Responding to inventory challenges through innovation
The ongoing tridemic ( seasonal viruses including influenza and respiratory syncytial virus ( RSV) and COVID- 19 pandemic), is threatening and appears to be on the rise. It has begun to test the risks and resiliency gaps for many businesses who rely on the fragility of their relationships with suppliers of key inputs. Several businesses may not be entirely cognizant of the fragility of the global supply chain links due to age- old traditions such as preoccupation with decreasing costs by tampering with the price element alone. What is evidently clear though in the backdrop of Covid- 19 logistical restrictions is that the global supply chain is still experiencing shortages.
Covid- 19 pandemic brought to the fore a plethora of logistical nightmares namely: high level of unreliability on carriers accompanied by sky rocketing freight rates. Buildings and real estate vacancies in general were at the all- time low occupation. Risks and resiliency gaps for operating a business such as weather catastrophes, sea and dry ports traffic and manufacturing delays wreaked havoc as major supply chain problems. For example, we all have at some point in time experienced the negative impact of shortages of some vaccines, medicines for our kids or for chronically ill family members, just as a cruel reminder of this historic level of gaps in the supply chain.
The KPMG 2021 CEO Outlook survey results point out that 67percent of companies are seeking to get in front of their productivity curve regarding the disruption caused by the impact of the Covid- 19 pandemic and now tridemic by increasing investment in risky areas such as manufacturing lead times, logistics and warehousing. Companies are beginning to find innovative solutions to maintain their revenue flow and their customer base satisfaction ahead of the tridemic shocks.
Businesses of today are not sitting back and waiting for global supply chains to untangle themselves, but rather they are moving ahead to buy warehousing storage space for those who were short on storage, shippers who cannot find shipping containers are proceeding to make their own. Other freight companies who could not book their goods with ocean carriers are now chartering vessels.
Despite the optimistic approaches adopted by some companies, challenges are still alive. Pervasive challenges exist such as battling inventory and cost- cutting measures, adapting a hyper- targeted planning approach to building bigger and deeper networks of suppliers. Several methods can be adopted to protect against future disruptions of supply chains. Amongst these are the following that I carefully gleaned from that haystack of solutions.
Nevertheless, most importantly is that businesses should consider applying a robust framework that takes care of responsive risk management strategies such as these to mention just a few.
A smart approach cocreated with a third party
As companies position themselves closer to their suppliers and improve their relationships and reliability, this approach holds advantages of increasing collaboration via data sharing and creating much needed visibility. It means deeper tiers become a key objective of directing that effort to becoming more obvious with each other and addressing mistrust between a company and its suppliers.
Inventory management
Among most of the modern and agile industries and even economic sectors that have been built on lean inventories, there is an emerging pattern of a permanent strategy change towards holding larger stocks and more buffer stocks, necessary in times of fluctuations caused by high sales. As a result, more and more companies are resorting to implementing aggressive continuous replenishment plans and automating their ordering to avoid constant stock outs that diminish the muchneeded goodwill with customers.
Transforming into digital supply networks ( DSNs)
In the new normal ( post Covid- 19 era), the current tridemic has highlighted the vulnerability of most companies when it comes to supply chain relationships. Worldwide uncertainties such as financial crisis, droughts and most recently Covid- 19 have exposed the decade- long held preoccupation with supply chain optimization, that is to say, optimization focused on minimizing costs, removing buffers and creating flexibility to absorb bottlenecks. A shift to utilization of new supply chain technologies are ushering in transparency across end- to- end supply chain networks and thereby supporting businesses’ capacity to overcome imminent barriers.
Standard linear supply chain models are transforming into digital supply networks ( DSNs) in the process breaking down functional silos and connecting enterprises to their complete supply networks to enhance end- to- end visibility, collaboration, agility and optimization.
Companies and governments can now make use of advanced technologies, for example the Internet of Things ( IoT), artificial intelligence, robotics and even 5G in anticipating and overcoming upcoming challenges such as tridemic, upsurge in demand of a service, supplier bankruptcy and even a labour dispute or regulatory changes.
O’Brian M’Kali ( PhD, MBA, MSc, M. Ed.), has lent his expertise to many organisations highlighting the essential role that enterprise development and SMMEs play in organisational and economic growth. Can be contacted on Mobile: 71860308 ( WhatsApp). Email: obrianmkali@ yahoo. com