6 Supply Chain Actions To Reduce The Pandemic Impact

Strain On Internal Operations

  • The increase in demand and the change in operation patterns is causing an increase in the number of labor hours needed to continue solid customer responsiveness, inventory management and replenishment, and problem resolution that comes with the territory.
  • Errors in shipping, scheduling, allocations, and returns are adding to the already present chaos and stress, negatively impacting profitability and in many cases, market share.
  • To that note, customers, both B2C and B2B, are becoming more demanding, increasing customer churn rate and eroding loyalty that they have experienced for years with some customers. Part of the irritation for their customers is their difficulty in responding in a timely manner with shipment receipts. The late or incorrect shipments have an effect on their operations as well, reducing profitability down the chain.
  • These factors are making it very difficult to plan, budget and get accurate and meaningful financial statements. They are feeling that the targets are constantly moving, and that budgeting is becoming useless until data can be accurate enough to provide a good data basis for them.
  • Several report strains on delivery schedules and tracking deliveries causing customer uneasiness and concern. This in turn negatively impacts the quality of delivery scheduling.
  • Changes and reduction in quality communication due in part to the remote workforce requirement and also in part because of older legacy systems

Strong Ripple Effects on supply chain ERP systems

  • Because a higher volume of traffic is required to meet demand, fluctuations, and deliveries, the volume of transaction traffic on ERP systems has increased by even a greater extent.
  • This slows down transaction processing, increases delays in processing, and puts a damper on business operations. If the system is current and, in the cloud, the solution to this may be simple.
  • However, if a legacy system is in place it may require a move to a new cloud-based ERP system or at least an increased investment in hardware architecture to accommodate the increase.
  • Costs can also increase for higher transactional volume and fluctuations because more resources may be necessary to avoid bringing the system to a crawl.
  • Internet traffic is increasing as more and more people are working remotely, causing a drain on internet provider resources and outages in some cases. Remote access is affected the same whether on a current cloud system or a legacy system.
  • With more and more remote access to ERP systems, especially legacy systems, the chance of experiencing ransomware challenges is more possible.
  • Two of our clients have been attacked in recent weeks, one of which had over 20 servers infected.
  • Most manufacturing system rely on light to moderate fluctuations to properly plan for inventory services levels and production capacity. But rapid changes and volatility adversely impact these areas, causing capacity bottlenecks, increase throughput requirements on work centers, additional shifts and often component material shortages which alter the shipment delivery schedules and increase cost.
  • If that was not enough, materials management efficiency can suffer greatly and present costly excess inventory levels and the other extreme of stock outs, both responsible for added costs and declining profitability and customer satisfaction.

6 Actions that can be taken to reduce risk and improve profitability

  • As stated before, for a company on a legacy system to do this, they will likely either have to move to the cloud or invest in hardware to achieve the capacity needed.
  • For cloud ERP systems, the provider will usually provide the ability to subscribe to “bursting increases”, whereby for a specific time frame they can increase bandwidth for a charge, and return to normal at a later timeframe
  • For legacy systems, a transition to the cloud will automatically be the best choice, not just in the short term but in the long run as well. Increased competitive advantages, improved technology capabilities and a lower total cost of ownership and operation are among the most promising.
  • The move to the cloud also provides greater security protections against ransomware and other strong threats. In addition, most if not all providers provide an extensive fault tolerance advantage, keeping the investment in data safe and secure.
  • By investing in ERP systems upgrades, preferably the cloud options, automation and communications are improved dramatically almost as a default. Task and activity planning, important system notifications, and automated system capabilities will have a positive impact on efficiency, production and profitability, providing a strong return on investment.
  • For example, imaging a supplier cancels an order that affects 10,000 orders that must then be canceled or impacted. One ERP provider uses a thing called business events that can automatically update the related customer orders upon the cancelation by the supplier.
  • These tools can increase real time visibility and help plan and avoid inaccurately filled orders, reduce the volume of customer returns, prevent loss of customer satisfaction and consequently, market share.
  • Proper safety stock policies can automatically be recommended based on real time data. This decreases stock outages, improves customer service and reaction time, and frees up much needed capital to shift to other important initiatives.
  • Metrics on inventory value and velocity provide a clear picture in real time, making it easier to accurately track and forecast lead times, and replenishment, all to the benefit of the bottom line.
  • Many shipping tools have the ability to manage a multicarrier strategy to reduce rates and stabilize deliveries.
  • This helps shipping by providing the ability to shop for rates and choose service selections that best fit the customer’s needs.

In summary:

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