With the economy experiencing historic trouble, it’s up to supply chain managers to plan for an uncertain future and secure their supply chain for whatever may come.
After months of dealing with a pandemic, the economy has taken a serious hit. What’s more, it’s hard to tell how long it’ll remain depressed. On top of that, there’s the added factor of uncertainty. Perhaps the worst of this pandemic is over, our economies will continue to open up gradually and everything will be back on track sooner than later. On the other hand, a second wave of COVID-19 might come, pandemic measures might be put back in place, and the economy might once more struggle.
All of this is not to promote pessimism but rather to present some possibilities of what the future has to hold for the economy. With an acceptance of these possibilities, there’s the chance at empowerment. In the face of uncertainty, it’s up to organizations to be proactive. To ready their supply chains for whatever’s to come. So that they can be comfortable and confident in the fact that come rain or sunshine, they’re good to go.
This article by Morai Logistics highlights several steps supply chain mangers should be looking to employ in order to prepare their supply chains for the future.
Review Suppliers
Many suppliers are in a tough position. Many of their preexisting contracts will be useless and their customers will want to renegotiate. Moreover, they’ll experience a notable decrease in demand from them. It’s critical for companies to then review their suppliers and strengthen their relationships with the ones that survive that review. Key to this is building trust and openness. Which, in turn, can lead to collaborative risk assessment.
As an article by Supply Chain 24/7 puts it,
Companies that have already invested in creating transparent, high-trust relationships with suppliers, and that put in place supply chain risk monitoring systems, are already reaping benefits. Others must now redouble efforts to reassess risks within their supply base and work jointly with suppliers to develop and implement risk mitigation strategies.
Renegotiate Supplier Agreements
With the market having changed so drastically so quickly, companies will have to look at their contracts with their suppliers. If there is a possibility of renegotiation, they should pursue it. However, what they almost certainly should not do is try to force their supplier’s hand.
Acting in bad faith and not receiving their supplier’s delivery while pursuing a price decrease is not the way to go. Instead, companies need to work with their suppliers for an equitable new contract. While it’s important to act quickly and deliberately, it’s just as important for companies to maintain strong relationships with their partners.
Reinforce Supply Chain Resilience
Now more than ever, the areas of weakness within a company’s supply chain are being exposed. It’s up to companies to review their supply chain, analyze it, and shore up its most vulnerable links. Not only will such a review be useful now, but it will generally prove beneficial going forward.
As explained in the previously mentioned Supply Chain 24/7 post,
During periods of growth, many companies find themselves moving too fast to carefully analyze their supply chains and eliminate suppliers that add little value or introduce unnecessary risk. Now is the time to scrutinize distributors and brokers, and aggressively pursue dis-intermediation.
Collaborate
It’s already become a common theme in this article, and there’s a good reason for that. Without working hand in hand with their suppliers—their partners—companies will only experience further disruption and turmoil down the line. Now is not the time to be short-sighted and narrow-minded. Companies with a vision know they have to build healthy, long-lasting relationships for success. Especially in times of hardship. Through a more transparent, collaborative relationship, supply chains will find it easier to spot risks and areas of cost reduction.
Supply chains are having to deal with uncertainty now more than ever—here are 5 ways that demand sensing is helping them manage it.
Today’s supply chain’s success is marked by the speed at which it can respond to the demands placed upon it. Companies have to be able to deal with the unexpected. Fast. There can often be sudden changes in what customers want. And it’s up to companies to have their supply chains sufficiently prepared for them. As such, technology has become central to the strength of supply chains. Specifically, with demand sensing, companies have a technology that gives them an opportunity to react to customer demands with greater speed and precision than before.
Demand sensing is an incredibly accurate way of forecasting. It’s a software that uses close to real-time data to give companies a picture of upcoming demand. With it, companies are put in a stronger position to deal with short-term fluctuations in the needs of their customers. Improving their supply chain planning and resilience.
An article of demand sensing by Supply Chain Brain explains,
Demand sensing, as the name implies, is essentially the art and science of picking up on short-term trends immediately, in order to better predict what consumers will want.
This article by Morai Logistics covers 5 ways companies can be leveraging demand sensing to bring clarity to their supply chain operations.
Boosts Upstream Planning
One of the most important points of information that companies get access to via demand sensing is point of sale data. By having this data, companies can know the state of their materials and products immediately. This in turn allows those in the manufacturing sector of companies to further fine-tune their forecasting without relying on others in the supply chain.
Helps Keep a Closer Eye on Inventory
The earlier mentioned Supply Chain Brain article highlights demand sensing’s impact on inventory,
Continually fine-tune upstream inventory. Demand sensing helps to dynamically optimize inventory and balance the network by factoring in inventory available in regional warehouses, along with predicted customer demand, by location.
What this means is supply chain managers can have a clearer view of their inventory in all its various locations. This results in supply chains being run more efficiently, avoiding waste, and being primed to be able to respond to customer demands.
Creates Balance Between Inventory and Sales
Inbound and outbound teams have opposing objectives. The inbound team wants inventory fully stocked. Whereas the outbound team wants everything sold. Both of these goals are critical to a healthy supply chain. However, if they don’t reach some degree of equilibrium it can spell trouble. Demand sensing helps avoid that by presenting a fuller, unified image of the needs of customers.
Makes Seasonal Demand Easier to Tackle
The products a company sells can change greatly by the season and the corresponding demand can too. Thus, the change of each season can be a testing time for supply chains, as they attempt to adapt to those changes. With the assistance of demand sensing, that’s easier to manage. This is because of the near real-time nature of the data collection and feedback. If any item is selling below or above expectations, companies can know immediately and respond accordingly.
Ensures Inventory Matches up with Product Lifecycles
Every product companies put out there are only going to be sold for so long. Each product has a lifespan. A point at which demand dwindles. And it’s up to companies to anticipate and plan for the lifespan of each product they put on shelves or deliver directly to customers. Once again, demand sensing makes this process simpler. Primarily by giving companies such accurate and quick feedback.