It’s no secret that various events can affect and destabilize the global supply chain, but the coronavirus pandemic has exposed some important vulnerabilities. One of the biggest problems has been the closure of factories in major production areas such as China, forcing manufacturers to find alternative ways of sourcing raw materials. This was also the key moment when warehouses realized that they needed a resilient supply chain – by resilience we mean the ability of a system to adapt to all sorts of unexpected risks and changes (such as COVID-19 and the Russian-Ukrainian war).
The importance of having a resilient supply chain in this period
The coronavirus pandemic is not the only event that has disrupted global supply chains. Geopolitical events, environmental disasters, public health issues, and the risk of a potential recession still threaten the smooth functioning of supply chains. Increasing resilience is, therefore, a priority at this time.
Companies that understand the importance of resilience have benefited from any unforeseen situation or crisis because supply chain resilience helps to implement a faster response to customer needs when demand changes in the market. An important role in increasing resilience is played by WMS systems that help reduce transport and inventory costs, mitigate risk and increase efficiency. Moreover, resilient supply chains allow for faster capacity expansion (up to 25%), thanks to optimized internal operations.
To understand the importance of a resilient supply chain, one only has to look at the activities of pharmaceutical companies during the early days of the coronavirus pandemic. Companies that prioritized and implemented resilient supply chains in the past were able to source raw materials much faster and designed, developed, and distributed the necessary products to health centers in record time. But there are other examples of companies that have managed to cope in disastrous situations even before the pandemic thanks to supply chain resilience. For example, Procter&Gamble invested in building a resilient system based on digital tools that helped the company avoid financial losses from Hurricane Irma damage. Another telling example is Nissan, which managed to recover its market share in a short time after the 2011 earthquake in Japan, and was able to find alternatives precisely because it was prepared for such an unforeseen event.
How can you measure supply chain resilience?
The first thing you need to do to figure out how your supply chain could cope with an unforeseen disruptive situation is an audit. Identify the weaknesses in your supply chain, do a supplier analysis and think about how it could affect your business if one of your suppliers is unable to supply you for various reasons. The key to success in a resilient supply chain is to have alternatives – as we saw in the case of Nissan when the supplier could no longer ship, the company turned to other suppliers. If you know in advance that there might be a supply problem, you could prepare alternatives and no unforeseen situation would take you by surprise.
Another way you can analyze the resilience of your supply chain is by constantly monitoring it. Watch your supplier’s response to your requests, changes in consumer behavior (number of orders, frequency, volume, etc.), changes in the market, etc. In this way you will be able to forecast certain unpleasant situations and make good decisions that will prevent supply chain bottlenecks. All this monitoring can be done much more easily, even in real-time, with a WMS.
The level of digitization and flexibility is another way of measuring supply chain resilience. The more you work with digital tools, the better you can optimize and automate operational workflows and eliminate human errors. The more flexible a system is, the better it will adapt to changes in the market. And let’s not forget diversity, which helps to address the big picture from multiple perspectives. A good example of this is supplier diversity – it’s good to always have backup suppliers you can rely on in case one of your main suppliers can’t meet your demands at full capacity. Again, all these features can be better analyzed and improved through a WMS.
How can a WMS (Planograma) help?
There are several ways in which a WMS can help increase supply chain resilience. Here’s what they are:
- WMS helps you see the real-time status of inventory and transactions – once you know exactly what products are in stock and where they are, you can make adjustments to deal with changes in the market.
- WMS gives you more precise control over your supply chain – why opt to outsource certain options when you can use a WMS that gives you vulnerability protection, better visibility, and more control over your warehouse activities?
- WMS ensures standardization of processes and elimination of errors – a simple, clean process will be much easier to adjust when sudden changes occur in the market.
- WMS helps you to be proactive – at some point, you will face supply chain disruptions for various reasons and it’s good that this event doesn’t take you by surprise. A WMS helps you identify potential risks early and prepare for a tailored response. In this way, you will be able to mitigate and minimize the effects of supply chain disruptions.
In conclusion, a warehouse management system such as Planograma gives you much greater control over your operations, provides you with real-time reporting on orders, stock and inventory, reduces human error, and increases flexibility and therefore supplies chain resilience. If you haven’t considered implementing a WMS before, you certainly will now. Lately, more and more events have been occurring globally, bringing disruption to the supply chain. At the moment, the biggest threat is the recession that may emerge amid geopolitical tensions and rising inflation. Already there are global supply chain issues – disruptions or delays that can put your business at risk, but if you know how to prepare and build your resilient supply chain correctly, no such event will take you by surprise. Implement such a WMS system in your warehouse and you will see improvements in no time!