We are well into 2023 and one thing that has not changed since 2022 is the unpredictability that many economies are still experiencing as a result of the pandemic and continued geopolitical conflicts. For the supply chain industry, this means that businesses need to be strategic, leveraging on tech and real time data to stay up to date. Achieving a connected supply chain allows businesses to have end to end visibility, which is a necessity today.
What is a connected supply chain?
A truly connected end-to-end supply chain has the aim to reach complete visibility in real time, which creates an integrated view across the company, including its suppliers, dealers, manufacturers, logistics partners, and clients. It is a means of connecting everyone involved in the supply chain, drawing together disparate systems and partner networks to ensure that information can flow end-to-end across the supply chain whenever and wherever it’s needed.
In addition, a connected supply chain utilises an end-to-end, cloud-native technology platform and interconnected network of manufacturing, logistics and distribution partners to generate greater supply chain productivity while mitigating business risk for organizations.
Enabling optimal decision making
Visibility across the supply chain is essential, not only to monitor goods that are in transit but in order to improve business operations including agility, inventory management, product development and pricing, and customer service. With the pandemic and Russia-Ukraine conflict, some businesses saw huge disruptions to their supply chain that resulted in goods being delayed and customers not knowing when they would receive their orders.
In situations like this, supply chain and business leaders need to understand what products customers are ordering, where they are ordering them, and the status of the products in transit in order to communicate to customers of any delays in delivery. All that information lies within the supply chain, but as the modern supply chain is complex and global, it can involve a whole ecosystem of companies, their suppliers, partners and customers.
Without full visibility, business leaders are unable to make optimal decisions and this will impact operational efficiency and revenue. It may also hamper environmental, sustainability and ethical initiatives that are a growing part of day-to-day supply chain management.
Leveraging different networks to mitigate risks
Leveraging different networks in supply chains is crucial for mitigating risks as it helps businesses to spread out their risks and protect themselves against disruptions that could arise from any single source. The complexity of supply chains today means that they are vulnerable to quality issues, delivery delays, or even natural disasters.
By leveraging different networks, businesses can diversify their supply chain, thus reducing their reliance on any one source of goods or services, thereby minimising their exposure to risks. Leveraging different networks can help businesses to stay agile and respond quickly to changes in market conditions. By having multiple sources of supply, businesses can quickly switch between suppliers to take advantage of emerging market opportunities.
An example was seen with Apple when they faced several supply chain issues due to China’s lockdown policies during the pandemic. In addition, many of its suppliers in China were unable to operate at full capacity or meet production targets due to lockdowns. There were also delays in the transportation of goods, further exacerbating the supply chain disruption.
To address these issues, Apple implemented several measures, including diversifying its supply chain and increasing its inventory levels. Apple started exploring alternative sources of key components and working with suppliers outside China to reduce reliance on one source.
Additionally, Apple increased its inventory levels of finished products and components to ensure that it had adequate stock to meet customer demand. Apple’s experience during the lockdown in China highlights the importance of having a flexible and resilient supply chain. By diversifying its supplier base and increasing inventory levels, Apple was able to mitigate the risks associated with supply chain disruptions and ensure a stable supply of its products.
Improving efficiency and driving profitability
Every business wants to stay as efficient and profitable as possible. This means ensuring that their supply chain has real-time visibility into the movement of goods and materials across the entire supply chain. This visibility ultimately allows businesses to track shipments, monitor inventory levels, and anticipate supply chain disruptions, allowing them to make informed decisions and optimise their operations, thus improving efficiency in the long run.
A connected supply chain helps reduce costs by eliminating manual processes and optimising inventory levels. With real-time data, businesses can identify areas of waste or inefficiencies and take corrective action. For example, they can reduce transportation costs by optimising routing and scheduling, or they can reduce inventory costs by improving demand forecasting.
In addition, a connected supply chain also helps to enhance customer satisfaction by providing timely and accurate information about order status and delivery times. With real-time visibility into the supply chain, businesses can provide customers with accurate delivery dates, improve order tracking, and respond quickly to customer inquiries or issues.
A connected supply chain for the disruptive future
As the last few years have proven, business-as-usual is becoming a myth. Expect the unexpected is the new normal and maintaining performance, in some cases survival, is contingent on connectivity and collaboration with a vast multi-enterprise network of interdependent parties spanning demand, supply, logistics, and trade ecosystems.
Building a connected supply chain requires a holistic approach that involves integrating different systems, processes and stakeholders across the supply chain. By leveraging digital tech, standardising processes, improving visibility, embracing agility and developing strong partnerships, supply chains can achieve better performance resilience and sustainability.
Paul Soong is the Regional Director for ANZ at e2open.
