3 Ways to Improve Your Operation’s Supply Chain Resiliency
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No part of the supply chain escaped the pandemic unscathed — but some suppliers and distributors fared better than others. Their secret? Resiliency.
That was the conclusion of Global Industrial's recent webinar, "Overcoming Supply Chain Volatility to Build Resiliency." Led by Christopher Longhito, Global Industrial's Senior Vice President of Operations, and Bill Boucher, Wipfli's Manufacturing, Retail and Distribution Industry Practice Leader, the webinar explored how to build resilient supply chain operations and why they're so important today.
Here are some of the highlights:
How the Pandemic Changed the Supply Chain
COVID-19 has affected every link in the supply chain — and not only because the pandemic spread across the globe. The deeply interconnected nature of the modern supply chain means an interruption in one area reverberates throughout the others. Boucher and Longhito also noted the pandemic's disruptions have been tremendously random, making it hard for suppliers and distributors to predict what will happen next.
Meanwhile, the supply chain is suffering from the same labor shortages afflicting the rest of the economy. Suppliers and distributors can't find the workers they need to meet skyrocketing customer demand. Product shortages and price volatility are also straining relationships between customers, suppliers, and distributors during the pandemic.
As Boucher put it, "The supply chain manager ... is probably the hardest role nowadays in any shop." But companies can conquer these challenges.
3 Ways to Improve Supply Chain Resiliency
Experts predict the pandemic's repercussions will linger into 2022. That means it's not too late for suppliers and distributors to build resilient operations. Moreover, building resiliency now will help the supply chain weather future disruptions in whatever form they take.
According to Longhito and Boucher, supply chain resiliency depends on three fundamental pillars: automation, employee engagement, and strong business relationships.
Automation brings increased discipline to organizational operations, Longhito and Boucher said. As a result, businesses that automate have an easier time navigating disruption. Instead of being thrust into confusion, they have clearly defined processes to keep things moving.
Automation also gives organizations a potent tool to combat labor shortages. When tasks are automated, employees can do more with less, allowing even short-staffed organizations to meet customer demand.
"Technology in our space is meant to supplement a productive, engaged workforce," Longhito said. "The best thing we can do is find ways to make [employees’] processes and lives more efficient."
Boucher concurred, noting that automation can help companies retain top workers amid the Great Resignation.
Longhito and Boucher acknowledged that automation requires significant upfront investments of time and money. Employees may also look suspiciously at new automation initiatives, worried they'll lose their jobs to machines. However, automation's game-changing potential for revenue growth and market share makes it worthwhile.
Longhito and Boucher advised companies to be strategic. They should decide what to automate based on concrete ROI potential, and they should coordinate constant communication between executives and employees so workers understand the technology is meant to empower them, not replace them.
While automation can be a large-scale project, Longhito stressed that even incremental changes like the addition of stretch wrap machines and electric pallet jacks could streamline operations.
2. Employee Engagement
"A people-first approach is absolutely key” to preventing business disruption, Longhito said. Engaged employees are more willing to go the extra mile in tough times.
While offering competitive compensation is part of the equation, Longhito and Boucher agreed it's not enough on its own to attract, engage, and retain workers. Companies also need to emphasize safety, well-being, and career development.
Ensuring employees have the resources to do their jobs is vital as well. Automation is part of that, but it's not the only way to support workers right now. For example, Longhito pointed to proper inventory placement and slotting as something that doesn't require a considerable investment while allowing employees to work more effectively.
3. Strong Relationships With Suppliers and Customers
The pandemic proved that just-in-time supply chains are extremely vulnerable to disruption. Longhito and Boucher recommended companies consider adopting "just-in-case" supply chains that grant them agility in the face of turmoil.
Boucher stressed the importance of cultivating a group of suppliers rather than relying on a single supplier for any one product or component. That way, if one supplier faces shortages, the company still has options.
"You'll never hear me say lean is out,” Boucher said, adding that the need for flexibility and agility, such as to have multiple partners in different areas, is important.
Quality of relationships matters as much as quantity. Longhito noted that regular contact with suppliers and distributors keeps a company top of mind. When inventory is limited, vendors will prioritize these close partners over other companies. Longhito saw this firsthand during the pandemic, when Global Industrial's strong supplier relationships allowed the company to access products that were in short supply.
Longhito and Boucher also highlighted the value of transparency between suppliers, distributors, and customers. By sharing updates, data, and resources, companies can build strong relationships and help one another overcome supply chain volatility. For example, throughout the pandemic, Global industrial held supplier forums so people could exchange ideas, insights, and best practices.
"Facilitating those discussions and being highly, highly interactive with the supplier base ... are key in order to maintain those relationships," Longhito said, noting that transparency is important.
The Future Belongs to the Resilient
The pandemic brought a new level of volatility to the supply chain by amplifying the weak points of the just-in-time model. That volatility is here to stay for the near future, if not longer, and companies need to adapt.
By investing in automation, engaging employees, and creating trusted partnerships, suppliers and distributors can meet customer demand and even increase market share, according to Longhito and Boucher. The best part is these organizations don't have to overhaul their operations. Even incremental changes in these areas can go a long way in building resilient operations.
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