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The outbreak of Coronavirus (COVID-19), which was mainly concentrated in China’s highly industrialized city of Wuhan, has opened up the fragility of the global supply chain. For many years manufacturers that built complex supply chains around the world had begun to focus on supply chain risk or face severe long-term consequences.
The best price of this COVID-19 outbreak was human, with over 79,000 reported instances along with 2,623 deaths as of February 24, the huge majority in China, according to the World Health Organization. The COVID-19 virus has spread to 32 countries and the WHO Risk Assessment for China is”very large ”
The costs to the world economy are still being tallied, and the worldwide supply chain has endured consequences as firms have needed to shutter production operations and as provides are languishing invents.A fragile supply chain
This shows that the fragility of the international supply chain, said Rosemary Coates, president and founder of Blue Silk Consulting, a management consulting company that concentrates on global supply chains and is based in Los Gatos, Calif…
The concentration of numerous providers in one field elevates the supply chain risk for producers, Coates said.
“Most of the large automakers have manufacturing plants in the region, and also to provide parts for them, all of the providers are clustered about those makers,” she explained. “They not only provide parts to manufacturing but also international fix components. So another thing that we will likely see after manufacturing plants across the world closed down… is that we are not likely to have the ability to fix cars since they won’t have the ability to have parts to fix anything.”
Also read: The 15 Best E-Commerce Marketing ToolsMany potential supply chain risks
“Should you consider disruptions — whether it is another disease issue, the following war, further transaction conflicts, climate change-related weather disruptions — that the palette of likely disturbance for the supply chain appears to be wider and deeper and broader and more extreme,” Ellis explained. “The coronavirus is the symptom; the disorder is a deficiency of resiliency, that supply chains are rigid.”
The attempts that firms have made about JIT and lean manufacturing principles are a huge contributor to the issue, Ellis said.
“If employed imperfectly, lean ends up meaning fragile, and when all of a sudden the stock provide stops, you do not have weeks of pay, you’ve times or sometimes even hours of pay,” he explained. “Supply chains have done it to reduce prices, to decrease consumer cost gains, but that comes at a price. When there’s structural disturbance you don’t expect, you are going to feel the pain with that disruption considerably faster than you may have years back when maybe there were bigger reservoirs of stock.”Diversify the supply chain
So the question that all manufacturers need to answer is what strategy they should adopt to reduce the supply chain risk of disintegration.
Manufacturing in China has received a lot of attention recently regarding supply chain disruptions due to issues such as the coronavirus outbreak as well as trade and tariff wars. One of the measures is to diversify operations in China and not, according to Coats.
That may be easier said than done.
China’s so intensely industrialized, and at times there are parts that are just accessible from China, with the goal that’s one of those shortcomings,” Coates said. “We’ve been urging organizations to begin creating elective hotspots for some time since the levies became effective, and now with the [COVID-19] infection, it just amplifies the dire need to do that, to have elective plans and sources far and wide.”
Ellis said returning to a more seasoned pre-JIT procedure and expanding stock stocks might be a pointless overcompensation. Bringing greater adaptability into products and not having providers topographically focused bodes well
“Either the products you make must be progressively flexible with the goal that you can in any case make them if a specific part isn’t accessible, or you have basic segments,” he said. “[Also,] ensure you broaden supply out of one specific area.”
It’s always better to have a variety of suppliers and not simply rely on the lowest cost alternatives, said Dana Gardner, president and principal analyst at InterArbor Solutions LLC.
“It’s always been the case that you don’t want to concentrate all of your eggs in one basket, but it’s difficult to predict where issues can crop up. Now it just happens to be a contagious disease risk, but there are all sorts of other forms of supply chain risk,” Gardner said. “This is a reminder, and it’s not specific to any geography or any particular kind of risk, but it’s better to invest in diversity than it is to go to the lowest cost suppliers because, in the end, the risks could be higher.”Technology helpful but limited
Technology can also play a risk mitigation role. There are platforms and applications that help organizations assess and manage supply chain risk including Blue Yonder (formerly JDA Software), Infor Nexus, Llamasoft, Resilink and SAP Ariba.
These applications can be useful in providing a degree of supply chain visibility and can serve as early warning systems, but organizations have to decide if they want to carry the costs of running a system that may only be needed if something goes wrong, Ellis said.
“On the off chance that you have a portion of these applications and make a hierarchical responsibility to be a strong supply chain, you most likely can outflank your rivals if something turns out badly,” he said. “Be that as it may, constantly nothing turns out badly, you’re likely conveying somewhat higher basic expenses since you’ve fabricated this fair on the off chance that capacity.”
Supply chain chance evaluation applications can be helpful, Gardner stated, yet just in the event that they are joined with on-the-ground human information and connections. The innovation will be unable to completely foresee a hazard to the supply chain, however it might be valuable in helping associations react to an occasion and return to ordinary after an interruption.
“It will be fascinating to check whether associations that have put resources into shrewd stages and put resources into information and flexibility can ricochet back quicker than associations that don’t,” he said.
Surely, the greatest bit of leeway supply chain chance applications offer is a capacity for an association to respond quicker than contenders to a troublesome occasion, Ellis said.
