Topics In Demand
Notification
New

No notification found.

How a Global Crisis Exposed Supply Chain Vulnerabilities
How a Global Crisis Exposed Supply Chain Vulnerabilities

April 13, 2022

1994

0

Every manufacturer seeks to avoid supply chain disruptions. Most have continuity plans in place, designed to support the company through a localized or supplier-specific situation. But few manufacturers were prepared for the global supply chain disruption caused by COVID-19.

During the first quarter of 2020, as the COVID-19 outbreak became more pronounced in China, supply chains began to feel its effects. As factories in China shut down, many manufacturers realigned their sources and continued production with minimal disruption.

However, when the crisis became a global pandemic, the overall demand for many products dropped dramatically across all regions, leading manufacturers to cancel or delay orders. The problem was no longer simply finding alternate sources. Manufacturers needed a plan to minimize the long-term impact on their business, as well as to their supply chain.

“While we hope to not face this type of catastrophic disruption again for many years to come, there are lessons to learn from the COVID-19 crisis. Specifically, when faced with an unprecedented disruption, it becomes clear that there is a difference between having a continuity plan and being able to execute on that plan quickly, based on accurate and up-to-date information.”

For manufacturers, many of the disruptions they’ve encountered have been directly caused or exacerbated by the lack of visibility into the supply chain.”

Real-Time Information & Transparency Increases Agility
Whether dealing with a specific supplier issue, a regional crisis, or a global pandemic, when disruptions occur, many organizations struggle to execute against their continuity plans. There are three key elements needed to effectively manage a manufacturer’s supply chain: a definitive supplier database, robust supplier operational data and an efficient method of supplier communication.

DEFINITIVE SUPPLIER DATABASE

Many companies have grown through acquisition, or they have allowed business units to manage their own internal systems. As a result, the same supplier is associated with multiple vendor numbers throughout siloed systems across the organization. Even during normal operations, this makes good decision making difficult. It is always a challenge to aggregate supplier information from multiple independent systems, but during a crisis, the risks and liability caused by siloed data become more pronounced. For example, while one business unit has identified a severe supplier issue, the rest of organization may not be aware of the potential risk.

ROBUST OPERATIONAL SUPPLIER DATA
Up-to-date, quality data is essential for effective response during a quickly evolving crisis. Current, accurate information enables companies to quickly identify potential weaknesses in the supply chain. Unfortunately, the data is typically hard to find, documented inconsistently and scattered across an organization’s silos.

Most ERPs only track tactical supplier data such as name, address, terms, and payment method. While this information is required for processing payments, it provides no insight into a supplier’s ability to continue supporting the business. This key intelligence is derived instead from operational data such as supported manufacturing processes, certificates, capacity and liquidity. By scoring a supplier’s response to key questions in these areas, supplier quality engineers can assess current data in relation to relevant categories and risks.

EFFICIENT COMMUNICATION METHOD
Buyers are typically assigned specific suppliers to manage, based on commodity, region, or other factors. In many cases, suppliers’ emails and other contact details are also maintained by these buyers. During normal operations, this method – while inefficient – works.

However, when a crisis occurs, a manufacturer needs the ability to reach out to groups of suppliers and request additional information. Hoping that suppliers are monitoring their emails is not a reliable strategy. Further, if email is the organization’s preferred method of communication, information submitted by the supplier in the body of the email or attached in a spreadsheet can be missed, it might be subject to version conflicts, and it is unlikely to adhere to standard formats. Once the data is received, it must be aggregated quickly in order to support the data analysis necessary to make critical decisions. Unstructured data derived from email and spreadsheets exacerbate the stress of a crisis situation, resulting in lost time and potentially bad decisions.


That the contents of third-party articles/blogs published here on the website, and the interpretation of all information in the article/blogs such as data, maps, numbers, opinions etc. displayed in the article/blogs and views or the opinions expressed within the content are solely of the author's; and do not reflect the opinions and beliefs of NASSCOM or its affiliates in any manner. NASSCOM does not take any liability w.r.t. content in any manner and will not be liable in any manner whatsoever for any kind of liability arising out of any act, error or omission. The contents of third-party article/blogs published, are provided solely as convenience; and the presence of these articles/blogs should not, under any circumstances, be considered as an endorsement of the contents by NASSCOM in any manner; and if you chose to access these articles/blogs , you do so at your own risk.


© Copyright nasscom. All Rights Reserved.