Digitalization: The Key to Building a Resilient Supply Chain
July 21
15min read
The COVID-19 pandemic has shone a light on the vulnerability of our supply chain. As companies start to move toward recovery, a different future of supply chain with a focus on visibility is emerging. At the heart of this is digitalization.
A few months into the pandemic, production delays and transportation issues due to border closures and lockdowns left manufacturers in shambles. Starbucks has reported cups and coffee syrup shortage in their stores. Meanwhile, global chip shortage halted production for gaming console producers such as Sony with its Playstation 5 debacle. Like many car companies, the automobile giant Ford was forced to cut production in half. Overall, the White House reported a dip in inventory-to-sales ratio for cars to 33 days from the pre-pandemic level of two months, which means that currently there are only enough cars in inventory for 33 days of sales throughout the United States.
According to The White House and Reserve Bank of Australia, the manufacturing industry was among the hardest hit. The chemical industry was no different. PwC’s Strategy& reported a 5% decline in global chemical production in 2020 compared to 2019.
The crash exposed the vulnerability of our current supply chain system, especially in times of crisis. And the COVID-19 crisis is not the first and certainly not the last. In fact, such crisis occurs more regularly than one may think. A survey by Fortune found that according to supply chain experts, manufacturers experience a shock to supply and production every two years and disruptions that last for over two months every five years.
This signals a great need for global supply chain to ramp up its resilience, due to rising cost, increasing sustainability expectation, talent gaps, lack of flexibility, and expensive IT system. In that light, companies are forced to take a hard look at their supply chains and make the overdue improvements.
There is a general consent that one of the key changes to be made is increased visibility. In a McKinsey Podcast on supply chain recovery, Susan Lund, a Partner at McKinsey Global Institute, says that transparency is vital since understanding a company’s full network of suppliers is key to increasing supply chain efficiency and resilience. “By understanding the deeper tiers of your supply chain, companies are finding that they have critical potential bottlenecks,” she said. The same sentiment is shared by PwC, which says that companies need to focus on improving supply chain visibility on their multi-tier suppliers.
The key to increasing sustainability is technology. Companies can use technology to gain reliable and real-time data, manage a complex network of suppliers and vendors, and improve planning through better surveillance and forecasting. The benefits of this extend beyond supply chain into business bottom line. For chemical companies, supply chain digitalization alone may unlock more than $70 billion in value and save around $90,000 on cost per employee.
Awareness around this reality has been increasing, and companies have begun to make this shift. Around 60% of executives surveyed by EY have made increasing visibility their top priority in the next 12-36 month, while 64% say that digital transformation will accelerate due to the pandemic. Bahtera has also kick-started our technology adoption for supply chain optimization.
Our recent business transformation exercise has seen a revamping of our mission to: To add value as the preferred supply chain partner through close partnership, supply chain efficiency, and quality maintenance delivered by a team of passionate people. We have discussed at length how this revamped focus on supply chain is manifested in our end-to-end, integrated solution in this article. This holistic approach however needs to be complemented by a strong digital system.
Following a successful digitalization of our internal process, we are currently building our full technological capabilities to support the entire process in our supply chain. This includes integration of demand and supply data, centralized inventory management, and monitoring portals for partners to improve visibility.
The shift towards a technology-driven supply chain is gaining traction. In a survey by manufacturing solutions provider Jabil, 93% of the companies have adopted technology to optimize their supply chains. We all need to leverage this momentum to create a better supply chain system as highlighted by this pandemic.
The COVID-19 pandemic has shone a light on the vulnerability of our supply chain. As companies start to move toward recovery, a different future of supply chain with a focus on visibility is emerging. At the heart of this is digitalization.
A few months into the pandemic, production delays and transportation issues due to border closures and lockdowns left manufacturers in shambles. Starbucks has reported cups and coffee syrup shortage in their stores. Meanwhile, global chip shortage halted production for gaming console producers such as Sony with its Playstation 5 debacle. Like many car companies, the automobile giant Ford was forced to cut production in half. Overall, the White House reported a dip in inventory-to-sales ratio for cars to 33 days from the pre-pandemic level of two months, which means that currently there are only enough cars in inventory for 33 days of sales throughout the United States.
According to The White House and Reserve Bank of Australia, the manufacturing industry was among the hardest hit. The chemical industry was no different. PwC’s Strategy& reported a 5% decline in global chemical production in 2020 compared to 2019.
The crash exposed the vulnerability of our current supply chain system, especially in times of crisis. And the COVID-19 crisis is not the first and certainly not the last. In fact, such crisis occurs more regularly than one may think. A survey by Fortune found that according to supply chain experts, manufacturers experience a shock to supply and production every two years and disruptions that last for over two months every five years.
This signals a great need for global supply chain to ramp up its resilience, due to rising cost, increasing sustainability expectation, talent gaps, lack of flexibility, and expensive IT system. In that light, companies are forced to take a hard look at their supply chains and make the overdue improvements.
There is a general consent that one of the key changes to be made is increased visibility. In a McKinsey Podcast on supply chain recovery, Susan Lund, a Partner at McKinsey Global Institute, says that transparency is vital since understanding a company’s full network of suppliers is key to increasing supply chain efficiency and resilience. “By understanding the deeper tiers of your supply chain, companies are finding that they have critical potential bottlenecks,” she said. The same sentiment is shared by PwC, which says that companies need to focus on improving supply chain visibility on their multi-tier suppliers.
The key to increasing sustainability is technology. Companies can use technology to gain reliable and real-time data, manage a complex network of suppliers and vendors, and improve planning through better surveillance and forecasting. The benefits of this extend beyond supply chain into business bottom line. For chemical companies, supply chain digitalization alone may unlock more than $70 billion in value and save around $90,000 on cost per employee.
Awareness around this reality has been increasing, and companies have begun to make this shift. Around 60% of executives surveyed by EY have made increasing visibility their top priority in the next 12-36 month, while 64% say that digital transformation will accelerate due to the pandemic. Bahtera has also kick-started our technology adoption for supply chain optimization.
Our recent business transformation exercise has seen a revamping of our mission to: To add value as the preferred supply chain partner through close partnership, supply chain efficiency, and quality maintenance delivered by a team of passionate people. We have discussed at length how this revamped focus on supply chain is manifested in our end-to-end, integrated solution in this article. This holistic approach however needs to be complemented by a strong digital system.
Following a successful digitalization of our internal process, we are currently building our full technological capabilities to support the entire process in our supply chain. This includes integration of demand and supply data, centralized inventory management, and monitoring portals for partners to improve visibility.
The shift towards a technology-driven supply chain is gaining traction. In a survey by manufacturing solutions provider Jabil, 93% of the companies have adopted technology to optimize their supply chains. We all need to leverage this momentum to create a better supply chain system as highlighted by this pandemic.