Amid the unprecedented global pandemic, today’s manufacturers across critical industries now need to learn how to break out of their traditionally inflexible supply chain models and quickly gain the ability to pivot in the face of disruption.
In response, supply chain leaders are realizing the importance of improving agility through digitizing their supply chain and order management capabilities, and 80% expect that the digital supply chain model will become predominant within five years. This article explores:
- Why large global companies are finding themselves struggling to overcome supply chain weaknesses
- The key to creating a successful roadmap to digitization, visibility and supply chain efficiency
- Five considerations when searching for the right supply chain management consultant
Table of contents
Complex supply chains have struggled to keep pace with the demands placed on them in 2020. Even before an unprecedented global pandemic crippled suppliers and halted shipments, an international trade war and an unexpectedly steady stream of natural disasters in recent years have created ongoing challenges for supply chain managers. In response, supply chain leaders realized the importance of improving agility through digitizing their supply chain and order management capabilities, and 80% expect that the digital supply chain model will become predominant within five years.
From manufacturing to healthcare, many businesses failed to overcome disruptive obstacles in recent years—in part due to manual supply chain management capabilities, which are notoriously rigid. By design, traditional B2B models scale up and down accordingly based on relatively predictable shifts in demand. Manufacturers across critical industries now need to learn how to break out of their traditionally inflexible supply chain models and quickly gain the ability to pivot in the face of disruption.
80% of supply chain leaders expect that the digital supply chain model will become predominant within five years
The COVID-19 pandemic brought these problems to the forefront of the supply chain sector as demand for medical devices, personal protective equipment and other essential goods put the medical supply chain’s inability to adapt in the face of unexpected surges on display for the world to see. Manufacturers and logistics operators across industries ranging from food production to electronics to consumer goods all faced similar problems to varying degrees.
These problems continue as outbreaks surface in new areas unexpectedly, causing demand flares that require manufacturers to suddenly switch gears and redirect supply where it’s needed. Every business is unique, however, and with so many technology tools available on the market today it’s often difficult to determine which solutions an organization should pursue.
Large global companies now find themselves struggling to overcome weaknesses in their supply chains that have been accentuated by the coronavirus pandemic, retaliatory tariffs and other disruptive events. These organizations are increasingly seeking expertise outside of their companies that can not only help identify the solutions required to lead an organization into the future but also source and implement them.
Manufacturers Adapt to the B2B Channel Shift
The lack of agility in traditional manufacturing models left many organizations unprepared to adapt their supply chains to meet the order-centric demands of the modern B2B arena. B2B transactions are commonly still facilitated by fax machines, emails, phone calls, paper orders, manually filled spreadsheets and field sales reps. Digital supply chain solutions are often secondary for manufacturers if they have the capability at all.
“With a traditional ERP background set up, data isn’t as fluid as it can be,” said Sean Breeze, director, management consulting at Perficient, a systems integrator and supply chain management consultant. “Data is not nearly as dynamic and you’re not getting data from multiple sources and artificial intelligence. That causes stagnation and processing capabilities that are much more rigid.”
Procurement buyers are consumers in their personal lives, and consumer habits have led them to expect a certain level of service on the things they buy. As such, corporate buyers are now promoting a digital shift in the way they choose to purchase from suppliers. The demand on the consumer side for better, faster, more accurate shipping and delivery has spilt into B2B markets, putting further pressure on businesses to streamline supply chain and logistics capabilities.
The demand on the consumer side for better, faster, more accurate shipping and delivery has spilled into B2B markets, putting further pressure on businesses to streamline supply chain and logistics capabilities.
“We as consumers can see where our online order shipment is at any hour of the day,” said Greg Hurst, director, management consulting at Perficient. “Now we’re seeing that migrate into the B2B world. Say customers have an order for wiper blades for their production line, for example. Instead of calling up and asking where the wiper blades are, now they want to go online and see that for themselves. B2B buyers today want that self-directed customer experience they get at home.”
This means that manufacturers without the streamlined digital capabilities necessary to create a better customer experience will lose sales to competitors who have fully implemented digital supply chain platforms. While B2B supply chains involve fewer parties and customers overall than B2C/retail supply chains, the complexity of each vendor/supplier relationship can make B2B supply chain management and digitization more complex in many ways.
“When you get into B2B manufacturing models, the contract really governs the relationship,” said Steve Gatto, director of digital commerce solutions at Perficient. “It’s not as simple as ‘I sell and you buy.’ Who at your company is entitled to purchase from mine? Their purchase power may be limited when they want to place an order, then it needs approval. The contract may not cover my total catalogue. There’s all these corresponding terms and conditions that have been agreed to about when we’ll actually get the product out to you, how it ships, reverse logistics. Every contract is different for manufacturers. Relative to retail, there’s so much complexity that governs B2B relationships.”
The handshake deals and complex service-level agreements that govern B2B transactions often act as a deterrent to automation and digitization because business leaders worry that the unique variables in each relationship won’t be properly translated into a broader solution, resulting in a loss of customers if something goes wrong. This perception is flawed, however.