“On the off chance that you can see an issue before it shows itself and be proactive, or see it so rapidly that you can respond quicker than every other person, you have a superior possibility of exploiting the providers that are accessible,” he said. “On the off chance that there are six providers on the planet and five of them get overwhelmed, that 6th provider will get a great deal of calls, and they are going to take the business from the principal couple that call, so being quick to the options is a major piece of supply chain strength.”
Supply chain chance appraisal applications that have progressed investigation and AI innovation can assist associations with deciding shaky areas in the supply chain and regularly propose activities to moderate the issues, Coates said. In any case, they are a long way from being generally embraced in assembling.
“Those types of devices are coming of age, but the world is filled with lots of small and medium businesses – even in automotive and aerospace – and these small companies don’t have the luxury of buying a big AI system, “He said. “So risk should be evaluated in different ways, either by personally placing someone on an airplane and going around to see suppliers and assess risk, or some other process like that. ”
Ultimately, the global supply chain may fall victim to its own success.
“The problem with the global supply chain is that you’ve got a bit of your supply chain everywhere,” Ellis said. “So if there is a big problem in one part of the world, chances are it is going to affect you because part of your supply chain is there – because part of your supply chain is everywhere.
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Supply chain management software is an invaluable tool for product managers, providing them with the insights and data they need to make informed decisions about their supply chain. It helps companies keep track of production costs and inventory levels, as well as monitor supplier performance and supply chain trends. The benefits of using this software range from cost savings to improved customer service. In this blog post, we explore eight key benefits that product managers can gain by leveraging supply chain management software development.1. Cost Savings Opportunities
Supply chain management software helps product managers save time and money on their operations. By automating tedious tasks, SCM software can help reduce manual labor costs, streamline processes, and improve the overall efficiency of the supply chain. Additionally, with efficient tracking of inventory levels and supplier performance, companies can avoid costly delays or stock-outs due to insufficient supply.2. Improved Efficiency
9 Best Cybersecurity Companies in the World3. Increased Visibility & Transparency
Supply chain management tools offer increased visibility into the entire supply chain process – from production to delivery – giving product managers greater control over their operations. It also enhances communication across different stakeholders – suppliers, customers, etc., as well as provides a more transparent view of operations. This helps ensure that everyone is on the same page when it comes to deliveries and other aspects of the supply chain process.4. Streamlined Collaboration & Project Management
5 . Automated Compliance Requirements
Leveraging SCM software for compliance requirements ensures that companies stay in line with industry regulations regarding safety standards for products as well as shipping protocols for deliveries. This allows product managers to stay on top of compliance matters without having to manually check each shipment or take up extra resources from other teams.6 . Data-Driven Decision Making
By leveraging data gathered through SCM systems, product managers have improved visibility into trends within their supply chains. This allows them to make more informed decisions about what products should be produced, how much should be produced, where orders should be sent, etc. By utilizing predictive analytics, they can even forecast future demand based on previous patterns.7 . Scalability and Flexibility
Supply chain management software is essential for all organizations looking to optimize their operations and maximize benefits from their supply chains – whether it’s cost savings opportunities, improved efficiency, increased visibility & transparency, streamlined collaboration & project management, automated compliance requirements, data-driven decision making or scalability & flexibility. As a product manager, you should use these best practices in order to achieve maximum benefits from your organization’s investments in this technology.
Organizational efficiency and staying one step ahead of the competition are made possible through supply chain management. It is now an essential component of providing high-quality items at reasonable pricing for modern enterprises.
Supply chain management is a subject taught in colleges of business and universities today. The management and optimization of a company’s supply chain may be the responsibility of whole departments in large organizations.
However, small and medium-sized businesses often have fewer resources and expertise available to them for improving the effectiveness of their supply chains. Therefore, the purpose of this book is to assist companies who want to learn more about supply chain management and make use of some of the more widely available tools, processes, and technology.Supply Chain Management
The flow of goods and services from raw materials to the final consumer is managed by interconnected organizations and systems through the application of supply chain management. Many distinct businesses may be a part of a supply chain, and supply chain management refers to how each business controls the movement of supplies to and from other businesses as well as its own internal performance.
The field of supply chain management encompasses a wide range of tasks including order management, inventory management, product lifecycle management, procurement, and more.6 Reasons Supply Chain Management is Important for Business 1.Lowers Operating Expenses
Supply chain management that is effective identifies expensive operations that don’t add value to the finished product. This lowers operating costs for a business by allowing it to reduce or eliminate certain activities.Less expensive production
Manufacturers rely on effective supply chains to get raw materials to assembly lines as cheaply and quickly as possible to prevent shortages that would cause production to slacken or stop.Reduced holding expenses
To save inventory costs in their warehouses, retailers, distributors, and wholesalers rely on supply chains to deliver goods promptly. This is particularly true for goods with a limited shelf life, like fresh food, or goods that age quickly, like laptops or cell phones.2.Increases Effectiveness
Waste is the enemy of operational efficiency, whether it be squandered time, effort, or raw materials. A sound supply chain management plan accounts for wastage and seeks to reduce it by putting an emphasis on operations that create value.3. Boosts Revenue
Strong and effective supply networks typically result in higher revenue and profit levels. More competitive pricing, higher profit margins, and activities like marketing are all made possible by lower costs.4. Enhances Material and Product Flow
The more quickly products are delivered to consumers, the more effectively the product flow operates. Bullwhip effects are less severe and there is less of a lag between demand and supply inefficient product flows, which makes accurate forecasting easier.5. Enhances Information Flow
Information sharing along the entire supply chain is made possible by an effective supply chain. By doing this, bottlenecks are eliminated and organizations get a complete picture of the supply chain, enabling them to make wise decisions. Additionally, real-time data keeps all participants alert so they can react fast to changes.6. Increases Client Satisfaction
Happy clients get what they want, when they want it, and for the lowest possible cost. An improved supply chain can increase consumer happiness and loyalty, which will result in more future purchases. Transparency in the supply chain is a topic that consumers value more and more.Types of Supply Chain Management
Supply chain management is a challenging task. What are small and expanding firms to do when large corporations can devote an entire team to supply chain optimization?
