Economies emerging from pandemic, but supply chain woes continue

| 0 Comments

supply_chain_covid_100.jpgCompanies need to become more resilient in their supply chain strategies but without sacrificing cost-effectiveness, warn experts

The Covid-19 crisis has been a wake-up call for supply chain professionals, on whom marketing teams are often so dependant.

According to a study by the Boston Consulting Group (BCG), for years, companies have focused on eliminating redundancy in sourcing to reduce fixed costs and promote efficiency. Greater efficiency, however, came at the expense of diminished flexibility and effectiveness - a tradeoff the pandemic-induced supply chain disruptions have made painfully clear.

And the disruptions are not yet over. BCG predicts that as the global economy emerges from the pandemic, supply chains will continue to face severe challenges:

Product portfolios and offerings have exploded in size and diversity.
Production and supply networks have become increasingly complex.
External pressures, including regulations and trade barriers, have intensified.
Customer segments have become more volatile, with rising service requirements.
Multiple stakeholders are demanding action to promote sustainability.
"In the face of such challenges, many companies struggle to optimise supply chains from end to end, leading to major impact on value delivery. To address these issues, companies need to become more resilient without sacrificing cost-effectiveness," the study states.

"A resilient supply chain allows companies to be responsive to customer needs and maintain high service levels while also keeping net working capital and costs under control."

Three pillars to absorb supply chain shocks

BCG says three pillars should support a company's efforts to absorb supply chain shocks: Redesigning the global network; Setting new parameters for supply chain buffers; and Proactively managing suppliers. Examining these in more detail:

Redesigning the Global Network. A resilient network for supply, manufacturing and distribution achieves flexibility through selective applications of redundancy, such as dual sourcing.

Other approaches include 'near-shoring' (as opposed to 'offshoring') to reduce dependence on complex global logistics and vertical integration to bring manufacturing for critical components in-house. A comprehensive risk assessment can provide the basis for determining how to balance flexibility, efficiency and effectiveness when redesigning a global network.

Setting New Parameters for Supply Chain Buffers. To promote resilience, a company needs to develop an effective multi-echelon inventory strategy, which typically leads to new inventory targets in the supply chain's high-volatility nodes.

In addition, companies should evaluate resetting their capacity utilisation targets and identify triggers that signal when to add capacity, or activate ready-to-use capacity based on utilisation trends.

It is also essential to align order fulfilment strategies (whether "make to order" or "make to stock") to customer needs.

Proactively Managing Suppliers. Resilient companies assess the criticality of suppliers and adjust supplier relationships to ensure resource availability. They also gain transparency into multiple tiers of suppliers so that they can fully assess upstream risks.

To gain visibility into the reliability of suppliers, they monitor traditional KPIs such as "on time, in full" and other risk KPIs such as credit ratings and geographic concentration. They also require suppliers to share relevant information on a periodic basis.

In summary

"Companies that succeed in establishing real-world resilience will be rewarded with smoother supply operations in the face of both normal volatility and severe disruptions," the study's authors emphasise.

African Marketing Confederation

Leave a comment


 

 

Career opportunites

Procurement Manager

  • >500 000 Gauteng Permanent Procurement Management
Job purpose We are looking for a Procurement

Fresh Demand Planner/Supply Chain Analyst

  • Analyst Operations, Planning & Inventory Permanent Supply Chain Western Cape
(Jnr - Mid Level), Supply Chain Planning, Based

Groceries Demand Planner/Supply Chain Analyst

  • Analyst Operations, Planning & Inventory Permanent Supply Chain Western Cape
(Mid Level) Supply Chain Planning, Based at Kenilworth,

Category Implementation Manager

  • >500 000 Gauteng Permanent Projects / Category Management Supply Chain
As an Executive Search and Career Consultant specializing

Head of Procurement

  • >500 000 Gauteng Permanent Procurement Management Strategic Sourcing
As an Executive Search and Career Consultant specializing

Regional Sourcing Manager

  • >500 000 Gauteng Permanent Procurement Management Strategic Sourcing
As an Executive Search and Career Consultant specializing

Procurement Director

  • >500 000 KwaZulu Natal Permanent Procurement Management Strategic Sourcing
As an Executive Search and Career Consultant specializing

Procurement Specialist

  • >500 000 Buyer Gauteng Permanent Procurement Officer / Specialist
As an Executive Search and Career Consultant specializing

Senior Sourcing Manager

  • >500 000 Gauteng Permanent Procurement Management Strategic Sourcing Supply Chain
As an Executive Search and Career Consultant specializing

Indirect Sourcing Programme Manager

  • >500 000 Contract Projects / Category Management Strategic Sourcing Western Cape
As an Executive Search and Career Consultant specializing

Deputy Chief Commercial Officer

  • >500 000 Contract Gauteng Procurement Management Supplier / Business Development
As an Executive Search and Career Consultant specializing

GROUP PROCUREMENT MANAGER

  • Gauteng Permanent Procurement Management Supplier / Business Development
Operating out of Johannesburg, this is a key

Tutor and Coordinator

  • Gauteng Operations, Planning & Inventory Permanent Procurement Management Supplier / Business Development
Purpose of the job: To plan, coach, advise

Commodity Manager

  • <500 000 Commodities Gauteng Procurement Management
Are you a Commodity Manager looking for the

Supply Chain Professional

  • <500 000 Gauteng Procurement Management Supply Chain
I specialize in placing professionals in the Supply

Supply Planning

  • <500 000 Gauteng Operations, Planning & Inventory Supply Chain
Seeking dynamic candidates to take to the market

Industrial Engineer

  • <500 000 Gauteng Industrial Engineer Procurement Consultant
Are you an Industrial Engineer looking to make

Logistics Manager

  • >500 000 Gauteng Logistics & Warehousing Supply Chain
Seeking vibrant industry specific individuals seeking new opportunities

Operations Manager

  • <500 000 Gauteng Operations, Planning & Inventory Procurement Management
Looking for an Operations Manager to take into

Supply Chain Systems Administrator

  • >500 000 Gauteng Procurement Management Strategic Sourcing Supply Chain
One of South Africa's leading, mining companies is