The Coronavirus pandemic has demonstrated the fragile nature of the supply chain to manufacturers and the general public alike, as shortages of previously plentiful goods have hit stores across the United States in the past several months. As this crisis has shown that a greater resilience to catastrophic events is a necessity, there are increasing questions regarding what the future of supply chain management looks like. With significant adjustments likely, manufacturers are going to need to mitigate future risks by using tools and developing processes to weather future disruptions to the supply chain.
Post-COVID Effects on the Supply Chain
Since businesses demonstrated poor flexibility in dealing with the real-time shock of COVID-19, preparation for catastrophic or “black swan” events will be a priority for many companies – including weather events (fire, flood, tsunami), disease outbreaks, worker strikes, social unrest, trade wars, labor disputes, product demand spikes, supplier bankruptcy, and other disruptions.
In an effort to be more flexible and adaptable, manufacturers will favor movement to more US-based suppliers, rather than sourcing globally. If international suppliers are a necessity, avoiding depending on suppliers from only one country will be avoided if at all possible.
To eliminate reliance on single-source suppliers, companies will seek out more diversity to assure continuity of supplies in difficult times – spreading out risk. While manufacturers may not completely move away from a JIT model of inventory, many will adjust their thinking regarding maintaining higher inventory stock levels in case on-hand materials may be hard to get during a crisis.
An increased emphasis will be placed on strengthening supplier associations, as these valuable connections can be important links during times of difficulty. Efforts will be made to attain status as the “customer of choice” for key suppliers by cultivating relationships and maintaining consistent good levels of communication.
How ERP Can Help
Supplier and Alternate Vendor Management – To assure the acquisition of raw materials from trusted vendors, supplier information is stored within the ERP software solution including materials available for purchase, applicable certifications, quality control results, and risk assessments. Qualified alternate vendors are also vetted and ranked, should a primary supplier’s materials become unavailable.
Vendor Scoring – Monitoring of primary vendors and alternate suppliers’ performance is monitored by the ERP system solution so that any disruptions can be quickly identified and addressed. This is done with vendor scorecards as well as the use of key performance indicators (KPIs) – measuring the quality of goods and services, price, and delivery dates.
Real-time Information – With an ERP’s overview of the entire supply chain in real-time, current, and accurate information enables the maintenance of a consistent inventory.
Bill of Materials (BOM) Tracking and Revision Control – This feature in an ERP software system enables manufacturers to switch out comparable raw ingredients (if possible) when original materials are unavailable – helping to avert problems during a supply chain crisis to meet customer demand.
ProcessPro ERP meets the needs of manufacturers who are looking to mitigate the risk associated with disruptions in the supply chain. With over 30 years of experience, our knowledge and experience can help you create strong supply chain management. Contact us for a personalized demonstration.