For what it seems like the first time ever, the impact the Coronavirus disease (COVID-19) has had on supply chains has made it to mainstream media, but why?
Yes businesses are closing their doors for good, shipments are dramatically delayed, some products are almost impossible to find, but the reason why it’s top of mind is because we’re all seeing the direct impact of failing supply chains first hand.
So, why is it happening and what can be done?
The industry has certainly experienced its share of ebbs and flows. That's why, because of the pandemic, supply chain disruption is heavy on the minds of CEOs and CIOs in manufacturing, wholesale, logistics and retail. Specifically, they ask about how digitization can help disaster recovery, information/cybersecurity and managing the new work-from-home environment. All of these are business continuity issues. But, they are also supply chain integration issues.
Here’s why.
Most companies’ supply chains were never prepared for this pandemic. Many business continuity plans were lacking both in strategy for digitally combating the impact of the virus and for supporting a digital workforce. COVID-19 has exposed these and other weaknesses in companies’ supply chains, and the digital fault lines are showing.
For example:
- Lack of supply chain agility and velocity. Companies whose supply chains had been optimized for low cost and high volumes got sideswiped by a reliance on too few suppliers, many of them in China. Onboarding new suppliers often takes too long, plus companies need to move data faster to accelerate their ecosystems.
- Inability to absorb supply and demand shocks. Changes in consumer buying patterns have created massive supply and demand shocks throughout the economy, and many “under-digitalized” companies are losing out as consumer-driven channels shift, i.e., more people shopping online and opting for home delivery instead of going to stores.
- Difficulty adapting to work from home. Companies that lack automation and rely on manual processes have been hammered by COVID-19 because their key IT employees can’t physically be in the workplace to operate their outdated, on-premise systems.
- Limited employee productivity. There are very real limitations to how much critical work can really get done from a remote environment, as working this way is especially challenging for teams launching new products, onboarding new business partners, etc.
These weaknesses must be addressed with supply chain integration in mind when preparing for the post-COVID-19 era. In fact, the same forces of creative destruction are playing out today, with COVID-19 accelerating digital technologies and driving migration to the cloud. The opportunity for replacing old ways of doing things is now.
Supply chain agility and velocity
Having supply chain agility and velocity basically means having enough automation in place to enable your business to turn on a dime. Such resiliency is desirable all the time, but especially now. In the likelihood of a “start-and-stop” economy over the next few years argues for more digitalization, not less. Wouldn’t it be nice if you had enough agility and information velocity to balance your supply chain risk vs. insurance outlays? Fortunately, technology has been improving business (and lives) for decades. And, it will continue to do so given the phenomenal progress being made in cloud technology, artificial intelligence (AI), blockchain, robotics, Internet of Things (IoT) and big data analytics, all advancements that stand to make supply chains that much faster and more agile as we go forward.
Supply and demand shocks
The biggest weakness in today’s supply chains is not a lack of strategy or planning, but the lack of efficient and intelligent integration across the participants comprising a company’s business ecosystem. By moving to automate all the manual steps within its most vital business processes, those processes can propagate faster and more fluidly through the company’s extended business ecosystem, leading to better decisions for fending off supply and demand shocks while actually creating new revenue opportunities. Successful digital transformation is inextricably linked to supply chain integration, and the best way to prepare for unpredictable shifts in supply and demand is to automate mission-critical workflows across end-to-end business processes like order-to-cash or procure-to-pay. Not in patch-work fashion, but for complete end-to-end visibility.
Work from home
With social distancing a genuine concern and work/life balance take on new definition, working from home is becoming the rule, not the exception. This calls for reengineering how we work, which in turn calls for reengineering how supply chains function. If your company is a digital laggard, you’ll struggle until you evolve your data and integration solutions to keep pace in the “new normal” and beyond. When it comes to supply chains, companies leveraging cloud integration technology are experiencing better business continuity than those still using custom, legacy or on-premise systems. Why? Because unencumbered by traditional IT environments that depend on internal data centers, servers, and storage, they are actually getting more done with less by embracing SaaS (Software as a Service).
The foundation of an agile supply chain is fluid data movement and seamless integration points, which hands down the cloud enables best. As the working world changes, you must consider embracing a fully remote workforce, which means putting all your key data and workloads in the cloud and leveraging SaaS applications to access it.
Shaped by improvements in supply chain integration technology, the post-COVID-19 world can be one where your employees gain improved quality of life and can do more high-value things because of efficiencies gained through digitalization. So, instead of worrying that AI or robotics will eliminate jobs, we envision a world where digitalization furthers new economic growth as ecosystems expand and each company’s pie gets bigger.
Employee productivity
As for leveraging technology to optimize employee productivity, businesses readying for the post-COVID-19 world should focus on a new set of productivity measures, including process improvement, productivity improvement, better communications security, more automation, stronger change management, more accommodating people management and realistic performance metrics. To do this, they will also need agility, business process optimization and seamless integration. The most astute companies clearly understand the opportunity the “New Normal” presents and are deliberately investing in digitalization over the next 12-18 months.
There’s been a lot of gloomy reports about “broken supply chains,” and while it’s probably human nature to be pessimistic at times like this, optimism must carry the day. Let’s look at how supply chain integration technology can literally help companies author the futures they want to make happen, so they can digitally transform and define what the “New Normal” means for them.
The good news is this: With today’s cloud software platforms, business leaders CAN control their digital ecosystem to offset supply and demand challenges and create new value. They CAN make their supply chain advance their business strategies. Leaders CAN make supply chain agile enough to turn on a dime, so companies are sufficiently adaptable when disruption hits, be it COVID-19, a seasonal hurricane, geopolitical developments or digital disruption in general.
Executives, you’ve got more control over your supply chain’s future than you may think. Plus, there’s a clear route to getting there, and digital transformation is leading the way. But, you need a plan and a framework, and it doesn’t happen overnight.