Managing supplier and customer connections on their own requires business managers in SMEs to multitask and perform supply chain management duties.
Positively, supply chains for smaller companies are less intricate. They can adapt to change considerably more quickly than huge corporations and can select the supply chain management strategy that best suits their needs.
Here are seven prevalent models for supply chain management. Selecting the approach that best suits your company can be aided by being aware of the variations between each model.Efficiency-Focused Supply Chain Models
In highly competitive industries where demand is predictable, products are comparable, and consumers seek cheap prices, these supply chain model types perform effectively. Manufacturing of chemicals, paper, and other basic items are a few examples of such enterprises.Model for Continuous Flow
One of the oldest supply chain strategies is the continuous flow model. It’s perfect for producers of commodity items, such as those who produce the same products frequently with little variation. In the continuous flow model, optimization is a result of close supply chain coordination and avoiding demand fluctuations.
The continuous flow approach is very well suited to just-in-time manufacturing.Quick Chain Model
This flexible business model is ideal for companies who constantly change their product offerings and need to move inventory fast, as well as for makers of popular goods with short life cycles. Businesses should concentrate on promoting new products, which depends on three factors: rapid idea-to-market transition, precise forecasting of demand levels, and end-to-end efficiency to keep costs low.Efficient Chain Model
Businesses in highly competitive marketplaces and those aiming for end-to-end efficiency can benefit greatly from the efficient supply chain concept. Because production is based on anticipated sales and competition is based on pricing, commodity industries utilize this approach. With this strategy, companies put a priority on perfect order fulfillment, depend on accurate forecasting to ensure product availability, and maximize efficiency to cut costs.Responsiveness-Focused Models
In industries where customer demand is unpredictable, businesses opt for a responsive model.1. The agile model
Businesses that produce specialty orders are best suited for the agile style of supply chain management. Make-to-order manufacturers only produce an item after receiving a customer’s order. Businesses must be able to produce in excess and create products and manufacturing processes that can be produced in the smallest feasible batches if they want to be nimble.2. The custom-configured model
The emphasis of the custom-configured model is on offering customized customizations, particularly during assembly and production. It is perfect for companies, like automakers, whose products come in a variety of configurations. Product configurations are often carried out during assembly when various product elements are put together in accordance with the requirements of the customer.
The continuous flow and agile approaches are combined in this model. The continuous flow model is used to manage the activities that come before product configuration, and the agile supply chain model is used to handle downstream processes and product configuration.3. The flexible model
For firms that experience large demand peaks and protracted periods of low workload, the flexible model is most suited. This concept allows companies to satisfy unique client requests or find solutions to issues by reconfiguring internal manufacturing processes. Businesses need to concentrate on having additional key resource capacity, quick answers, strong technical ability in engineering and procedures, and a flexible process flow that is easily changeable.4. SCOR model
The Supply Chain Council and 70 top industrial businesses worked together to build the SCOR model. This strategy aims to standardize procedures and produce a measurable method of monitoring outcomes. This entails evaluating procedures and objectives, quantifying performance, and contrasting business performance with benchmark information.Closing Remarks!
The process by which firms identify, evaluate, and mitigate risks in their whole supply chain is known as supply chain risk management. Supply chain vulnerabilities and unforeseen disruptions can affect a company’s finances and reputation.
Supply chain risk management can range from straightforward, such as a brewer making sure they have a backup supply of hops in case one region’s crop fails, to sophisticated, such as a comprehensive examination of vulnerabilities by a multinational organization.
The global Coronavirus pandemic has us all relearning how to live our day-to-day lives in a system that is learning on the fly.
There is no certainty.
There is no previous experience to draw on.
This is new and it is our reality.
I keep hoping that somehow I will normalize, that life will normalize.
But it hasn’t yet.
Is this the new normal?
A world where I feel a mix of completely numb and absolutely overwhelmed all at the same time.
It’s like there’s way too much to process, but absolutely nothing happening in each moment.
It’s messing with my mind and emotions.
I feel both:
Responsible and helpless.
Invigorated and exhausted.
Stressed and calm.
I feel everything and nothing.
This is my every day now.
I know I’m not alone in this.3 Big Struggles During the Coronavirus Pandemic
The focus of this Friday Focus is really about areas where I am struggling and learning (slowly but surely) to get through this changing, pandemic-filled world.
However, before I continue talking about the struggles I’m facing, I need to note two important things:
I have it pretty easy. I still have my job, as I work from home. Though I’ve felt the strain of the economic struggles plaguing us globally, I am OK. I have a roof over my head that I share with my amazing family. I have my health and safety. I have access to food and medicine. I am truly blessed.
