During the past two Covid-19 affected years, people have come to a new realization. With the tragic death toll and lives changed forever, along with work-from-home routine including endless Zoom meetings, the world has now newfound respect for the importance of supply chains.
The covid-19 pandemic led to massive supply chain disruption around the world. The scale of disruption has been unprecedented in near history as countries the world over restricted inter and intra country movement of goods overnight, moving into a complete breakdown of all supply routes. While the shortages were across all supply chains, critical medical supplies and essential consumer commodities were prioritized over all other industry goods since they are linked to basic human survival.
The Covid-19 impact over the last two years has reduced gradually because of vaccination and human immunity building up, leading to supply chain networks worldwide rebounding, taking in stock the massive losses that the industries had to face. While we press forward from hereon, the world now wakes up to a new reality and never before has a need for an agile supply chain been so profound. Although disruptions are inevitable, there is a greater emphasis on planning and a response plan for building global economic resiliency in the future.
Over-reliance on third party distribution, JIT manufacturing – which was needed for hyper-efficient supply chain, de-prioritization of continuity planning, lack of investment and diversification in supply chain downstream partnership are some of the key vulnerabilities that the organizations have woken up to. The pandemic has exposed vulnerabilities that industries either earlier ignored or had new foreseen.
However, that has set to change now. Organizations are now looking at building resilience by working on diversifying manufacturing operations and expanding their distribution network to ensure last-mile delivery.
How evolving business models will mandate that eCommerce businesses invest in building agile supply chains?
Pandemic boosted the eCommerce operations at a breathtaking pace, especially in the B2C world. Overnight, eCommerce platforms saw an unprecedented surge in volume resulting in complete chaos as the supply chain networks were not tuned to manage such huge volume flux.
This has now led to greater emphasis being placed on Agile delivery networks. The business model that was earlier focussing on consolidation now has to course correct in diversifying its network by including small vendors and it is imperative for them to reconsider their power and relationships within the supply chain.
eCommerce companies have to focus on building relationships with their seller networks, they have to nurture the sellers by building and expanding categories, spending on seller education and growth programs, aiding in the right seller pricing strategy, extending their might of data analytics to predict demand and building the BI systems, perfecting the blend of the hybrid model of Multichannel, Omnichannel and Unichannel operations. eCommerce players will also have to strategize and expand their product fulfilment to a wide array of sellers across categories. Put simply, it’s imperative to build toward a more resilient global supply chain and it cannot happen without doing the basics right.
What does an agile supply chain mean – key guiding principles?
As the nomenclature goes, an agile supply chain simply means the quality of delivery with incredible speed. It is built over effective responsiveness, flexibility in demand correction and building competency around it. eCommerce enterprises today have to be more responsive and agile to customer needs. In addition to being able to deliver in shorter lead times, they also need to manage a much wider assortment of products.
The key guiding principles are:
- Building BI Infrastructure: Enterprise needs to invest heavily in building a virtual system that maps every entity in the upstream and downstream processes. The integration should result in a seamless, real-time exchange of information. Real-time analytics that can help provide actionable insights into production schedules, tracking logistics performance, inventory across channels, inward and outward synchronization, dispatch schedules and real-time return tracking will help real-time decision making which drastically improves time to serve.
- Integration of systems: Integration of systems also helps bring transparency to the chain, reducing the bullwhip effect and overall inventory in the chain, thus lowering the cost of goods sold. With multiple systems iterating over the movement of order and inventory, integration and its varying degree of virtualization and networking within the supply chain is pivotal
- Transparency and Trust: Beyond the systems, trust and transparency between entities and partners in the supply chain are essential to operate on unified objectives rather than operating in silos. Manufacturers need to enrich their product attributes, be transparent in sharing the order volumes and pipeline across different order buckets, order amendment status, production schedules etc. and in turn, the manufacturer’s suppliers need to detail the identity of the supplier’s supplier, delivery schedules, delays or postponements if any, quality issues and its impact on delivery schedules etc. eCommerce entities now have to increasingly focus on creating collaborative platforms and sharing information that may be viewed as confidential to their business. The trust between the partners enables a free flow of information and data which helps informed decision making
- Investment in Supply Chain: An investment in a digital supply chain provides the agility that would enable retailers to save huge amounts of time: They now can respond more quickly to consumer patterns and use insight platforms to help make intelligent decisions even before a purchase enters the supply chain.
- Technology Adoption: When data is stuck in legacy systems or scattered across different spreadsheets, it is impossible to act on and utilize that data. In the supply chain world, that can cause a host of issues when trying to make informed decisions about logistics, inventory, sourcing and procurement, and purchasing patterns. Adopting the right set of technology tools allows manufacturers to evaluate the impact of any new information – be it a supply disruption or an unexpected order – and easily compare alternative courses of action.
Does what we say, ring a bell with you? If so, talk to us at Iksula and together we may be able to create something great together.