“The pandemic threw us a curveball.”
This was a common phrase heard from many business decision-makers last year. Amid the chaos, a number of best practices emerged to help reduce exposure to disruptions and unexpected events without negatively impacting performance and efficiency.
To ensure your supply chain is better prepared to flex during unexpected peaks, it is important to proactively identify and then work to remove boundaries that might hinder or slow down your efforts. Following are five actions that will help supply chain managers work toward that goal. These are steps that can be taken within a company or used to identify the right third-party logistics provider.
Consider all relevant factors. The call for greater redundancy and resiliency is one of the most significant strategic challenges faced by supply chain organizations today, as companies confront the disruptions caused by shutdowns and capacity shortages to sensitive just-in-time networks. This is driving a renewed focus on steps that can be taken to reduce exposure to disruptions and unexpected events without negatively impacting performance and efficiency. It is no longer enough to just manage risk. Those companies that will continue to grow and remain competitive are the ones that take a holistic approach to ensure they are positioned to actually gain advantage from disruptions.
Invest in the right technology. In today’s environment where disruptions and peaks can unexpectedly occur at an accelerated pace, the pressure to continually innovate to maintain competitive advantage has never been greater. A continuous commitment to invest and innovate to drive technological advances within the supply chain is necessary for success. Identify and invest in those technologies, such as autonomous mobile robots or picking algorithms, that provide flexibility for future company growth and enable supply chains to quickly address changing market and consumer needs.
The focus should be on technologies that are not bolted down, but rather can easily scale with capacity to increase the flexibility and intelligence of the operations without large upfront investments. It is also important to have technology that will augment and enhance human labor as needed.
Ensure access to skilled, flexible labor. Demand for supply chain talent continues to be a serious challenge, with companies struggling to identify and attract qualified candidates. For most companies as they look to address capacity needs, it is not simply about meeting hiring quotas and headcount. Rather, it is about having access to a large enough labor pool to be able to effectively and efficiently scale up or shift employees between locations and facilities to manage fluctuating supply chain needs. It is also important to create more streamlined and efficient recruiting and onboarding processes that make it possible to match the right talent for the job and easily ramp up additional skilled workers as demand increases. Being able to move skilled labor to where it is needed is extremely important when confronting unpredictable times.
Balance efficiency with capacity and resiliency. In preparing for unexpected peaks, there are a number of opportunities to increase efficiency. The key is taking a strategic approach that does not require a sacrifice of resiliency and capacity to achieve efficiency. Start by fully understanding the operation and recognizing that not all efficiency looks the same.
For example, acceptable efficiency goals or ranges may look different depending on the volume. Define and establish efficiency goals or ranges for low- and high-volume periods and implement changes based on those two operating strategies. The efficiency playbook for low volume will contain different metrics, initiatives and opportunities than the one for high volume, and they will be balanced with the relevant resiliency and capacity requirements. The goal is to be able to easily move back and forth between the two playbooks to strategically optimize efficiency under both scenarios, while maintaining resiliency and capacity.
Rethink inventory and materials locations. In the same way a company might preposition essential materials and stocks for a forecasted hurricane or other storm to minimize disruptions, so too should they consider steps to ensure continuity during non-weather events, such as a pandemic.
For instance, this might mean diversifying locations and being less reliant on global inventories to ensure that inventory is available in regional and local markets whenever possible. To make good decisions about where to place inventory and how to get product to consumers as quickly and efficiently as possible, it is important to have good data and visibility into the supply chain. Communication is also critical. Once the right information is acquired, it needs to be shared with decision makers and relevant participants throughout the supply chain.
By proactively taking the steps necessary to remove key boundaries and positioning their supply chains for success with 3PL expertise, companies can be better prepared to pivot when unpredictable changes and challenges arise.
Val Hoge is chief operating officer for DHL Supply Chain, North America.
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