Supply Chain Organisations Will Rebound and Recover

Supply Chain Organisations Will Rebound and Recover

November 28, 2020

AVEVA SVP Global Planning & Operations Harpreet Gulati says as the global economy recovers, businesses around the world will need to refocus on operating in a more sustainable manner.

By Harpreet Gulati

While the issue of supply chain disruption is not new, the impact of the COVID-19 pandemic has caused companies to re-think their global supply chain operations.

After disruption began, many manufacturers initially scrambled to meet rapidly changing demands by ramping up production, redesigning supply chains, or finding ways to cut costs and ride out the storm.

From a practical viewpoint, there has been some discussion in the media that heavy industry and manufacturing may become more localised in advanced economies. Localised supply chains would likely bring a number of benefits, such as an increase in local jobs and tax revenues for governments, the carbon footprint of goods would be reduced, as components would not have to travel such great distances. Tighter supply networks could also lead to the better enforcement of supplier standards and enhanced product quality.

However, market norms have been rewritten, affecting profitability in some segments and forging tremendous opportunity in others. While there is an ongoing debate on how to rethink the localised, regionalised or globalised supply chains given the post-pandemic influences, there is one clear solution to these systems.

In parallel to these societal and economic pressures, digital transformation is enabling flexible, agile solutions that companies, especially in the manufacturing industry, can implement to overcome—and prosper from—these challenges. Digital transformation can help organisations in every sector become agile and more efficient, and as the global economy recovers, businesses around the world will need to refocus on operating in a more sustainable manner.

Pivotal technologies like cloud computing, the industrial Internet of things (IIoT), artificial intelligence, and augmented and virtual reality, are transforming traditional industrial operations. These innovations represent unprecedented potential growth opportunities for businesses despite the aftermath of the most recent pandemic.

COVID-19 has conversely affected global industrial organizations, and has resulted in huge peaks and troughs which have not only had a considerable impact on the supply chain, but tested every organization’s ability to pivot swiftly.

In the manufacturing sector, many companies (e.g. the FMCG sector) have started scaling down or focusing production on fewer product categories, where suppliers will be offering up irregular flows of raw materials. However, this is juxtaposed by the demand for online retail demand and domestic food and beverage production, for example, which has soared.

Because of this impact, businesses need to be incredibly agile to manage the challenge of turning down and ramping up production as demand changes.

Another main observation was that in most industrial sectors, managing OPEX and CAPEX through the downturn and upswing is crucial to avoid significant supply side constraints in the face of building demand as economies recover.

We have also seen a period of great distrust and disinformation while global supply chains are disrupted. Data is key to traceability and provenance. Better visibility allows us to understand where crucial resource such as food and pharmaceuticals are right now and where have they come from. Plus, it gives insight to how we get energy efficiently to those who need it.

Overall, businesses have the opportunity to adapt and maintain operational excellence in volatile times through digital transformation.

The current crisis is accelerating cloud and the use of data in increasingly sophisticated ways to provide visibility and certainty into operations. There has also been a fundamental shift in mindset; customers understand now where they need to get to and how quickly they need to get there.

This is a moment where businesses must become more resilient through technology, with customers rapidly digitizing everything within their own businesses and in their supply chains.

Given the unprecedented circumstances, technology has also helped to ensure that crucial products (e.g. medicines) remain available as manufacturers deal with volatile demand and supply. Technology provides visibility into supply chains as well as operations, allowing businesses to effectively manage production through major upheaval.

Going forward, the manufacturing companies or supply chain organisations will have to navigate their challenges. Enterprise Agility, visibility and collaboration across the entire manufacturing value chain will be critical to long term success as the supply chains recover, albeit in a modified form. To support, digital transformation can provide the data driven insights needed to adapt and overcome.

(Ed. Featured image by Photographer ELEVATE.)

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