How Covid-19 exposed weakness in the supply chain

Could the global coronavirus pandemic be the black swan event that forces companies, and entire industry sectors, to rethink and transform their supply chain models?

By Heinrich de Leeuw, MD of Seidor South Africa

Although the full impact of Covid-19 on supply chains remains unknown, what we do know is that the economic and financial ramifications will be felt across global supply chains. There is no doubt that the ongoing digital transformation of industries will be accelerated as a result of the current crisis.

According to a report by Deloitte, “Covid-19: Managing supply chain risk and disruption”, some companies are better prepared than others to mitigate the impact of the pandemic and respond to this event, but others are scrambling. “These companies are overly reliant on a single geography or a single supplier for key products.

“They don’t have enough visibility across the extended supply network to see their risks. They don’t have the systems to understand their inventory status, to project stock-outs of direct materials and optimise production, or to project stock-outs of finished goods to optimise customer allocation, and they don’t have flexible logistics networks to ensure the flow of goods in a profitable manner.”

Right now, supply chain leaders would be wise to quickly change how they do things if they want to overcome the challenges that arise from lack of visibility, collaboration, and coordination. The need for more automation and information is an opportunity for manufacturers. In the wake of COVID-19, companies still need human workers to manage the supply chain, but they also need to evolve their businesses into digitally intelligent organisations that are equipped to drive efficiencies throughout their business processes.

Looking to the future, ABI Research forecasts the supply chain impact of COVID-19 will spur manufacturer’s spend on enterprise resource planning (ERP) to reach $14 billion in 2024. While many ERP platforms include modules for inventory control and supply chain management, in light of the outbreak, many manufacturers will also turn to specialist providers.

It’s a journey that begins with an extensive due diligence process as these organisations need to understand their risk exposure, including the operations of their supplier’s suppliers too.

To help our customers discover what it means to be a digitally intelligent organisation and drive efficiencies throughout your business processes, Seidor Africa, which represents SAP Business One in South Africa, can enable companies to build a more productive and data-led business.

It’s an opportunity that offers several key benefits:

1. Business will gain access to the real-time, reliable business information it requires to align components such as stock levels (in-stock and “on order”) with customer orders (current & back-order) and accurate delivery schedules.
2. Moving from a reactive, back-capture methodology to continuous manufacturing process where material consumption, stage updates and quality control data is entered real-time on the production floor will aid accurate stock management, replenishment, and efficient order fulfilment. Continuous manufacturing and the electronic tracking thereof are also key to identify any potential inefficiencies in certain production lines or phases of production.
3. Providing sales reps with the ability to view pricing, stock availability and place orders in real time from their mobile or tablet while in the field or with a customer, through SAP B1 Mobile Sales application integrated to SAP Business One. Having these orders added to the manufacturing and subsequent delivery cycle automatically, will provid an invaluable advantage for businesses in the supply chain industry.

Although Covid-19 illustrates how many companies are vulnerable to global shocks through their supply chain relationships, technologies such as SAP Business One are available to improve visibility across the end-to-end supply chain and support greater supply chain agility and resiliency.

Digital supply networks like these are being built and designed to anticipate disruptions and reconfigure themselves appropriately to lessen the impact of events. They will enable the digital supply networks of the future, regardless of industry sector.

This article first appeared on www.channelwise.co.za.