I am beyond grateful and forever indebted to everyone working on the front lines, risking their health to provide essential services to people like me. From ER nurses to grocery store cashiers, I thank you from the depths of my soul for your service.
I wanted to be clear on my position and acknowledge that there are so many stories, journeys, and realities we are all living – with some being so much more difficult than others.
Here are the three main struggles that I have been facing during this Coronavirus pandemic, and want to address:
Struggling to focus on and complete tasks both for work and home.
A feeling of responsibility for things that are beyond my control.
An inability to find joy in my days.I’m Struggling to Focus
The struggle to focus was the first thing I noticed taking over.
My days became a blur with little to no schedule.
This was particularly strange to me because I usually work from home.
Nothing had changed on that front.
Somehow, though, as the world around me lost it’s schedule, mine went along with it.
Focusing and completing tasks can be a challenge for me in my regular life as well, so that part wasn’t new to me.
But the ongoing, never ending lack of focus with no ability to break the cycle?
I reached out a couple of times to others to express my frustration with this “stuck” feeling I’ve been experiencing.
It has been helpful to me to know I am in good company with this one.
So many people are experiencing this difficulty as well.
My chats with others helped me to remember some skills that I had learned over the years to help myself get unstuck and accomplish tasks, which was great.
The most helpful of those skills that I have started to implement in my day-to-day life (and am using it to write this piece in fact) is called “Chunking the Day”.
I learned this technique in a Cognitive Behavioral Therapy class.
It has been incredibly helpful to me both in the past and now as I struggle to get through my days and get things done.
How does “Chunking the Day” work?
It’s quite simple.
The idea is to focus on something that is attainable in the moment I am in right now.
(I can also use it to plan ahead. But a long list can be overwhelming. So I need to consider this when planning ahead so it doesn’t become a liability or add stress.)
I choose to use different time frames at different times, but I’m always careful to be sure they’re not too long.
Maybe 20-30 minutes.
Currently, I’m working in 10-minute chunks at a time.
So the chunking comes to play when I set out to work on a task for 10 minutes rather than setting out to work on a task to completion.
If, at the end of 10 minutes, I feel ready for another 10-minute chunk, then I will move into that. But if not, I will take a break (also for a set chunk of time).
There is no guilt or judgment allowed in regard to not completing a task.
The goal was to do 10 minutes of work on a project and that was attained.
That is the focus and success.
Chunking the day only works when used along with self-compassion.
It can be easy to go into negative thinking and say “but I didn’t complete the task.”
That isn’t at all helpful.
What’s a better approach?
To say: “I am grateful I was able to get that 10 minutes of work done.”I’m Feeling Responsible
This one has been an intense emotional journey and continues to be.
I honestly didn’t realize until a recent event just how much emotional weight I was carrying and responsibility I was feeling about the well-being of our essential service workers and first responders.
I was awoken by sirens and lights flashing right outside my window.
I bolted out of bed at 2:30 a.m. in an absolute adrenaline-filled panic.
When I looked out the window, I saw multiple fire trucks on the street outside my house.
Firefighters were running about, hooking up hoses.
Smoke filled the air.
It looked like the fire was coming from either the gas station or grocery store nearby – so I knew my family was safe and we weren’t in danger.
But then, suddenly, I started absolutely sobbing.
I was completely overwhelmed.
My son had run upstairs noticing the sirens as well so he was there with me as I completely fell apart.
I, in an absolute blubbering mess, unloaded.
I expressed my overwhelming fear for:
The front line workers (the nurses, police, firefighters, etc.).
The essential workers (grocery store workers, pharmacists, truck drivers, etc.).
Our highly vulnerable citizens (the homeless, abused, addicted, etc.).
It just all came spewing out.
Just an endless stream of fear for all of them and undying gratitude for all they are giving of themselves and anger for the position they’re being put in.
I realized in that moment how much fear and worry I am carrying for so many people around me.
The worst is yet to come.
It pains me to stand by with my only help to offer being to stay home and do nothing.
I am feeling responsible for the safety and well-being of the world and want to help them, but I simply can’t.
This breakdown was exactly what I needed to bring some clarity to what has been stewing underneath the surface and growing for some time.
I had been feeling very irritable.
It was incredibly uncomfortable.
Accepting and facing this feeling of responsibility has been helpful for me in moving forward.
I’ll bring up another nugget of knowledge I learned in my Cognitive Behavioral therapy class:
If you can name it, you can tame it.
So now that I have been able to name it, I am now in position to be able to tame it.
A good friend reminded me that while I can’t be there for everyone, there are still many people I can be there for.
Her exact words:
“Do for one or a few like you wish you could do for many.”
At times like this, it is important to focus in on what I’m doing to help rather than what I can’t control.I Can’t Find Joy
I almost feel guilty talking about this one.
I feel like it’s unfair to focus on my need for enjoyment at a time that is literally dealing with life and death moments for so many.
I am in no way wanting to compare my struggles to those that are facing extreme loss, fear, and pain due to COVID-19.
That said, our mental health relies on us experiencing joy – and that is important to discuss, so I am.
I have dealt with depression before. It’s no stranger to me.
Struggling to find joy in a day can be a real struggle when I have been in a state of depression.
I think some of that applies here.
