Supply chain leaders are continually seeking ways to improve profitability and exceed customer expectations. Since COVID-19 entered the picture, achieving peak performance is more daunting. As we look ahead toward 2021, business managers who prioritize supply chain management need to focus on the following:
Assess Weak Links in the Supply Chain
The early months of the pandemic had manufacturers scrambling to find alternative sources for products sourced in China, the original epicenter of the global COVID-19 pandemic. It was a wakeup call for many suppliers who rely heavily on Asia to meet product demand. Although most markets are again producing products, the uncertain economy requires manufacturers and suppliers to take a fresh look at demand forecasts and determine where they need to make permanent changes. Maintaining multiple supply locations may have become a critical necessity for those wanting greater control over inventory—even if it comes with additional costs. Learn more.
Focus on Budget Flexibility
The word “uncertainty” seems to be the mantra of the new pandemic world. Supply chain managers should expect the unexpected and be prepared to shift gears suddenly. A recent Gartner survey revealed that only 21% of respondents think their supply chain has the agility and resilience to shift sourcing, manufacturing, and distribution fairly rapidly. Contingency planning might not feel comfortable, but it will be critical to make adjustments. If revenue isn’t going according to plan, it may be necessary to take cost-cutting measures. You’ll want to make sure you target dollars to the best possible business income.
Elevate End-to-End Transparency
Supply chain success and new opportunities depend on open communications among your team and across foreign and domestic vendors. Improved visibility means you will have a greater command of key performance indicators (KPIs), such as time-in-shipping, so you can spot trends that impact production schedules and know when to reorder supplies. The result? You’ll have the correct volume of the right items stocked in inventory, and that makes for a satisfied customer.
Embrace Digital Technology
With AI and IoT at their disposal, manufacturers have a host of digital tools to help them improve efficiencies in their supply chains. As our manufacturing accountants detailed in our blog “4 Disruptors to the Digital Supply Chain,” AI can spot patterns that allow supply chain systems to predict future orders, while the IoT spots errors so that adjustments can be made to expedite the shipping process. There is an expectation that real-time data will further improve the manufacturer’s ability to make data-driven business decisions, such as predicting outcomes across the complete supply chain. In addition to enabling these greater efficiencies, digital technology also helps with social distancing measures.
Lessons learned during the first half of the year will come in handy as supply chain leaders find ways to manage risk and quickly swerve when necessary. Look no further than consumers’ demand for e-commerce to understand the importance of meeting end-delivery options. Your manufacturing accounting and consulting professionals can work with you to identify risks and develop contingency plans.
Do you have questions about this blog or other manufacturing and distribution topics? Our manufacturing accountants can help. Please contact Jason Cope at 214-635-2508.
Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.