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The pandemic has had a detrimental impact on multiple industries, from retail to the events industry. When it comes to the manufacturing industry, global supply chain issues emerged from the start of 2020 when factories ceased production, were running on reduced personnel or shut down completely.
The manufacturing industry is only just finding its feet again. The closure of manufacturing facilities has led to reduced production and higher demand for components and parts. The supply chain disruption has led to organizations and smaller companies having fewer vendors to choose from and less leverage when procuring inventory.
To tackle global supply chain issues, remain competitive and stay in business, it’s imperative to evolve your business processes. In this article, you’ll find some of the current challenges with global supply chains and the solutions to excel in today’s economy.
Evolving Internal Processes
It’s essential to evaluate your current internal processes to adapt them to your current circumstances. Change is necessary to function in an evolved landscape, so it’s vital to assess your internal processes to provide your company with more agility.
An example of this is the shift that many companies had to do when transitioning from working in a colocated space to distributed teams that worked from home.
While this isn’t possible for all employees that work in labor-intensive facilities and plants, it’s still possible to shift to a more agile organizational structure by adjusting certain processes. One of the first steps is to build a “nerve center” with c-suite execs and top management to guide the whole company through dynamic situations in real-time.
The nerve center acts as a single source of information and decision-making for operations planning, procuring new vendors and overseeing parts availability. Another critical aspect of the nerve center is to work with department heads to resolve logistical issues such as securing alternative shipping routes and which manufacturing sites are safe to be reopened after pandemic limitations.
Maintaining Relationships With 3rd Party Suppliers
To strengthen your supplier relationships, consider these factors:
- McKinsey, advanced supplier collaboration can help supply chains become more resilient, improve company growth and lower operating costs.
Current Challenges
When supply chains first slowed down and, in some cases, even came to a grinding halt, many companies realized how fragile their supply chains were. Some of the current issues with global supply chains have been resolved as manufacturing has reopened in some parts of the world. However, in the aftermath of the pandemic, a lot of significant challenges and hurdles remain for manufacturers that want to function within today’s market.
Lack of Data
Data has become the new currency and helps companies leverage business intelligence to make smart choices and data-driven business decisions. When it comes to the manufacturing industry and the impact on supply chain management, insufficient data can cause a myriad of problems.
Having the right data at your fingertips provides your company with more visibility and scope when it comes to suppliers and customers. Managing your supply chain and inventory data helps to strategize crisis management processes and prepare your organization for upcoming trends, disasters, policy changes and labor strikes.
Unemployment and Skills Shortages
Unemployment and skills shortages detrimentally impact global supply chains; if there are fewer skilled workers in plants, it lowers the overall productivity of suppliers.
Diversifying Suppliers
Switching to a different supplier sounds easy in theory, but the reality is that finding an alternative supplier while reducing costs can prove laborious. In certain instances, the part may not be available from another vendor. For example, the AMD chip shortage for the Playstation 5 and Xbox caused significant production delays and resulted in staggered releases of the console.
Another challenge when diversifying suppliers is that many suppliers originate in China, and sourcing an alternative supplier or distributor could eat into the profits.
While it can be difficult to find a different supplier, it can have advantages, such as shorter shipping times and cheaper replacement costs. Furthermore, diversifying your pool of suppliers mitigates your risk, giving you more opportunity to navigate through the global supply chain issue.
Lack of Digitization
Many companies still rely on writing on sheets of paper and storing physical documents, which siloes data and can lead to errors and duplicates. Technology is shifting the landscape of the manufacturing industry and without innovative technology, many companies will be left behind when it comes to procuring resources and filling inventories.
By transitioning to digital infrastructure, you can access all of your company data in a single place with intelligent business insight tools. Many companies are already making the shift to newer technologies such as AI, machine learning and automation. In fact, 45 percent of manufacturing executives expect further increases in operational efficiency from automated processes in 2022.
Supply Chain Solutions
Now is the time to take proactive steps to secure the future of your manufacturing company by preparing for the current global supply chain issues and challenges ahead. The best way to set yourself up for success is to start by making a long-term plan for your business.
Solutions you should act on right now:
The Future of Evolving Your Business Processes
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