There seems to be a heightened prevalence of depression globally, which makes sense.
I can’t expect myself to find joy in the way that I may have at a time where our entire globe wasn’t under such massive threat and experiencing such loss.
But I can find the areas of my life that shouldn’t be consumed with this pain.
I can work to find ways to find joy in my days, but I am having to look for it in new places.
Typically when I am in search of enjoyment I head out.
I love my home. But my home is also where I work.
So getting away from my home is a way for me to get away from work, which is important for me to be able to unwind and let go.
When I am at home I struggle to not have the many tasks and jobs that need doing swirling around in my head.
When I get away, it is much easier for me to find joy.
This is a hard struggle to address during the current circumstances.
We all keep hearing over and over “Stay Home!”
I am faced with challenging myself to learn to let go and relax at home (a.k.a., at work).
This is very hard to do!
It’s a work in progress.
I have been trying to encourage myself to do things that don’t really excite nor interest me. I know that sounds weird but it’s a start.
I must be honest, I’m not super excited to re-watch my ridiculously large DVD collection that I meant to donate to goodwill long ago, but I’m working through it.
I have found there are nuggets of joy in there waiting to be discovered.
For instance, the other day we as a family watched “The Day The Earth Stood Still” and found ourselves chuckling together at how cheesy the whole thing was.
We were able to find a way to enjoy an experience that I really did not expect.
I didn’t enjoy the movie per se, but I did enjoy the family movie critic extravaganza.
It’s something I now can look forward to doing again that I wouldn’t have expected to like.
Another activity that I have taken to doing each day is to walk across the street from my house with my husband and spending a bit of time sitting on the bleachers at the baseball diamond.
On most days there is a family or a dad and son or a couple there (safely socially distancing, being only with those in their household) playing a game of some sort.
The other day we saw three young children playing a totally disorganized – but incredibly cheerful – game of baseball with their parents.
I found joy in witnessing their joy!
No, it’s not quite the same as maybe going to watch the World Series live at the local pub with a bunch of friends.
But it is something new to look at.
It is a view that isn’t within the walls of my house.
I am learning to find joy in these smaller moments filled with laughter, cheers, and fun.
While I’ve been able to provide you with a couple examples of ways I’m trying to address my struggle to find joy, I’d be lying if I said it’s always that easy and simple.
Some moments of joy seem to reveal themselves much more clearly and easily than others.
Again, this is a work in progress.
I realize it will be an ongoing struggle as I continue to be unable to go to my usual sources of entertainment and fun. Like going for my favorite Lemongrass Vermicelli dish at my favorite local Vietnamese restaurant or looking forward to and planning my upcoming trip to Mexico (which is no more).
So how do I get through this crisis?
I must continue to push myself to look for the joy in each and every moment where it may be hiding.
It is imperative for my mental health.Coronavirus Is Affecting Us All In So Many Ways
I am beyond grateful for my health, my family, my job, my home – for all of the things that so many people around the world may lose and have already lost.
I am so incredibly fortunate and blessed and I do not take any of that for granted.
My heart goes out to the world, to each individual that is struggling, no matter what their challenges may be.
I know that at some point this pandemic will be a memory of a time where so many lost so much and so many learned so much.
It will be a time we all look back on with immense emotion without a doubt.
I hope that for us that time when we are able to “look back” comes sooner than later.
Of all the diseases to plague the world it seems especially cruel that it be one that takes our ability to hug each other away right when we most need it.
On that note, please do all you can to share your struggles, share your joys, reach out in whatever ways you safely can.
Do not experience this thing alone or let others be alone either.
As socially distanced as we all are right now, we truly are all in this together.
Featured Image Credit: Paulo Bobita
Digitization of the supply chain was an elusive target within the previous five years–constantly on the horizon however slow to materialize. What’s a”digital supply chain”? When there are numerous variations of this definition based on who you’re speaking about, arguably it is most frequently called the following: Program of technologies to digitize and analyze information in a precise and quick manner to boost supply chain performance.
The path forward could be daunting: a steep learning curve, inner resistance to change, siloed decision making, multiple sources of data, and the lack of low-cost, customizable technology alternatives have left many businesses stuck at the experimentation and testing phases. The fantastic thing is that new technologies players are currently bringing technical applications to market that, in combination, encourage readily customizable options. Wider approval is bringing prices down. Cloud computing and artificial intelligence are creating the critical mass of information and analytics required to discover supply chain patterns and make actionable insights. And as the specialist knowledge base of best practices evolves, the Digital supply chain is turning into a more concrete reality.
Most firms struggle, nevertheless, with climbing digital supply chain capabilities to conduct their end-to-end small business. The trick to success will be to begin with the business challenges, and then specify the”nirvana state” business procedures and clearly articulate the anticipated financial benefits from attaining this nirvana state. This vision helps specify the important industry requirements for developing Digital supply chain capabilities.Big change in little time
The digitization of this supply chain differs from the tech boom that occurred in the late 1990s and early 2000s due to one big reason: simple access to precise data and Digital technologies (for example, Internet of Things apparatus) that can capture and analyze this information. The adoption of Digital technologies has soared in just a few short decades, and tendencies point to a continuing stride moving forward. International cloud computing visitors grew eightfold from 2024 to 2023, to 8.6 zettabytes (ZB) yearly, and may more than twice by 2023. During precisely the exact same period, annual large data analytics visitors quadrupled to 1.2 ZB from 2023 and will be expected to more than triple from that point. Internet of Things (IoT) apparatus plummeted from 2024 to 2023 to 10 billion and are forecast to reach 27 billion in 2023.
