These tools can substantially reduce the potential consequences of a disruption. Research by the Business Continuity Institute has revealed that supply chain disruptions are costing a third of businesses more than €1m a year, and this figure will undoubtedly increase as the world continues to experience shortages.
For companies reliant on sourcing materials from abroad, there is no full retreat from global trade. According to Geraint John, supply chain risk expert at Gartner’s SCM World, companies will have to manage this risk by limiting reliance on single sources of supply and increasing visibility within their supply chains using digital tools that enable them to re-plan or restock if necessary. It is all about mitigating risk to protect your business.
Software tools are helping manufacturers reduce exposure to supply chain risk in five key ways:
1. Forecasting
Manufacturers can go to market quicker if they are able to anticipate demand, and they do this by reviewing sales trends or external sources of data. Business software, such as ERPs, are helping businesses analyse this data to determine whether they have the capacity to fulfil this demand profitably. Companies can quickly assess how changing circumstances in their supply chain can affect the overall ‘landed’ cost of imported materials and what impact this will have on the bottom line.
2. Logistics
When small companies grow beyond a certain size, keeping track of supply chain shipments in transit becomes too complex to manage using spreadsheets. Container management software, however, provide this level of visibility. This, in turn, allows companies to quickly calculate the implications of any disruption to manufacturing schedules and order fulfillment.
3. Workflow
Delivery delays can be damaging for an industry such as aerospace, where companies adopt ‘just-in-time’ production methods. However, businesses that adopt production planning and scheduling tools can quickly adjust their workflow and accurately assess the impact of these changes. This allows companies to update customers quickly with any expected changes and still give confidence.
4.Tracking and traceability
Complete inventory visibility is crucial for businesses to react quickly to disruptions in the supply chain. Companies with a warehouse management system (WMS) or a stock module on their manufacturing software, can easily track the quantity and location of these materials, and even trace their source of origin. An ERP with a document management module will also enable a company to keep an accurate record of any materials that require certification to stay compliant with the latest regulations.
5. Real-time data sharing
Real-time data sharing within the supply chain, both up and downstream, will only grow in demand as data becomes increasingly universal. Supply chain leaders do not just want to see data from their tier 1 suppliers; they also want their supply chain partners to be able to see data from their own suppliers. This level of visibility throughout the supply chain is yet to reach its full potential, but trends and expectations are heading in that direction.
Any expanding company wanting to keep ahead of changes within their supply chain, without having to invest in extra administrators, will need to invest in technology. Soon, these tools will become a prerequisite as data-gathering technologies, such as the Internet of Things, grow in adoption and factories become ever more connected for true supply chain transparency.
Our traceability checklist is a good place to start if you are wanting to increase your supply chain visibility. From late orders to missing stock, find out where your business could be losing money and transparency.