID-19 pandemic.
Visibility: The Critical Link to Supply Chain Resiliency
Why is visibility so important? Because information is king. Visibility allows logistics teams to see all the information necessary to make decisions quickly and accurately.
Visibility gives many companies the confidence that they have a high-performance, compliant operation. It helps teams negotiate and coordinate with vendors, understand demand, manage manufacturing capacity to avoid supply shock, identify alternate sources of materials and products, and meet customer demands.
What Makes Reacting to Change a Challenge?
While the pace of change in the logistics sector has always been brisk, recent events have ramped that to a full-out sprint.
According to Quickbase’s recent Supply Chain Resilience survey, 79% said they are responding to change with their teams or organizations weekly (43%) or daily (36%).
While many companies experience classic logistics issues, such as production quantity, quality defects, and manufacturing work pattern changes, together they caused one-third of respondents to spend at least several days reacting to them.
Here’s the breakdown of what categories took several days away from the busy schedules of supply chain specialists:
- Changes in production quantity: 44%
- Changes in manufacturing work pattern, such as reduced manufactured capacity: 38%
- Quality defects: 34%
- New product introduction: 18%
What Are the Biggest Challenges the Supply Chain Faces?
In addition to spending time reacting to typical issues, companies must maintain agility and accuracy in a faster-moving world that poses new hurdles, including COVID-19 of course, but also these:
- Shortages of Key Materials: From lumber to microchips to electronics to meat—the shortage of products and resources are causing downstream issues that impact global markets, causing production line shutdowns from China to the United States.
- Labor Crunch: Economists point to an increased number of workers quitting jobs as a major logistical pinch point. Many of these workers were essential to the chain, including truckers, laborers, and warehouse workers. According to the Department of Labor, 4.3 million Americans quit their jobs in August 2021—the highest number since the stat was first tracked in 2000. And the exodus continues.
Before any of these issues arose, many industries were already struggling with inefficiencies that caused a general lack of preparedness. The Supply Chain Resilience survey revealed that many supply chain pros feel unprepared for challenges and changes going on in the industry.
In fact, only 37% of respondents said they felt very prepared for coming changes, leaving 63% of respondents feeling only moderately prepared (35%) or completely unprepared (28%).
Survey respondents flagged one area in particular that they thought contributed to the problems of unpreparedness: Manual Processes and Disconnected Systems.
74% of respondents noted that pulling data out of ERP systems is time-consuming and expensive. Plus, once the information is pulled, it becomes outdated and irrelevant fairly quickly. Respondents also said they fell back on manual processes to fill in the gaps in point solutions and legacy systems (like ERPs). Again, this manual process resulted in teams creating siloed and out-of-date information.
When you consider that a company may be interacting with potentially hundreds of suppliers and cross-functional stakeholders using manually extracted data, it’s easy to see how this can lead to lost time and information, as well as mistakes. It also prevents teams from identifying—and fixing—potential risks within the supply chain.
Why Is Navigating Disruption So Critical?
What can happen when logistics challenges aren’t addressed correctly? They can quickly cascade into a host of troubles, including:
- Products not arriving in time or in the right quality or quantity
- Overspending on procuring resources, parts, or products from suppliers
- Non-compliance as suppliers can’t see into supplier information
- Plant downtime due to missing or incorrect materials
These situations can result in poor customer satisfaction and decreased revenue. As one survey respondent explained:
“We are at the stage where we can’t retrieve reliable data, and if we do, we need to go through a lot of manual verification. The data transparency is the first step that we need in our organization, and from there we should be able to identify the patterns, the quality issues of the vendors, and make better decisions with regard to the supply chain, which is critical in our revenue and margins.” Other negative impacts of missing visibility cited include:
- Higher operating costs (59%)
- Lost revenue (54%)
- Missed customer deadlines (44%)
The impact on revenue is crucial to understanding the true impact that missing supply chain visibility can have. While risks exist throughout the entire supply chain, respondents pointed to sourcing (50%), logistics (48%), and demand planning (48%) as the areas where mistakes impact the financial bottom line.
