Supply chain is an integral part of any enterprise, and it can create a major difference in how successful the enterprise can become. Globalization and Personalization have exponentially increased the number of actors and links in the supply chain, which in turn, has increased the vulnerability of these chains to disruptions. Today’s supply chain has become far more complicated and difficult to manage, especially for enterprises engaged in the production and distribution of physical products.
The recent crisis at Suez Canal is a glaring example of how a factor of transportation could compound the disruptions in a global supply chain, already strained under the impact of the pandemic. At least 367 vessels were backed up waiting to cross, which included container ships, bulk carriers, and oil tankers. Some ship operators opted to re-route around the Cape of Good Hope, adding more than a week of additional sailing time, and increased fuel costs. Based on the shipments that were on the affected vessels in and around the Suez Canal, an estimated $54 billion in trade losses were reported owing to an increase in raw material costs across the world Patience and stock runout in multiple markets.
The above scenario highlights the impact of only one of the factors of transportation on the supply chain. However, there could be several possible disruptions in the supply chain, making an enterprise unable to meet customer demand or even causing it to go out of business. Some of these disruptions could include changes in the customer’s preferences or demographics, policy changes, short-term cost escalations, natural disasters, such as floods or earthquakes, or man-made disasters like terrorism and cyberattacks. Not only the factors of the supply chain success have increased, but also the predictability of these factors has become difficult for the supply chain experts. This makes today’s supply chain professionals’ jobs far more complicated compared to yester years.
A resilient supply chain helps enterprises minimize these disruptions by making sure they have planned enough resources to mitigate unforeseen risks and uncertainty. Planning
is critical in ensuring that the enterprise is able to build, measure and predict its supply chain performance indicators well in advance, and take appropriate actions to succeed. Well-considered, multi-factor planning, allow enterprises to maintain their competitive advantage and ensure their success when faced with disruptions. Hence, today most enterprises are investing heavily in supply chain technologies for real-time planning and visibility, enabling them to manage and operate in multiple scenarios.
An ideal supply chain planning connects consumers, distributors, manufacturers, and suppliers’ systems and data, to create an ecosystem where decisions could be made in real-time. Such a system brings visibility and transparency and helps in real-time coordination of activities to ensure the availability of the right product, in the right quantity and format, at the right place, to meet customer demand while maintaining cost efficiency. If there is any disruption in supply chain factors, an enterprise could activate the respective scenarios without compromising on its objectives. The recording of disruption, decisions, and impact pertaining to it, further improves resilience in the supply chain.
Planning helps streamline operations, account for inefficiencies, manage resources, avoid
delays, and bring down operating costs. It impacts several departments within an enterprise, enabling optimization of work and development of capabilities. When done well, the plan enables business foresight and preparedness to deal with changing market scenarios. For instance, if a supplier is experiencing delivery issues, a visible planning system would provide information to the right stakeholders, who could decide to allow other suppliers to step in and meet demand.
An ideal planned supply chain can help an enterprise in multiple ways. It helps cut down on costs, increase customer satisfaction, and improve overall performance. According to various research conducted in the domain, enterprises that have implemented supply chain planning technologies have realized a 3-5% reduction in inventory, a 5-10% increase in inventory turns, and a 2-5% increase in revenue due to higher customer service levels.
