Definitely, the previous year wasn’t for amateurs. Even businesses most prone to change had to adapt – resilience and innovation were the keywords – and several sectors were forced to transform themselves, supply chain included.
With the growth of competitiveness and market fragility, the supply chain started to play an even more primordial role in business strategy. This transformation was driven mainly by the need of organizations to reduce costs. The delicate moment around the world has forced companies to take a closer look at their whole supply chain.
1. Identify vulnerabilities for an efficient risk management
Companies of any size and segment must be aware of internal and external threats, identify weaknesses and risks, and avoid handling disruption in the supply chain. For such purpose, it’s important to conduct an effective supplier management, in order to identify, assess, mitigate and respond to all threats.
2. Rethink the use of “just in case” and lean manufacturing strategies
The Covid-19 pandemic closed the borders of various regions of the world and the supply chain thus collapsed. Consequently, businesses had been forced to rethink their operating strategies with lean manufacturing, and create an alternative on the fly.
3. Have a resilient supply chain, but without losing competitiveness
The supply chain must concentrate efforts to be resilient – that is, it shall have the ability to operate normally, even after being impacted. For such purpose, it’s vital to study alternatives, in order to find different supply options that can mix price, quality, delivery and agility. A Marketplace, for instance, can be very strategic to companies, in the search for new partners.
4. Keep an eye on additive manufacturing, technology and innovation
The need of digitizing supply team operations is both an urgency and a reality. Taking a close look at innovations, technologies and disruptions – such as additive manufacturing, for instance – can contribute to render procurement processes less lengthy and operational, and more strategic and assertive. Only technology is able to help in facing the challenges of a fragile, anxious, non-linear and incomprehensible world.
5. Data has never been so vital
Data only increase over time, and it’s crucial that companies don’t wait until being sunk into information to give due importance to this topic. Therefore, collecting and analyzing data can be the key to achieve the much desired supply chain resilience.
6. Supply chain leaders have never had so much influence within their companies
With the crisis, the need to create a resilient supply chain became clear, and procurement professionals earned great prominence within their organizations. Chief Procurement Officers (CPOs) and their procurement teams have now a chance to increase the area’s long-term value, and show that they are essential to avoid bottlenecks and preserve business continuity and competitiveness.
7. Suppliers must be true partners
2020 showed that the supplier needs the purchasing company to stay in operation, and the purchasing company needs the supplier to keep on operating. Therefore, establishing partnerships that are sustainable, transparent and collaborative isn’t just a matter of relationship, but of survival in the market. It must be a win-win relationship for both parties in the chain.
8. Supply chain sustainability is a key strategy
Business contracts between companies will increasingly include clauses on sustainability issues and the use of responsible sources of labor and natural resources. Companies must then add, in their strategies, actions to slow down climate change, eliminate carbon emissions, generate less waste and use sustainable components in their manufacturing processes. This initiative implies great responsibilities to professionals and endless opportunities for innovation.
9. Reshoring and parallel supply chains
Companies have started to rethink reshoring – the practice of moving business operations within their countries and reducing the risk of international blockages. On the other hand, this practice has a higher supply value and impairs supply chain competitiveness, particularly in times of economic recession. Therefore, creating a mid-road solution – known as parallel supply chain – can be a hybrid alternative between importing and producing at home.
10. Supplier base diversity and focus beyond price
Nowadays, it’s essential to develop strategies to diversify the supplier base. Having a strong dependence on a single source, no matter it’s linked to a single plant, company or region, increases supply chain risks dramatically. Additionally, it’s important to consider that the choice of a supplier can’t be linked to low prices only. After all, for certain products, you get what you pay for.
These 10 reflections help to reaffirm the dynamism we are experiencing today – everything is happening very fast and you must be attentive to it. Therefore, supply chain professionals must be increasingly connected with the trends of the future.
We published recently, in this blog, the main skills that every successful buyer must have in 2021. Now is the time to boost your skills and acquire new knowledge!
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