Three ways to create resilient supply chains
The idea that in every crisis lies an opportunity was attributed to Albert Einstein. However, you don’t have to be Einstein to develop more resilient supply chains. Here, John Young, APAC director at EU Automation, suggests three key ways in which forward-thinking manufacturing companies will respond to the current period of uncertainty.
It has become routine to read headlines warning of the severities of the supply chain shock that coronavirus has unleashed. The problem is compounded in those sectors that rely on global supply chains. However, although coronavirus may threaten global supply chains on an unprecedented scale, many were already gearing up to respond to systemic shocks.
Investment in digitalisation is one of the vital ingredients in improving supply chain resilience and flexibility. While some media talk of digitalisation may contain overstatements, there is undoubtedly good evidence to suggest that digitalisation offers real benefits and real costs-savings to those who make the leap. In fact, a recent survey by PWC Global showed that those ‘Digital Champions’, the companies who were furthest ahead in the digitalisation of their supply chains, reported a in supply chain costs and a 7.7% increase in revenue for the last year.
Digitalisation for supply chains is enabling transparency across the entire value chain. This means visibility all the way from product origin to the customer and product lifecycle. Alongside this data, the use of artificial intelligence is allowing businesses to spot relevant patterns and adopt a more proactive approach to managing risk.
For example, one way this can be achieved is through the creation of a digital twin. This is effectively a virtual replica of a company’s supply chain using data analytics and artificial intelligence. It can model the entire supply chain, including all the assets, warehouses, logistics and material flows. The concept itself is not exactly new. What is new is the use of Internet of Things (IoT) technology to continually feed data into the digital twin in real time. This not a static model.
Having a virtual replica of your supply chain allows you to carry out accurate testing of different scenarios, such as how switching a supplier might help you mitigate the possible impact of a global pandemic. With the ability for the model to respond to new real time data, companies that are able to exploit this technology spend less time in crisis mode and can instead develop mitigative strategies. The digital twin allows them see risks early and adjust inventory levels accordingly.
According to research by Boston Consulting Group, use of a digital twin can lead to sustainable inventory reductions of five percent and reductions in capital expenditure of for those companies that have been early implementers. For those companies using IoT technologies, the use of digital twins is already becoming more common. A survey by Gartner revealed that of companies using IoT already use digital twins and a further 62% plan to within a year.
Diversification and collaboration
For smaller and medium sized enterprises, whose adoption of digitalisation and Industry 4.0 technologies is likely to be slower and phased, there are still plenty of sound ways to improve supply chain resilience. A sensible strategy would be to diversify supply, both in terms of company and location.
In many places, the idea that countries or businesses should reduce their reliance on global supply chains has gained some traction. In the Asia Pacific region for instance, there is some talk in Australia of the need to grow the domestic manufacturing sector to reduce the risk that stems from an overreliance on imports. However, at just under six percent of GDP, the manufacturing sector in Australia, as a percentage of the overall economy, is about a fifth of the size it was in the middle of the last century. Macro-level factors like these will not change quickly.
In the meantime, many manufacturers will continue to rely on global supply chains, whether that is for tier one or tier two suppliers. The risk of this reliance on imports can be mitigated, in part, through building the right kind of relationships with suppliers. Manufacturers should consider looking for alternative sources of supply for key materials and components, but they should also look to work with suppliers who can offer collaborative partnerships.
This goes back to the point about transparency. If manufacturers are to develop more effective supply chain risk management strategies, they need transparency across the entire value chain, including tier one and tier two suppliers. Manufacturers should challenge their suppliers to provide reliable information and data on future supply and demand and they should look to work together to mitigate risks.
Many manufacturers will be assessing the ways they can strengthen their supply chains in the wake of the disruption caused by coronavirus. Yet this is not just about firefighting during a crisis period. It is essential that businesses emerge from this phase better prepared for the next shock to the system. Investing in digitalisation, diversifying supply and building collaborative relationships with suppliers are three key ways that goal can be achieved. That is the opportunity.
The Ultimate Procurement & Supply Chain Event
From September 28th-30th, network with C-level executives, gain insight from industry pioneers and walk away with actionable insights that accelerate your career. By the end of the week, we promise you’ll have the skills to solve the world’s most pressing supply chain and procurement challenges.
The three-day show is an essential deep dive into the industry, with influential speakers sharing insights and strategies from their organisations, group roundtable discussions, and fireside chats. Whether you attend virtually or in person, you’ll strategise how to cope with global disruption, learn from industry leaders, and walk away with tips, tactics, and tangible connections.
How to Attend
In a COVID-disrupted era, we know that the majority of people would rather avoid travelling for events─why take the risk, right? In response to the continued disruption, BizClik Media Group has decided that Procurement & Supply Chain LIVE will offer the best of both worlds through hybrid accessibility.
That means you and your peers can attend the event in person or virtually ─ with no disadvantages for people who choose not to make the trip to the Tobacco Dock venue.
Procurement & Supply Chain LIVE will be held at the Tobacco Dock in London, an industry-leading venue that is renowned for delivering world-class events. For attendees’ peace of mind, the venue is working to the government-endorsed AEV All Secure Framework, alongside mia’s AIM Secure and ‘Good to Go’ accreditation, they will ensure that we achieve a COVID-secure environment to facilitate all of your networking needs.
Our physical venue is both historic and stunning, but it has no bearing on the information that you and your peers can gain from the event. You can still absorb it all, interact with other attendees, and enjoy the conference experience on your alternative, virtual platform.
The platform will feature live feeds from all of the stages, as well as virtual networking areas. So, if you want to avoid travel, it’s not a problem! You can still get involved and enjoy the entire experience from the comfort of your own home.
What’s on the agenda?
With keynote addresses from global leaders, dynamic roundtable discussions, and extensive networking opportunities, Procurement & Supply Chain 2021 will expand your network, deliver insight, and enhance your organisation’s reach.
Across the three-day event, a number of relevant topics and trends surrounding procurement and supply chain will be discussed.
- Tuesday 28 September - Digital supply chain
- Procurement strategy (11:30 am)
- Supply chain leaders forum (12:00 pm)
- Women in supply chain (14:00 pm)
- Procurement technology (14:30 pm)
- Wednesday 29 September - Procurement consulting
- Sustainability (11:30 am)
- Supply chain management (12:00 pm)
- Digitalisation (14:00 pm)
- Risk & Resilience (14:30 pm)
- Thursday 30 September - APAC sessions (04:00 am)
Influential executives from around the world will give their insights and professional experiences surrounding these topics, allowing you and your company to leave with valuable information.
The past year has shown how important supply chains are and the importance of managing them correctly. With increasing digitalisation across all industries, you won’t want to miss out on our great speakers and information surrounding this topic. Preparing your company for the future is key, and we are sure you will gain great insights at our three-day event.
Order now to make the most of our early-bird offer. Ticket prices increase over 50% soon! For tickets and information, head over to our event site.