Read this blog to discover how to unlock a lean and resilient Supply Chain.
The effects of the COVID-19 pandemic are still felt around the globe, wreaking havoc with years of hard work put into supply chain planning systems, processes, and workflows. Processes that were running efficiently just two years ago must now be re-evaluated and re-engineered for a more dynamic and uncertain world to improve efficiencies, better the bottom line, forecast accurately, and keep customers satisfied.
So, too must we re-evaluate what it means to have a lean supply chain.
Let’s face it; we are in the throes of learning a brutal lesson: Keeping a supply chain resilient is just as important as keeping it lean. And that means we must now include in our definition of lean: efficient, agile, and elastic. If there is heavy reliance on redundancies in the supply chain, you could have difficulty remaining profitable – or in business, at all – before the next crisis even arrives. The goal is a cost-effective high-performing supply chain that can scale up or down and be agile enough to respond swiftly to shocks.
Here is why the new definition of lean for supply chains incorporates resilience:
- Demand continues to be volatile. Consumers have continued to stockpile essential products, such as soap, cleaning products, and toilet paper, as COVID-19 variants emerge. Since many of these products have long shelf lives, we expect a steep fall in demand following the sharp short-term increase. How do companies plan for this?
- The supply chain partner landscape is shifting. Some existing partners have cracked under pressure while new partners are emerging. Quick supplier assessment and monitoring are becoming the new supply chain management standard. What impacts does geopolitical change have on suppliers? Do you have choices in your suppliers for specific components, products, or materials if you need to switch?
- Omnichannel solutions continue to be in customer demand. Online, delivery, and curbside pick-up services continue in the winner’s circle over on-site shopping and purchase.
High volatility, supplier shifts, demand changes, and overall uncertainty are all factors expected to persist – even as a “new normal” evolves. Thus, the supply chain, as we have known, must also develop to improve resiliency against current and future disruptions.
Three keys to a lean and resilient supply chainDiversification: Historically, lean supply chains have sourced from one or a few geographies to lower costs. However, as seen throughout the COVID-19 pandemic, this can considerably impact the bottom line when faced with disruption. One of the most critical lessons learned has been diversifying the countries from which a product is sourced. China has been the sourcing center for a worldwide market, yet it was the first hit by the COVID-19 pandemic and subsequent lockdowns. Many retailers were impacted by relying solely on one location for supply and faced prolonged shortages. It will be essential to find a broader range of products worldwide and identify more selling channels, such as online marketplaces. The variation builds a more resilient supply chain that can react swiftly to disruptions, assuring the best possible outcomes in terms of real efficiencies and bottom-line management.
Adaptability: The ability to adapt quickly to the unexpected is vital for any organization. With Covid-19, retailers with robust capabilities to adapt were able to expand and capitalize on new products and selling categories not offered pre-pandemic. Other retailers overlooked this opportunity to adjust their supply chain and, as a result, failed to understand how to adjust to the shift in buying patterns and demands that were changing around them. A lean supply chain means having a functional, low-cost supply chain, but having a healthy mix of consistency and market-based agility makes supply chains resilient to dynamic and uncertain market conditions.
Tools: Having the right set of tools is essential and can help save time and money, allowing more investment in optimization. Value-added tools that enable integrated business planning and predictable, prescriptive supply chain forecasting, such as CCH® Tagetik Supply Chain Planning, assist you in making beneficial supply and demand planning choices. The right tools help organizations, limited in time, expertise, and skillsets, assess situations quickly and trust the resulting decisions. Supply chain planning tools enable organizations to become resilient by getting ahead and planning for disruptions before they happen, lowering the time and costs associated with reacting to supply chain disruptions.
CCH® Tagetik Supply Chain Planning is an innovative native-cloud platform that enables you to implement an Integrated Business Planning (IBP) initiative with support for all lines of business. Whether you are planning within one line of business or connecting plans across all supply chain planning systems, CCH® Tagetik Supply Chain Planning is the most scalable, flexible, and user-friendly option on the market.