How to weather the storm of risk in the manufacturing supply chain

Richard Lebovitz, CEO of LeanDNA, personal photo

While some data points to a resurgence, nay boom, for the manufacturing industry This summer, the supply chain is currently preparing for a storm of disruption that could slow it down, according to the CEO of LeanDNA, Richard Lebovitz. As the manufacturing sector, the factories that make it up and their supply chains become more and more complex, in part due to global customer demand, efficiency in terms of inventory management, reporting, d analysis for visibility and forecasting of demand, need technical progress.

We all know how the aftermath of the global pandemic has led to fluctuations in demand, new requirements to assess supply chain vulnerabilities (Biden Executive Order), and unforeseen shipping accidents disrupting operations (Suez Canal ). We asked Lebovitz about the relationship between inventory management and business resilience. A term that seems to be on everyone’s lips at the moment.

“Disruptions like these are not new.” It confirms what a lot of people are saying. “Manufacturers have always faced uncertainty, but the difference this time around is the sheer rate of disruption happening at the same time. This can be too difficult for supply chain leaders.

What disruptions do you see coming in the next 12 months?

“Balancing supply and demand is an essential function of the supply chain, but dramatic variations and disruptions have made it one of the most difficult areas facing manufacturing today. We are seeing incredible spikes in excess inventory as other companies struggle to deliver due to parts shortages, and they will continue to struggle as “unprecedented” hits to global supply chains continue to unfold. the headlines. Whether it’s persistent problems with the Suez Canal accident or complex shortages of basic resources such as steel, plastics and semiconductors, the supply chain is becoming a more critical function. which has a direct impact on revenues, working capital and operating costs.

“While I can’t say for sure what the next disruption will be, nor exactly when it will happen, I can confidently say that manufacturers are used to dealing with unpredictability. Whenever the next problem arises – and it does – manufacturers will have to address spikes in demand or shortages, supplier failures, natural disasters, unplanned accidents and more.

Why is this more worrying than what we just saw over the past 12 months?

“Even before Covid shut down global operations, optimizing inventory was one of the most difficult aspects of manufacturing. Geopolitical disruptions, natural disasters, supplier failures, market fluctuations and more are all well-known drivers of supply chain uncertainty. But the big difference this time around is that there doesn’t seem to be a clear timeline for a ‘return to normal’, which makes the future even more unpredictable, with obstacles remaining around disparate systems, manual processes, siled functions, etc.

“The tools traditionally used to manage supply chain decisions in the factory (ERP / MRP systems, planning solutions, business intelligence tools) have not kept up with the new complexities introduced by the globalization of suppliers, l ‘increase in product customization in the factory and a pandemic. Most manufacturers still depend on in-house solutions or error prone manual spreadsheets, and as a result, they are always in a constant state of firefighting as any unforeseen event can create disruption and negatively impact the fire. customer delivery.

Who will feel the effects the most?

“Basically, manufacturers who are unable to produce and consumers who are left with an empty bag. “

“Manual processes, slow reaction times due to inaccurate data, spreadsheets, all impact the manufacturing back office – this is where people really struggle to make sure that the factory has everything it takes to deliver the products on time. And if the products are not delivered on time, you end up with disgruntled customers who are unable to meet their own customer orders and demands.

“Smart management of plant operations is required, where inventory decisions are made to ensure you have the right parts at the right time with optimized inventory. Manufacturers who connect their factories and a myriad of data points across all locations will make significant improvements to today’s complex chains with AI-powered prescriptive guidance. This naturally leads to greater flexibility, efficiency, resilience and, for lack of a better word, “actionability” across their operations.

What should the supply chain manager or purchasing specialist be thinking about now to ensure resilience?

“Supply chain leaders are addressing the idea that uncertainty will be the norm and that it’s time to accelerate strategies and tactics that enable agility, and a quick and efficient response to everything. what comes next – a balance between proactive planning and real-time responses.

“Lean systems that give full visibility into the supply chain and plant operations can accelerate these goals. This means embracing digital transformation and empowering teams with tools that improve efficiency and processes, while creating full visibility and standardized best practice workflows. This allows teams to quickly prioritize day-to-day supply chain actions, tackle pressing issues before they hamper production, and ultimately empower your supply chain team. to operate on a whole new level.

“Of all the cracks exposed by the pandemic and other disruptors to the flow of goods, there has emerged a recognition that the ‘right way’ to manage inventory – the decades-old status quo that worked in a simpler time before the globalization, mass customization, and multilevel supply chains – no longer work. Focusing on the factory, where plans and disruptions come to life, is now key to mitigating risk and ensuring resilience. “

If you’re looking for technology to help you mitigate procurement risks or streamline your P2P processes, Spend Matters® TechMatch℠ can help you clarify the differences between potential vendors.

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