These technologies are crucial for digitizing the supply chain and have the capability to make significant benefits across the whole plan-source-make-deliver spectrum. (See Figure 1) Data created via innovative analytics and empowered from the IoT, as an instance, can reduce networking capital prices in logistics and planning. In conjunction with augmented reality, wearables, and robotics, IoT apparatus can accelerate response times to possible supply disruptions or manufacturing deviations. On the factory floor, robotics can maximize materials use and reduce error rates, While 3D printing adds design and manufacturing flexibility. Structured collaboration applications and marketplaces (by way of instance, FourKites’ platform for asset monitoring ) can allow value chain partners (like suppliers, vendors, peer businesses, retailers, and customers) to operate their own infrastructures within an integrated manner. Crowdsourcing may add sourcing durability and flexibility into the supply chain whilst at the same time enhancing asset allocation and decreasing transportation costs.
Rather supply chain and tech teams frequently operate on Digital jobs on both sides, as well as their own daily duties. These jobs are perceived as creative jobs that don’t core to the mainstream enterprise. In reality, digital jobs are rarely connected to longer-term, the overarching company approaches, and they frequently aren’t connected to clear grade, support, and price developments.
Furthermore, companies have a tendency to get a portfolio of digital and nondigital jobs with minimum coordination among them. The nondigital jobs –for example streamlining the sales and operations planning (S&OP) procedure, improving transport sourcing, or implementing lean manufacturing initiatives–generally far outnumber the Digital, with approximately 70 percent being nondigital. What’s more, unlike the Digital jobs, the nondigital ones are frequently connected with a gain and loss statement objective. Because of this, nondigital jobs generally are entrusted over Digital ones for investments and scale-ups. In the stage that firms seek our aid with Digital supply chain conversion, we now discover that, in almost two-thirds of instances, their Digital projects have shown no quantifiable cost, productivity, or other physiological benefits.
To be prosperous, digital jobs will need to be tied into other small business endeavors that are connected to the corporate plan and also have a financial target related to them. By way of instance, within an attempt to boost the stock, a project group may explore new need planning tools. In the same way, a team may explore using state bidding and crowdsourcing tools to decrease freight costs. Or as part of a plant reliability initiative, a group can test the usage of IoT apparatus to assist prioritize maintenance jobs. This linkage ensures that digital projects are addressing the ideal small business issues. Additionally, it ensures that Digital jobs aren’t in battle or redundant with nondigital jobs. Rather the 2 sorts of jobs are now incorporated together. Finally, whenever there’s a financial business case connected to Digital projects, they’re more likely to get investments and also be scaled beyond a pilot project.
Additionally, as companies pursue those jobs, we think they could benefit greatly from looking for fresh perspectives out of their own businesses –as well as their particular businesses. We’ve seen many top international manufacturers devote much less time and price to implementation due to the insights they have gained from other people. ExxonMobil, as an instance, sought out help in upgrading its own technology, maintenance, preparation, and monitoring system. In 2024 it moved out the energy business and kept Lockheed Martin as the lead system integrator because of its own next-generation procedure automation system. ExxonMobil thought it might gain from Lockheed’s experience in assisting U.S. military customers transition from rigid, costly legacy systems to more agile, safe, open ones.
Related: – What is the Ethical Supply Chain? Supply and Demand.Steps toward successful transformation
It’s crucially important to comprehend that effective technology installation is a comparatively late-stage measure in a longer process of discovery and preparation that contributes to digitization. Rather a successful digital transformation journey starts by answering four Important questions:
What is the company’s digital ambition level, or end vision, for the transformation when it is complete?
How does the company’s current digital capabilities compare with that of the end vision?
What technologies and digital use cases are needed to close the gap between the two?
What would be the business impact of implementing those technologies and use cases on the organization?
One effective method of answering these questions entails a workshop-driven app, normally lasting a few weeks, also called a”digital supply chain fast scan.” The app consists of the following four measures:
Evaluate digital consciousness and vision levels throughout the business to develop a”digital goal image,” or prospective vision.
Assess the digital capacities of important stakeholders at every stage in the supply chain, then measure the gap between the capacities necessary to see the target image.
Research technology choices, evaluate the value and effect of potential use cases and produce a suitable project brief list.
Prioritize steps and revise the digital object image according to findings to make a high-tech digital road map for moving with the conversion.
Step 1: Develop a digital target.
Step 2: Evaluate current capabilities.
After creating a target image, the company can begin running deep-dive interviews with agents from all core purposes to set a baseline of its present digital capacities. (See Figure 2.) This procedure gives a fantastic chance to make a list of ongoing and planned digital initiatives spanning the whole preparation, production, sourcing, and delivery value chain. For every digital component or capacity –if it be a data source, an analytical instrument, a reporting platform, or another tech –the organization needs to document its function over processes and functions; the encouraging technologies; and the effect it’s in terms of prices, support, and working capital. This shared baseline snapshot of present digital capacities and constraints creates the foundation for quantifying, and finally closure, the difference between a company’s existing capacity set along with the digital goal.