Outside the logistics universe, consumers are bearing the brunt of supply chain disruptions as well. They face higher prices for goods, more expensive shipping costs, and sporadically find themselves staring down partially filled grocery store shelves.
COVID-19’s Impact on the Global Supply Chain—And Beyond
COVID-19 was a major pivot point for the global supply chain industry because it highlighted weaknesses in the chain. When things broke down, companies realized the importance of visibility when managing the flow of goods, services, and information.
COVID-19 also created more demand for goods that fell outside manufacturing capabilities. (Recall the toilet paper debacle in the first half of 2020.) And, currently, there are shortages of items related to setting up home offices now that work-from-home opportunities abound.
In addition to vowing to improve visibility, many industry leaders are taking a hard look at how to reduce risk overall. COVID-19 is just one example of a disruption. Any number of other scenarios, such as another pandemic, climate change-related migration, or extreme weather disruptions, could cause breakdowns similar to what was seen during the COVID-19 pandemic.
While the supply chain industry doesn’t have a crystal ball when it comes to potential future troubles, pros in the field already see three challenges on the horizon:
- Supplier and vendor management: Supply chain pros worry that not having a real-time visibility into supplier data, performance metrics, and contract information is critical to reducing risks and ensuring they procure the right materials and products in the right quantity and quality at the right time.
- Inventory data management: Without access to the massive amounts of information that flows through the inventory management process, minor issues can become massive bottlenecks in the chain. Real-time visibility into inventory helps ensure companies have what they need in stock when they need it.
- 3PL or Carrier data management: Non-compliant third-party (3PL) logistics providers can harm customer relations and profitability. The solution? Visibility into performance info, costs, and contact information of these providers. This enables logistics pro to troubleshoot solutions as well as identify cost-saving opportunities.
How to Build a More Resilient Supply Chain
The challenges of creating visibility throughout the supply chain—as well as the benefits of having that visibility—mean it’s important to be strategic in how you add resiliency to your operational structure.
First, keep in mind that the best way to build supply chain resilience is to know what comes next throughout your organization. That sounds easy, but this type of valuable information will be in short supply if you don’t have a system to harness accurate information from vendors, suppliers, and teams across your organization.
Can you consistently access this information at a moment’s notice? If the answer is no, it will be difficult for your company to react successfully when disruption strikes.
Your organization should focus on the following five areas:
- Ensure easy access of information in existing core systems
- Build real-time insights into supplier performance and compliance data
- Streamline communication with suppliers and vendors with a single source of truth to store information and contracts
- Improve the procurement process as new suppliers and products are introduced or new regulations become relevant to the process
- Swiftly adapt to unanticipated changes or disruptions
A fool-proof way to support these areas of effort is through a no-code platform, like Quickbase, which allows you to:
- React faster by automating workflows and uniting information across your supply chain
- View organization-wide performance in one place
- Automate complex or manual processes
- Integrate with your core and legacy systems
- Implement change three to four times faster than traditional software
Conclusion
At the end of the day, organizations that can respond to shifts in global supply chains today will be poised to grow through subsequent challenges—all while remaining profitable and burnishing their customer service reputation.
Using Quickbase for resilience offers the peace of mind of knowing you are mitigating risk, managing expenses, and maintaining schedules in a high-performance, compliant environment.
When the next disruption hits, you can be ready.
FAQs
Is resilience important in a supply chain?
Yes. A supply system that boasts resiliency will have just-in-time visibility into a company’s work and processes. Run right, the system can react swiftly and adjust seamlessly to unexpected changes.
Why is visibility so important for the success of global supply chains?
Visibility allows supply chain teams to see industry-wide information necessary to make fast, accurate decisions. A no-code agility layer, like Quickbase, offers this visibility to companies, uniting information and systems and removing tedious, risky manual processes.
How can supply chain professionals improve the resilience of their supply chains?
The fastest way to improve supply chain resilience is to create as much “visibility” through the chain as possible. One easy way that is not capital intensive is to harness the power of a no-code platform, like Quickbase. This software allows companies or manufacturers to unite information and systems, remove tedious, risky manual processes, manage capacity to reduce shortages, and react faster to change by automating workflows.
