During the past few months, the pandemic crisis has exposed just how fragile the modern supply chain is. Many organizations found themselves vulnerable, especially those who depended strongly on China for raw materials or finished products. Global supply chains were put at risk when Wuhan shut down; more than 200 of the Fortune Global 500 have a presence there. This resulted in significant disruption, even with China returning to normalcy as early as April.
Complex global supply chains built on lean manufacturing principles uncovered vulnerabilities, especially for sectors that had inventory and single-sourcing models driven solely by cost control. Supply chains are looking for a new model, including diversified supply chains and decentralized manufacturing capacity. Underpinning this is the digitization of supply chain and logistics.
Why You Need Digital Transformation
It’s surprising to learn that in 2020, relationships between buyers and suppliers is still largely paper-based. This makes it difficult to pivot agilely and identify and recruit new suppliers. Digital transformation using technology such as artificial intelligence and IoT can help supply chains quickly switch to alternative providers if their regular suppliers face disruption.
Digital transformation can connect globally dispersed operations for advanced levels of visibility. This starts by focusing on Tier 1 suppliers, your key suppliers either by spend or business criticality. Tracking reporting KPIs and governance can give your business real-time tracking of a supplier’s inventory and production, helping you understand their flexibility to scale production up or down at a moment’s notice. Once you’ve identified the Tier 1 suppliers, expand visibility to Tiers 2 and 3. These suppliers may be the ones you fall back on when Tier 1 suppliers have an impacted ability to fulfill orders.
Digital transformation of your supply chain also makes it easier for your company to switch supply network models as government policies change, such as restrictions on exports or imports from specific countries.
Build Agility With Digital Transformation
Digital transformation doesn’t just help an organization keep making and selling what it’s always made and sold. It also allows companies to pivot according to market demands, as exemplified by multiple non-medical companies switching production to make masks and other protective equipment.
This agility is beneficial in a pandemic, but continues to prove useful in otherwise changeable markets. With digital transformation, companies are adept at redesigning processes from the ground up and realigning for new products.
The Way Forward
So how, specifically, is technology helping manufacturers and distributors move forward? With the surge in online ordering, logistical adjustments became a must. Suppliers gave products a digital unique identifier at the origin of the supply chain, providing full transparency over inventory down to the product level.
AI and machine learning came to the forefront as companies learned they could no longer only look at past data to create models to base long-term predictions on. Short-term predictions are becoming the norm as teams study the resulting data for guidance on next steps.
Digitalization of the supply chain is the clear way forward. It’s a way that companies can begin strategizing for achieving resilience against supply chain disruption. Big data analytics assists in streamlining supplier selection, while cloud computing works to facilitate and manage supplier relationships. Automation and IoT are enhancing logistics and shipping processes. The pandemic has also accelerated the rollout of 5G technology for many manufacturers and distributors in order to enable IoT devices for remote monitoring.
Drive Supply Chain Digital Transformation With ERP
Manufacturing and distribution have long relied on outdated processes, but the COVID crisis presents a ripe opportunity to reset the system. No matter what the future brings with the virus curve rising or falling in the coming months and beyond, the winners will be the supply chains who have adopted technology to support flexibility and agility.
While digital transformation can be associated with highly innovative technologies—AI, predictive analytics, robotic process automation—one surprising player is a more common business application: the ERP. This technology has been advancing from the back office to the forefront of business digitization, providing a flexible foundation for organizations to integrate their more cutting edge technologies.
Adding a well-configured ERP can strategically advance your digital maturity and drive transformation. If you’re not sure where to start—or not sure your current ERP can get you where you need to go—it’s time to talk to the experts at ASI. For more than 30 years, ASI has been helping customers implement the ERP software they need. Find your digitalization foundation with the right ERP. Start with ASI today.