Step 3: Assess technology options and create a short list.
The next step is to research different technology options to deal with specific present and future demands. Too many businesses, unfortunately, see this component of the procedure as merely comparison-shopping among alternatives based on comparative performance and cost, or as a binary choice between proprietary or off-the-shelf, highly personalized alternatives. These are certainly valid factors, but the crucial first decisions entail identifying and assigning desired digital capacities in the context of immediate demands, long-term strategic objectives, acquisition through the business, demanded investment in centre and labor updates for effective execution, along with other aspects. Figure 3, as an instance, shows how businesses can begin with identifying the important abilities they need and find which technologies may offer these skills.
Step 4: Prioritize potential projects and create a digital roadmap.
According to this investigation, the company will prioritize digital jobs within the short, medium, long term, offering a clear, pragmatic roadmap to digital transformation.
Related: – Top 6 ways to Achieve supply Chain SustainabilitySuccess story
t shouldn’t be supposed that digital transformation necessarily involves a complete reengineering of the supply chain. Digital solutions may also be targeted to deal with certain issues within a company, as exemplified by a current digital transformation which A.T. Kearney was included in at an integrated oil and gas firm.
The organization had discovered that poor data flow, inadequate facilities and broken procedures were making it challenging for downstream refinery employees to monitor, inspect, and maintain field equipment. Nearly all the repair and maintenance work was responsive, direct times for approvals were extended, and a lot of the full procedure was paper-based. In addition to negatively impacting productivity, these struggles also made it challenging for the company to attract and keep new area operators, so many of these younger workers and individuals, in an already diminishing workforce.
Following this inspection process, the business decided on the next digital endeavors: 1) set up an onsite personal network for mobiles, tablet computers, and programs to boost field communications; two ) launch pilots to utilizing detectors and other infrastructure to track the status of nonvital gear and predictive analytics to set optimum frequency and timing of maintenance for critical equipment and procedures; and 3) adapt offices for new methods of working, transform associated labor practices, and reassign functions and obligations.
Field operators today create caution warnings, not only episode reports, which help produce a sense of urgency around fixing the matter. Field operators can also be stored in the loop regarding the standing of warnings after the truth, circulating more precise info and cutting reaction time. A brand new transparent shift scheduling procedure enables increased flexibility in schedule-change asks, as area operators and supervisors share updated data in real time. Plant-procedure master checklists are developed and handled digitally rather than being paper-based. Because of this, they provide greater precision and permit common processes to be available to all and reused by numerous plants. The ePermit to perform a procedure, which arouses plant accessibility for area operators, has been streamlined by digitizing authorization utilizing mobile devices and digital signatures.
It is essential to mention that the transformation campaign didn’t only concentrate on implementing new technologies. Additionally, it involved changes to procedures, culture, and office environment. By way of instance, workspaces such as area operators are established, relocated, merged, or redesigned to enhance participation, cooperation, and ease of working. In all, over a hundred people engaged in the work area and ethnic co-creation effort.
Related: – How BlockChain Technology Growing Importance in Retail IndustryOne step at a time
Long seen as a cost centre and also an afterthought, the supply chain is currently regarded as central to firms’ push for support differentiation and competitive edge. At precisely the exact same time, the previous five decades have seen a quantum jump in digital supply chain engineering that promises to aid with the growing complexities of information flows, sourcing and supply logistics, and inventory management. In production, and especially in heritage businesses, digital supply chain conversion has emerged as a dividing line between future expansion and slow reduction.
Businesses starting that transformation may gain from the rising accessibility of customizable, off-the-shelf technologies alternatives. Meanwhile business success stories and best practices have grown across many verticals demonstrating the concrete benefits digital transformation may provide. Now’s the time for organizations to proceed, or danger spending weeks or years fighting to catch up after. Yes, the technology is complicated, the procedure will be tumultuous, and also the proliferation of service, product, and strategy choices can be perplexing. But as the old saying goes, each thousand-mile journey begins with a single step. A very clear plan which ties to the organization’s overall plan and generates acquisition from stakeholders can supply that initial step.
The importance of supply chain operations became clear long before the global pandemic and Russo-Ukrainian War. Organizations are now stepping up efforts to optimize their supply chain operations to meet the new challenges posed by the worsening global economy and the geopolitical situation. Investment in digital supply chain management solutions is projected to double by 2026 (Figure 1).Figure 1. Global supply chain management software market 2023 to 2026
However, measuring the performance of a supply chain is necessary before improving it. Supply chain leaders need to understand the current state of their supply chain before implementing any improvements. Leveraging key supply chain KPIs can help you understand your supply chain and what it needs better.
This article explores 5 key performance indicators (KPIs) that can help supply chain leaders measure their supply chain performance.1. Perfect order rate
Perfect order rate is one of the most commonly used key performance indicators for assessing the overall supply chain performance. This supply chain KPI directly measures a supply chain’s ability to fulfill orders free of errors and incidents.How it is measured
For a business to complete a perfect order, it must meet the following requirements:
The order left the warehouse on time
The order is received by the customer on time
The order contains all the items in the right quantity and quality
No returns are made
There are no payment issues.
The simplest way to track your perfect order rate is to subtract the failed orders from the perfect orders. The reasons for the order failure can be easily traced, given the complete process is recorded and laid out through integrated digital tools with real-time data sharing.
