Global events and conflicts, as well as fluctuating consumer demand, have placed a strain on supply chains. This year so far has already presented tumultuous events that supply chain managers have had to contend with. Demand for certain goods has increased, leaving low inventory levels while demand for others has completely dried up. Inflation, which has risen over the last few years, with geopolitical issues have forced the need for a supply chain that is able to adapt to these challenges.
Supply Chain Flexibility is Necessary
Supply chain agility is the ability to adjust to changes in capacity, raw materials levels, and production levels. Products that are in demand or essential components of other products affect the entire supply chain when they are lacking. Semiconductors alone for example, are not as necessary as when they are used in other products, which accounts for a large percentage of exported goods. The interconnected global economy demands a supply chain that is able to change as changes occur.
A supply chain that is not flexible is unable to easily adapt to changes, which can cause delays and disruptions. An organization is able to scale to meet the demands of the business with a flexible supply chain. A cloud-based digital supply chain system that collects and shares information across the entire chain makes for a system that is able to adapt.
Flexibility can be achieved through functional logistics systems that are able to carry out tasks. They must be accurate, easy to implement, and customizable. Creating processes to deal with unexpected events helps to create a series of standardized and structured solutions that allow for flexible responses. A supply chain that is not rigid prepares a business for any supply chain disruption that occurs because production levels and transportation capacity can be adjusted as needed.
Flexibility Within the Supply Chain to Handle Issues
Delays and disruptions occur for a variety of reasons and can impact the supply chain, the most common being:
Extreme Weather: A flexible supply chain can work around extreme weather events by diverting to other transportation methods. For example, vehicles can avoid traffic backups due to closed roads from flooding or ships can be re-routed due to areas that are in a drought.
Visibility: Visibility is critical to the success of a supply chain so the lack of transparency can have a negative impact on the entire chain. Using a bar code system that yields information in real time allows for complete visibility.
Geo-political Issues: Geo-political issues have been in abundance over the last few years, which have caused varying degrees of disruptions. Political decisions regarding free trade and tariffs can be mitigated by increasing or decreasing capacity of warehouses and inventories.
These supply chain issues are not unique to this year alone: the need for greater flexibility has increased considerably in the last few years as certain issues have caused a domino effect with supply chains.
Supplier Vulnerability
In order to have a supply chain that is able to adapt, it has to start first with the sources of the materials. The due diligence of researching each supplier should be generated using metrics such as key customers, key product categories, and capacity. Digital solutions can improve the risk transparency for suppliers by assessing their data security, regulatory and operational risks, and other weaknesses that could put them at risk to delivering materials on time. Choosing suppliers carefully can reduce the risk to the supply chain down the road. Companies of all types and sizes can reduce their exposure to supply chain risk by assessing supplier vulnerabilities and diversifying among suppliers.
Technology Investments
One of the best ways to deal with a changing and challenging market environment is to invest in technology that can provide real-time inventory and shipping visibility in one platform. Being able to integrate business data, including suppliers, gives the business greater transparency into supply chain logistics to forecast and strategize. When businesses have the technology to adapt and plan for potential disruptions in the supply chain, they are able to more efficiently react.
Verizeal for an Agile and Effective Supply Chain
Shipping and transportation processes are only going to become more complex. Supply chains must be able to adapt to expected and unexpected challenges in the industry. A strong logistics platform and the use of technology can help build a flexible and efficient supply chain. Verizeal can support the flexibility needed to give your business the ability to scale and remain competitive in the market.