When each vendor only has its own terms filed away on paper from faxes and printed emails, it can be difficult to keep sales representatives in the field up-to-date with accurate, real-time information on factors such as:
- Entitled Pricing
- Purchase Histories
- Lead Times
- Current Capacity
Eradicating manual processes in favour of digital replacements ultimately improves service to the customer by offering better visibility into order status, history, and milestones at the point of sale and into the order itself.
The key to creating a successful roadmap to digitization, visibility and supply chain efficiency involves finding the right partner that will take the time to understand what your business really needs. Any consultant in this arena must be able to balance the unique elements of each manufacturing operation with processes anchored in best practices, enabling them to guide and implement organizational change.
“Not everything can be solved with technology,” said Pawan Kumar Gupta, principal, order management & supply chain at Perficient. “It takes a combination of technology and better processes, but technology can help a lot for most manufacturers because they usually have a lot of room for improvement. Integration can be a big hole for many of them, so connecting the pipes and making sure the data flows intelligently in the right direction and into the right systems can really help them be successful.”
Obtaining expertise from supply chain consultants to break down walls between processes will facilitate a more personalized and customized approach to your organization’s supply chain. Additionally, it is critical to streamlining sales and production models to incorporate all variables, allowing the manufacturing operation to pivot wherever demand leads.
“Not everything can be solved with technology.” – PAWAN KUMAR GUPTA. Principal, order management & supply chain at Perficient
How to Find the Right Supply Chain Management Consultant
Supply chain management is rarely a core competency for manufacturers. For example, a 2018 study showed that more than half of B2B sellers lacked the people, processes and technology to implement an omnichannel sales strategy.
As such, the first step in a business transformation is finding the right business partners. When an organization’s supply chain fails to keep pace with industry demands, it may be time to seek outside help from vendors or consultants who can analyze your end-to-end supply chain and provide solutions to your pain points.
“Telling me what to do without putting in place a realistic, boots-on-the-ground implementation pathway can no longer be considered a viable model,” said Yemisi Bolumole, associate professor of supply chain management at Michigan State University’s Broad College of Business. “The advisory model has evolved into a partnership where the consultant comes along on the journey because what they advise on paper may not execute the same way in practice. If Step Two doesn’t pan out the way your white paper said it would, then what’s the pivot? Who else do I turn to for new templates?”
The ability to provide end-to-end analysis is key to success, as it ensures that addressing challenges in one area of the business won’t cause a ripple effect that causes other issues upstream or downstream. However, the ability to offer practical system integration and process support during the journey is also essential.
When sourcing a consultant, you should seek the following to ensure they possess the skills to help you create a roadmap that will deliver end-to-end supply chain optimization:
It’s critical for any supply chain consultant to have a diverse range of experience. This ensures that they will have more than the willingness to help you implement, but also the capability.
“You have the folks from the high-end business schools to bring in that perspective,” said Bob Vanek, chief strategist of supply chain management at Perficient, “but you also need those industry veterans who came up through the pipeline and have lived and worked in the industry. That mix of expertise really helps to understand the full business case and drive it to a functional and more robust solution.”
A consultant with system integration capabilities should have established partnerships with major supply chain and logistics software vendors. This familiarity with major solutions, their APIs and their providers can help the supply chain partner to streamline integration between relevant solutions to provide maximum visibility and optimal digital capabilities.
Strategic Procurement and Risk Management
Given the frequent disruptions experienced by the manufacturing supply chain in recent years, it’s essential to select a supply chain management partner who can identify weak points in a supplier network and offer solutions.
“What the pandemic showed us is that supply chains need more risk mitigation. They must look at instances where there’s only a sole source and determine if they should bump up safety stock, find alternatives, onshore production or find other ways to gain more control. The future of the supply chain will be a lot more about risk mitigation,” said Breeze.
Inventory and Materials Management
Many manufacturers have begun to reconsider their inventory management strategies for a post-pandemic period, as well. Just-in-Time (JIT) inventory management practices caused problems for many manufacturers, as they couldn’t get supplies and materials to create new goods for customers who were open, while they also scrambled to find storage space for completed inventory held for customers who were shut down and couldn’t receive it.
“There will be a paradigm shift in how much inventory is carried,” said Bolumole. “If any organization had actually carried enough inventory or backup material stock to have survived the worst period of the pandemic, I don’t believe they would’ve even survived the economic circumstances of the United States in the last 10 to 15 years. We won’t trend away from JIT, but we will see a trend toward redefining what Just-in-Time really means.”
Keep in mind, not all manufacturing operations are made equal. Each sector has its own set of problems and concerns, as does each individual business. To fully streamline supply chain management and order management processes, it is essential that your partner fully understands all the pain points and obstacles specific to your operation so that they can identify the vendors and service providers best suited to the job.
Ultimately, the right partner will collaborate with you to design and implement a strategic roadmap and stay with you throughout the journey to adjust it when necessary based on data and metrics. By staying with you throughout the journey, this partner can help you control costs and adjust your sales and operations planning, training practices, cycle times and more to keep pace with shifting metrics during your operational shift. The destination point for this roadmap should be a fully optimized supply chain that is specifically customized to the unique needs of your organization.
Source: Industry Dive Brand Studio