Top Five Supply Chain Lessons Learned in 2020
Published on 1 December 2020
Here are some of the top supply chain issues that companies worked through this year, and some advice on how to avoid them when the next disruption occurs.
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When it finally comes to a merciful end, there will be a lot of lessons that companies take away from 2020. The supply chain was in an especially bright spotlight as early stages of the global pandemic found consumers scrambling to cover their basic needs. Even with most of those gaps filled by midyear, there were still supply chain shortages, social distancing requirements, and second waves of COVID-19 to contend with.
Through it all, supply chain managers learned the value of having good supplier visibility at all tiers, using robust technology systems, and thinking beyond “lean” inventory strategies to avoid stockouts. Complete supply chain visibility—a concept popularized before the pandemic—became table stakes when COVID-19 emerged.
“All the components of a supply chain — raw material providers, trucking and freight carriers, and even customers’ receiving docks — can be interrupted for an unknown duration,” ESCO’s VP of Supply Chain Mike Funke writes in the Portland Business Journal. “Timely access to reliable information outside of your own four walls becomes paramount to making the best decisions for customers and the business.”
5 Key Lessons Learned
As we wrap up what proved to be an extremely challenging year for many, here are five supply chain lessons that we can all take away from the experience and apply in 2021 and beyond.
1. Global disruptions call for top-notch business tools
“This does not mean scrapping your current business system in favor of one with all the bells and whistles,” Funke points out, adding that no two companies’ requirements will be identical at this point.
To determine yours, identify the most significant obstacles standing in your path (i.e., “what if” scenario planning is a good starting point). “If your current system can’t adapt to overcome these hurdles,” Funke writes, “find the best complementary tools that can work with your system to extract, analyze, and leverage the data you need to be successful over the course of your digital supply chain journey.”
2. Your new source of supply may be right under your nose
When some of the world’s key manufacturing centers ground to a halt as a result of COVID-19, many companies began looking closer to home for their raw materials and goods. This was a smart idea, and one that was already happening thanks to the international tariff wars that started in 2019.
When incidents occur that disrupt your supply chain, the time it takes to get finished goods to your facility is critical. “Finding local or regional sources can reduce your transportation time and allow you to acquire products in a matter of hours versus days or weeks,” Fastenal’s Jeff Hicks writes in Forbes.
He points out that local and regional distribution can (and should) still provide global reach and planning. “Search out the providers who can manage and execute a supply chain on the local level.”
3. Technology provides clarity in “fog of war” situations
Coming into 2020, few supply chain managers knew that a good portion of the year would be spent working through the “confusion caused by the chaos of war or battle,” or the fog of war.
And while its’ well known that technology makes teams efficient in normal operating conditions, it can prove even more valuable for combatting unknowns. For example, Hicks says Fastenal uses technology to provide visibility into employee behavior in terms of product usage: What's moving? How quickly? Are the patterns changing?
“Visibility into this data helps you quickly discern trends, prioritize what is most important and plan accordingly,” he writes, noting that technology can also help add an element of control and extend the life of existing inventory by systematically controlling wasteful consumption.
“There are various ways to collect data to improve decision-making and react to or plan for risk in the supply chain.”
4. If it’s not one thing, it’s going to be another
Companies that successfully navigated the early stages of the global pandemic to begin operating in an almost-normal state quickly found themselves facing a new obstacle: a lack of transportation capacity.
Driven by the e-commerce boom and a driver shortage that was already underway pre-COVID (among other factors), this capacity crunch forced companies to find creative ways to get their products from point A to point B.
To ensure continuity now and as we move into 2021, Forbes suggests inserting a pre-negotiated premium price escalator in your carrier contracts with defined circumstances. “Also, consider joining shipper co-ops that pool volumes across large numbers of companies to gain more collective clout on behalf of members,” it advises.
“Finally, a good freight broker or forwarder can manage all of your transportation nightmares while supporting customer service, technology, and visibility.”
5. If you’re not already investing in your digital supply chain, you should be
COVID-19 taught companies that crises can occur in unexpected ways, and that their supply chains can easily be exposed to unimagined vulnerabilities that can surface quickly.
Fortunately, technology has advanced to a point where it can play a leading role in helping companies through VUCA (volatility, uncertainty, complexity, ambiguity) environments and events.
“To mitigate the impact of supply chain disruptions, companies will need a digital supply chain that unifies all the systems, applications, processes, and information in the supply chain, connecting all stakeholders on a single digital platform — which makes it an essential platform for managing a supply chain crisis,” Mark Burstein writes in Retail Info Systems. “It can be utilized for demand planning and forecasting, postponement techniques, vendor management and sourcing, omnichannel inventory visibility, and much more.”
It All Comes Down to Business Continuity
Finally, if your business continuity plan hasn’t been updated in years, it’s time to pull it up, review it, and revise it for the modern world which, unfortunately, now includes a host of new threats. Good preparation always proves valuable for riding out the storms with a resilient supply chain, and coming out the other side and working toward a brighter and even more successful future.
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.