Supply chain resilience: the key to restoring manufacturing’s health

COVID-19 has exposed just how fragile just-in-time manufacturing supply chains really are. It is forcing organizations to re-think their operations and processes to deal with whatever the new normal will look like – and prepare for any future crisis.

Nearly all industries have seen their supply chains knocked sideways. In many cases, links have been broken by this unprecedented health emergency. According to Gartner, 84% of organizations have faced varying forms of disruption – from operations being reduced to restricted and even closed.

To support future resilience, manufacturers will need to keep more extensive inventories rather than rely on just-in-time, which will have an impact on their finances. Also, they will need to incorporate regional self-sufficiency both in terms of suppliers and near-shoring manufacturing, bringing it closer to the point of use. This will increase resilience and reduce the risks of a single point of failure.

The supply chain is key to business success

Of course, these enormous pandemic-induced disruptions are amplified by the fact that manufacturers worldwide are going through the same challenges at the same time. This doesn’t mitigate the fact that supply chains will have to be far more resilient to handle any future global issues. As a result, we will see procurement and supply chain management change to avoid such significant interruptions.

IDC points out that organizations will need to take a more structured, proactive posture to risk. This is far more than robust, business-continuity planning. It is about developing the structural capabilities essential to a resilient supply chain that is now multi-tiered, multi-faceted, and incorporates an ecosystem of suppliers.

According to a survey before the pandemic, 84% of chief supply chain officers (CSCOs) said that a “lack of visibility” on supply chains was their biggest challenge. A further 87% said they had real difficulty in predicting and managing disruption. COVID-19 has exacerbated this precarious position.

Linking the future successfully

Any misalignment between supply and demand for manufacturers leads to too little or too much product entering the market. The former we have seen clearly in the pandemic. Disruptions in supply-chain logistics and lack of predictive planning has resulted in a shortage of ventilators and other monitoring devices in hospitals, for example. Country lockdowns, border delays and component shortages have had a domino effect through entire business ecosystems. Despite the strong demand for dairy products, for example, farmers have been forced to dump their milk during the pandemic. There has been a host of disruptions in the supply chain from farm to dairy product manufacturers.

Digitizing supply chains can help with such issues and the rising problem of supply-chain complexity. Artificial intelligence and data analytics, for example, can provide valuable insight into operations across the supply chain for smart decision making. Prescriptive and predictive analytics enable organizations to understand rapid market changes and the evolving market landscape. AI and GPS systems can help optimize shipping routes in real time, providing data for workarounds if a border is closed. It also helps drive greener and more sustainable supply chains.

Orange Business is working with its customers to create connected, intelligent supply chains that can improve overall efficiency. We are starting to see a new generation of data-driven platforms emerging, such as the Internet of Things (IoT) and Blockchain, which will play an essential role in developing agile, secure, highly visible and resilient supply chains. This will enable organizations to have a 360-degree view of supply chains across multiple supply-chain segments and allow for the adjustment and recovery of supply chains due to disruptions such as COVID-19, for example.

These new tools can’t do the job of building resilient supply chains on their own, however. They will need integrating into secure infrastructures that include external suppliers, regulators, distributors and consumers. This will enable all the players in the ecosystem to see where bottlenecks in the supply chain might occur and optimize performance levels where necessary.

The right information to the right people

COVID-19 has forced manufacturers and logistics companies to instigate homeworking for their knowledge workers. It has highlighted how vital information in the supply chain needs to be accessible to teams anytime, anywhere, and from any device. Those that have robust, secure connectivity and collaboration tools in place and have mapped their supplier and customer network as part of their risk management strategy have remained operational. Those that haven’t have struggled.

The lack of clarity regarding operations and what has been achievable has been painful for fast-moving goods manufacturers (FMCGs), for example, resulting in unplanned shortages of household items from paracetamol to flour.

Manufacturers that have invested in cloud applications have had a distinct advantage at being able to instigate homeworking quickly. But these organizations typically do not have the capacity for most of their workforce working remotely. Orange has had to come up with innovative workarounds. To ease the pressure on the enterprise network for one FMCG, it deployed Zscaler to enable remote access traffic to cloud apps to be routed via the Internet. In another business continuity scenario, Orange deployed Microsoft Azure SSL VPN gateways for a manufacturer to relieve pressure on its network.

Moving forward, some manufacturers will re-think their business models as a direct result of COVID-19. Flexible and homeworking will become a permanent part of their workplace ethos. This will require them to fast-track their digital transformation to embrace integrated collaboration tools, for example, to enable disparate teams to work together across the globe. A strong digital infrastructure, together with performance monitoring tools and heightened security capabilities, will be essential.

Resilience will be more important than ever

There is little doubt that digitization and hyperconnectivity will make it easier to come back from the crisis. Organizations with a high digital dexterity in their supply chains will be the ones that flourish in the new normal, underpinned by their ability to respond quickly and effectively to any disruption.

Frank Baggermans

Frank is Managing Director of Benelux and leads enterprise activities across Belgium, the Netherlands and Luxembourg. He studied commercial economics and marketing in Utrecht and has over 20 years of business and technology leadership experience. Frank is the proud father of two sons and, in his free time, he enjoys being with his family and friends, sailing, playing tennis, golfing and experiencing new sights.