Technology

3 Characteristics of Agile Supply Chains

2 Mins read

To say it’s been an usual, challenging year for global supply chains would be a massive understatement. Strategies that may have worked well in years past now feel woefully obsolete. Companies around the world have found themselves having to change gears quickly to stay afloat in these uncertain times.

One major takeaway from the first half of 2020 is the increasing need for agile supply chains. Why? Because any number of forces — natural disasters, trade policy changes, pandemics, etc. — can disrupt “normal” operations at any time. Only companies who are able to respond to disruptions quickly and effectively can expect to succeed in such a competitive market.

Here are three characteristics of agile supply chains worth considering.

The Ability to Pivot During Disruption

Many companies had to get creative this year when coronavirus-related shutdowns affected factories in China. Under usual circumstances, China comprises one-third of global manufacturing, but its Purchasing Manager’s Index (PMI) — an important economic indicator — dropped from 50 to 35.7 in early 2020. As BBC reports, companies from Apple to Volkswagen were affected by shutdowns spurred on by quarantine regulations and workforce shortages.

This is a case study in how a company’s ability to pivot during disruption can make or break their operations. It’s a wake-up call of sorts to diversify your supplier base. As a result, many experts now recommend companies find at least one secondary supply source in case their go-to supplier becomes unavailable for one reason or another.

Above all, agility signifies the ability to adapt in the face of uncertainty. Having a risk management plan in place before a disruption hits is the best way to pivot when challenges arise. Putting in this work on the front end can save the business on the back end.

Harnessing & Acting on Instant Data Insights

How supply chain players approach data analytics affects their level of agility. When things are happening quickly, there’s no time to wait for benchmark reports. Decision-makers need the ability to harness instant supply chain analytics so they can understand performance at every level — factory floors, order fulfillment, inventory warehouses, retail stores, etc.

Here’s one example of an enterprise using immediate data during COVID-19, as outlined by the CEO of ThoughtSpot: Kroger harnessed data from its intelligence platform to respond to “near-daily fluctuations in customer behavior” like figuring out when people were most apt to shop and which products they were buying in bulk. This allowed the company to position itself to serve customers based on instant insights and adjust supply chain activity as necessary.

Visibility Throughout the Entire Supply Chain

Both the ability to pivot and data analytics strategy depend on companies having visibility end to end throughout the entire supply chain. This includes how much various suppliers can produce, global inventory levels, manufacturing center outputs, transportation status and the like.

Despite seven in 10 companies considering their supply chains very or extremely complex, only about six percent of companies believe themselves to have end-to-end visibility. One major obstacle is having disparate systems pieced together, rather than having an integrated data solution accessible to all leaders and decision-makers who could benefit from it.

Achieving supply chain agility is a matter of making key data more visible and actionable, as well as having a contingency plan in place for when conditions inevitably change. One way companies are responding to disruptions like the pandemic is by diversifying their supply sources in case one option becomes suddenly available.

Companies with supply chain visibility powered by advanced analytics are better positioned to respond quickly to logistical challenges and shifting consumer demand.

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