Whether it is a global pandemic, trade wars, geopolitical instability, tariffs or natural disasters, these disruptions make a significant impact on supply chains globally. With such unpredictable disruptions, companies must invest in building key capabilities in their supply chains i.e. agility, resilience, and sustainability. Here we will talk about how to increase supply chain agility that can help companies to sustain in this ever-changing environment.
What is supply chain agility?
In supply chain management, agility means being able to plan, respond, and monitor promptly in case of unexpected events. It means to instantly change the direction when required to rationalize SKUs, shorten planning cycles, and shift production lines.
The goal is to maintain a fluid, responsive, and informed supply chain that can easily navigate changes that may come its way- whether good or bad.
Successful supply chain agility depends on the following-
- Understanding the external factors that shape supply chain logistics, irrespective of how steady things are now.
- Integration of process workflows and more proactive technology to address the pain points in the value chain.
- Exploration of components of the value chain that are most affected by industry disruption.
- Ongoing analysis and monitoring of new processes, production cost savings, and cross-functional collaboration, continuing to tweak practices if required.
Dimensions of an agile supply chain
Organizations that are alert can forecast changes in the industry, competitor threats, growth opportunities, and upcoming disruptions. The more aware organizations are, the quicker they can respond to changes in demand and supply trends.
Companies cannot incorporate changes without access to information and tools. Alert businesses have access to specific industry data in relevant history logs that all stakeholders can easily analyze and share.
If organizations are decisive, they can clearly and quickly translate any industry change in the accompanying information into action. The most decisive organizations have easy and unified change-of-command to lessen the number of points of contact required to make a quick decision.
Swift organizations implement their plans quickly. More quickly the changes are made, more cost-effective the entire supply chain becomes and this is profitable for businesses.
Agile businesses have the power and the buy-in to modify the ongoing processes when new opportunities come. This can be done without disrupting the entire business. Those capable of adaptability understand that action plans can change anytime, even when they are commenced under a smooth data-backed cycle that fits a value chain need at the time.
Ways to increase supply chain agility
Use real-time data
Maintaining real-time inventory levels is crucial to success as it provides more visibility into operations that can help companies in making informed decisions and can be proactive in implementing changes across the supply chain. For instance, the ability to view, track, and manage inventory levels across the supply chain in real-time can give a business insight into how to optimize inventory to keep costs low as well as meet demand.
Spilt the inventory
Although the primary benefit of splitting the inventory across several fulfillment locations allows businesses to expand their consumer reach geographically, a secondary distribution center can help to avoid long fulfillment delays and can help businesses to continue to meet consumer expectations even if a warehouse has to shut down due to any unexpected event. Strategic inventory management principles help to plan this crucial element and makes the supply chain more agile.
Implement demand forecasting
By implementing demand forecasting tools, companies can anticipate demand fluctuations based on the past, patterns, and seasonality. Appropriate demand forecasting can help organizations to maintain healthy stock levels at all times, plan for flash sales and promotions to be done in future, and make sure that they have enough inventory for the busy holiday/festive season.
Set Stock Keeping Units (SKU) reorder points
To avoid delays and stock-outs, companies can use past sales data and inventory to determine when it is time to reorder inventory at the stock keeping unit level so that inventory can be restocked at the right time.
Companies can also take into consideration future growth to understand how many units of SKU should be ordered. Many inventory management solutions are available in the market that can help in pulling up the data which is required by a business to determine an optimal reorder point. These solutions also include an automatic notification feature that can notify when inventories are running low.
Investing in warehouse technology (Warehouse Management System/WMS)
As businesses expand their supply chains, they will need to store inventory in several warehouses, which can be challenging and complex. To overcome this, companies need to have technology in place that controls and monitors daily operations within the warehouse.
Warehouse technology and automation will help businesses to ensure that inventory is received, picked, stored, packed, shipped, and replenished efficiently. Besides that, the right WMS also has the potential to improve consumer satisfaction.
The COVID-19 pandemic has brought about the importance of supply chain agility even more than before. With the sudden scarcity of raw materials to changes in demand, stock-outs to shipping carriers being stretched beyond capacity, the world has seen it all. Therefore, it has become essential for businesses to increase their supply chain agility to thrive in such constantly changing scenarios while maintaining profitability.