This metric directly impacts customer satisfaction and, therefore, must be included in an effective supply chain performance measurement process. The KPIs can also be added to a supply chain metrics dashboard to help managers easily use its data.Challenges
Sometimes, it is difficult to get customer feedback on a specific order, which is why some businesses don’t learn about a failed order until a complaint is made.
Another challenge is the lack of data sharing among business partners in the vertical supply chain. This can be due to a lack of digital collaboration or privacy concerns and can lead to weak supply chain visibility and ineffectiveness of the KPI. Check out this article to learn more about how to improve supply chain collaboration.2. Cash-to-cash time cycle
The cash-to-cash (C2C) time cycle is also a common and effective supply chain KPI that measures the time between the payment being made to the suppliers and being received from the customer. Reducing this time cycle is the aim of all supply chains since it indicates that the funds are spending less time in other hands.How it is measured
3 main parameters to consider for this KPI:
Days of inventory (DOI)
Days of payables (DOP)
Days of receivables (DOR)Challenges
Identifying the optimal C2C cycle time is challenging since it depends on the business dynamics. Therefore, businesses should continuously review supplier terms and their supply chain to identify opportunities to improve C2C cycle time.3. Supply chain cycle time
In the post-pandemic world, where supply chain resilience is becoming increasingly important, this supply chain KPI is useful for measuring the ability of a supply chain to respond to volatility. This KPI shows how long it will take for a supply chain to fulfill an order if it runs out of stock. This means the total time for a supply chain to produce, pack and deliver the product.
The shorter this time, the more agile, flexible, and resilient the supply chain is.
Monitoring total supply chain cycle time can identify pain points in the supply chain, which create future disruptions and impact supply chain responsiveness.How it is measured
In order to measure and analyze your supply chain cycle time, you need to be able to accurately track each step in your order fulfillment process. This includes tracking:
When orders are received
When they are processed and made ready for shipment
On which date and time are the products shipped to customers
When customers receive their orders
You can use digital solutions such as RFID (Radio-frequency identification) to track packages. By tracking each step in the logistics process, you can easily identify areas for improvement and improve supply chain cycle time overall.Challenges
The main challenge in using the supply chain cycle time KPI is collecting accurate and reliable data from every step of the order fulfillment process. This involves ensuring that all employees involved in receiving, processing, shipping, and delivering orders are accurately logging their activities or that you are using a digital supply chain visibility solution so that high-quality data can be gathered.4. Inventory Turnover
Inventory turnover is also a crucial supply chain KPI which falls under logistics operations. Other terms for the inventory turnover KPI are inventory velocity and inventory-to-sales ratio. This metric measures how many times the entire inventory of a business is sold in a specific period. So, for instance, a shoe manufacturing factory produces a batch of 2000 shoes in one day. When all the shoes from that specific batch are sold, a point will be added to the inventory turnover dashboard, increasing the overall inventory velocity.How it is measured
A higher number shows healthy sales and revenue, while a lower number shows weak sales. However, the inventory turnover rate depends on the nature of the business; for example, the rate of an FMCG store would be much higher than an automotive brand such as Porsche.
Comparing the inventory turnover rate with direct competitors can give insights into the supply chain’s overall performance and guide supply chain managers toward improvements. The formula to calculate inventory velocity/turnover/inventory-to-sales ratio:
The inventory turnover KPI can be a challenging metric for some supply chains, especially those that are highly complex and involve multiple stakeholders. It can be difficult to accurately track the date of purchase and sale for each item in order to calculate the correct figure.
Additionally, it is important to take into account factors such as seasonal fluctuations and changes in demand, as these can greatly impact the inventory turnover rate. For such a complex supply chain, it is important to use an integrated cloud-based digital solution.5. Demand satisfaction rate
This is another essential supply chain KPI to add to the supply chain performance measurement package. Demand satisfaction rate or fill rate refers to the customer demand that was satisfied or filled by stock availability and without backorders or lost sales. This KPI represents the demand that can be satisfied if inventory management in the supply chain is improved.How it is measured
To measure this KPI, you first need to track each customer order, including the order date and delivery date. You then need to calculate the number of orders that were met on time, as well as those that were delayed or not fulfilled at all. Then you can use this formula:
The number of orders met on time ➗ The total number of orders received = Demand satisfaction rateChallenges
One way of improving this KPI is to improve supplier relationships across the vertical supply chain. However, this can be challenging, especially in an environment where businesses are increasingly relying on offshore suppliers. To learn more about how to improve supplier relations, check out this quick read.Recommendations on implementing supply chain KPIs: Digital performance measurement
Apart from the KPIs mentioned in this article, there are many more KPIs that supply chain managers need to use in their performance measurement process and keeping track of all of them can be a challenge. We recommend using an all-inclusive supply chain management software that can help efficiently measure all your KPIs to accurately track the supply chain performance.
Check out our data-driven list of supply chain software to find the option that best suits your business needs.Further reading
If you need help finding a vendor or have any questions, feel free to contact us:
Shehmir Javaid is an industry analyst at AIMultiple. He has a background in logistics and supply chain management research and loves learning about innovative technology and sustainability. He completed his MSc in logistics and operations management from Cardiff University UK and Bachelor’s in international business administration From Cardiff Metropolitan University UK.
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