Future-Proofing Your Manufacturing Supply Chain Now for 2021

Published on 23 November 2020

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lori_kesten
Kesten
Lori
Sales Executive
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Warehouse

During times of uncertainty, manufacturers must address current challenges while also planning for the unexpected. There’s no time like the present to kick off some of these initiatives.

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A very famous American once said, “If you fail to plan, you are planning to fail.” Uttered by no other than Benjamin Franklin, these words have never been more applicable for companies that are both navigating the current COVID turmoil and preparing for what’s coming around the next corner. 

And while it may be tempting to focus on the here-and-now during this unprecedented situation, organizations must also start preparing for recovery now or risk falling behind the curve for 2021 (and beyond). 

 

Thinking Ahead

Disruptions, product shortages, and a new wave of shutdowns are taking a toll on global supply chains right at a time when the International Monetary Fund (IMF) released its rosier economic growth projections for 2021.

According to its World Economic Outlook, the global forecast calls for a 5.2% increase in 2021 (up from 4.4% decline in 2020). “The improved forecast reflects both better-than-expected second quarters,” the IMF states, “mostly for advanced economies – and indicators of strong recovery in the third quarter.”

Despite the current obstacles, this is no time to bury your head in the sand and hope that the problems go away. In fact, Tiffany Stovall of Kansas Manufacturing Solutions says manufacturers should be evaluating their current state and preparing to take paths based on their circumstances. “If the COVID-19 pandemic has taught manufacturers anything,” she writes in Industry Week, “it’s that they have to be nimble and that there will be additional opportunities.”

Pointing to a recent state of manufacturing survey that found that 89% of manufacturers were negatively impacted by the pandemic (e.g., revenue decreases, price increases, supply chain issues, etc.), Stovall says 97% of manufacturers found new opportunities during the pandemic.

“To take advantage of opportunities during times of uncertainty, manufacturers need to have a plan for the unexpected,” she writes. “Manufacturers would be wise to level set from reactive to proactive and develop a strategic roadmap of ‘adoptability.”

 

Planning Ahead

In  A five-step plan for business stability after the pandemic, Dayton Business Journal urges companies to start identifying new opportunities, setting new goals, and making projections now, even though no one really knows yet what the “new normal” is going to look like after the COVID threat passes. 
 
“People have to start asking themselves, ‘What’s on the other side?’” one finance leader told the publication. “Is it just surviving? If we continue to invest in this business, what must we change to be successful?” Good first steps in this direction include taking inventory of the last 12 months, shoring up their balance sheets, and planning for potential supply chain disruption. 
 
“Businesses seeking to build resiliency also need to consider their customer and supplier concentrations and what could happen in the event of a disruption,” the Business Journal adds, “Identify demand-side risks like a reliance on a single customer or product line and plan accordingly.”

 

Digital Enablement Tools to the Rescue

Citing a new Alexander Group manufacturing survey, Industry Week says that while recent economic challenges have forced companies to reimagine their business models, the predicted “snap-back” in demand could leave some of them in a lurch in 2021. 

“While most firms have recovered from the initial economic shock, they are learning to operate in an uncertain environment,” Alexander Group’s John Drosos writes. For help, many of these companies invested in digital enablement tools to enhance interactions with existing and new customers.

Using supply chain applications like warehouse management systems (WMS) and supply chain visibility platforms, for instance, companies can gain good visibility across their global networks while also managing the higher velocity of e-commerce orders that are now moving through their warehouses and distribution centers.
 
“Never in recent history have manufacturers transformed their organizations so quickly, and so decisively,” Drosos concludes. “The COVID-19 pandemic accelerated many trends that were already appearing within commercial models.  While still living with great uncertainty, manufacturers are revising their strategic business models to reflect a new reality: the buyer journey has changed, and they are responding accordingly through broad-based commercial initiatives and investments.”

 

Direct-to-Consumer (DTC) Strategy on the Rise

The 2020 has seen several consumer trends emerge. Customers have gone to their favorite retailer asking about a particular product they have been buying at the store in the past, only to be told that the manufacturer is no longer distributing the product in stores. In fact, the only way to make that purchase now, is to order directly from the manufacturer, usually through their own ecommerce platform. 


Some of these manufacturers choose to go directly to the consumer for a portion of the sales, and some are completely bypassing the retailer. In any case, this emerging trend is a game changer for both manufacturers and retailers. The manufacturer has to distribute their goods efficiently, perhaps, in a similar way an ecommerce retailer would. Over the last decade, we have seen retailers struggle to support the omni-channel distribution, shipping goods to stores and directly to the consumer from their distribution centers and stores. Today, manufacturers choosing the DTC strategy will require a vastly different distribution model.

 

Resilience through the pandemic

Regardless of the company or industry in question, following Franklin’s early planning advice is sure to pay off as 2021 approaches and as the business environment normalizes. “Manufacturers continue to show resilience through the pandemic. Many see reasons for optimism as they have found ways to keep their staff employed,” Stovall concludes. “Now is the time to look at how they can grow. From their current experiences, manufacturers should learn, plan, adjust, and evolve. In this environment, proactive manufacturers will have opportunities.”

Generix Group North America provides a series of solutions within our Supply Chain Hub product suite to create efficiencies across an entire supply chain. From Warehouse Management Systems (WMS) and Transportation Management Systems (TMS) to Manufacturing Execution Systems (MES) and more, software platforms can deliver a wide range of benefits that ultimately flow to the warehouse operator’s bottom line. Our solutions are in use around the world and our experience is second-to-none. We invite you to contact us to learn more.