Prioritizing Supply Chain Optimization in an Era of Transformation

Part of the fallout of the COVID-19 pandemic is that we discovered our supply chains weren’t as resilient as we might have imagined. Virtually every day, media outlets presented us with stories on supply chain disruptions in industries as diverse as pharmaceuticals, microchips, and lumber. Pandemic-related lockdowns triggered shortages in key materials and components that rippled throughout global value networks. Container ships piled with goods sat idle, waiting their turn to be unloaded at overcrowded ports.  According to one estimate, 94% of Fortune 1000 companies experienced supply chain disruptions due to COVID-19.

The scale and scope of supply chain disruption brought on by COVID were unprecedented. No supply chain leader could have anticipated the impact. But the crisis did highlight some surprising vulnerabilities—shortcomings that wholesale distributors are eager to address, both to rebound from the crisis and to be better prepared for the next disruption.

The new agenda for supply chain leaders

So what are the top priorities for distributors looking to shore up their supply chains and create greater flexibility and resiliency?

  1. Improving transparency – We now know that distributors play an outsize role in the success of their clients. The pandemic showed us how a work stoppage or material shortage at any point in the supply chain could bring operations to a halt. Distributors looking to optimize their end-to-end supply chains are seeking ways to improve transparency and give their customers the confidence they need to better plan for disruption in their own operations.
  2. Strengthening trust – In a climate of uncertainty, customers want the reassurance of knowing the origin, processing history, distribution, and location of goods they order at every step of the manufacturing and distribution cycle. They rely on their distributors for trusted products and the ability to track, trace, and monitor goods along the entire supply chain.
  3. Improving the reliability of information – Disparate sources of information on shipment statuses and inventories aren’t just a problem for the distributor’s internal operations. They also compromise overall supply chain integrity and erode customer trust. Market leaders increasingly recognize the importance of creating a single version of the truth within their own enterprise and throughout their partner network.
  4. Extending real-time visibility – The lack of visibility of real-time supply chain status in areas such as inventory and inbound/outbound shipments can turn a minor glitch into a sizable disruption. Improving real-time visibility helps supply chain partners collaborate on solutions and address potential crises before they affect customers.

Embracing innovation to drive supply chain transformation

As a growing number of distributors plan for a more volatile future, they’re seeking out the solutions that can help them ensure business continuity in the midst of supply chain disruption. According to one recent study, 87% of respondents are planning investments in supply chain resiliency within the next two years.

What are some of the areas targeted for investment?

  • Transforming demand planning – Market leaders are investing in real time demand planning solutions that help them drive more efficient supply chain execution. These include capabilities for collaborating closely with key suppliers and customers to create resiliency and coordinate joint action at the first sign of disruption.
  • Enabling proactive decision-making – Distributors are embracing the data-driven machine learning tools to help them spot the emerging patterns and trends and work proactively to mitigate negative effects.
  • Continually reevaluating the mix of suppliers – Customer expectations keep inching higher, and the mix of suppliers needed to meet those expectations has to change accordingly. Distributors are looking for solutions that provide the visibility to rethink and adjust the mix of suppliers to address their customers’ changing demands.
  • Widening the analytics scope for a more accurate picture of demand – Today’s distributors must collect and rationalize data on internal requests and external customer demand streams, and a host of other factors that can affect supply chain integrity—from labor issues, regulatory changes, seasonal trends, weather patterns, and news events. They’re embracing the technology to help them spot patterns and intelligently analyze and adjust supply chain operations.

Today’s supply chains are much more than a loose confederation of businesses with shared interests. They’re drivers of growth and innovation — and the foundation of a distributor’s market reputation. The more efficient and collaborative that supply chains can be, the more effectively they can help distributors weather disruption and thrive long after the dust has settled.

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