The scenes being played out across our major supermarkets this month serve as a timely reminder of how fragile supply chains can be. Now more than ever, business leaders must rethink the supply chain playbook, writes Jason Toshack, General Manager ANZ at Oracle NetSuite.
Many global supply chains have been stretched to the brink over recent months, and Australian businesses are feeling the aftershocks of shipment delays and stock unavailability.
Empty shelves and limited supply have been a wakeup call to re-evaluate the way we view, manage and optimise the many parts of our supply chains.
How to combat supply chain shortages: 4 timely measures for Aussie businesses
Below are some measures Australian business leaders should consider.
1. Move away from the ‘Just In Time’ approach
One thing is clear, ‘just in time’ systems can be unpredictable when there are supply shortages or shipping delays. Forward-thinking business leaders with continuity in mind are transitioning towards a ‘just in case’ approach, which prioritises resilience within business supply chains.
The ‘just in case’ approach is all about forecasting demand and proactively securing sufficient supplies ahead of time. This precision prevents wastage and protects profitability, but requires clear visibility into the entire breadth of your supply chain operations.
To achieve that, two things are important. First is a robust business management solution that gives you visibility into incoming orders versus available stock.
Secondly, you will need …
2. Data, lots and lots of data
As you might imagine, predicting potential demand – or strain – on your supply chain is reliant on up-to-date data. The past 18 to 24 months have provided businesses, to some extent, with the data to help anticipate demand spikes and patterns that may signal an impending shortage of stock.
By comparing market data like stock levels, procurement cycles and lead times with your own needs and customer demand, you should be able to notice potential vulnerabilities and find ways to optimise efficiencies within your supply chain and with your suppliers.
Finance teams can also leverage supply chain data and correlate them with financial data from balance sheets, allowing chief financial officers (CFOs) to create more accurate financial models while keeping an eye on the budget and cash flow.
3. Review and optimise supplier contracts
Now would be a good time for CFOs and procurement leaders to review supplier contracts – and renegotiate if they are unable to meet your supply chain demands.
Pay special attention to how and where they source goods, both locally and internationally – this will reveal whether a supplier is a weak link in your procurement chain.
Even better, request that your supplier integrates their supply chain data with yours, giving both parties visibility into the larger picture. This is critical, as a recent Deloitte survey reveals only 50 per cent of businesses have visibility over their Tier 1 suppliers.
This information will help identify potential weak points, negotiate new contracts and establish an action plan should a supplier fail to meet their required service level agreements (SLAs).
4. Choose the right systems
With daily changes, manual processes and siloed spreadsheets are insufficient to manage the complexities of your supply chain. Choosing a solution with visibility into your operations can give you real-time insights to make rapid data-led decisions.
To ensure your supply chain is resilient, invest in a solution that provides:
- Built-in management systems for inventory, supply chain and financial reporting, along with APIs (Application Programming Interface) for integration with external supplier systems.
- Data analytics capabilities to collate, manage and process data from different data points across your supply chain.
- Security and high-availability systems to ensure mission-critical systems can be spun back up easily during outages.
Rethinking your business’ supply chain to adapt to any challenge and remain efficient is necessary to protect your ability to do business.
Done well, the above measures won’t just keep your business afloat; it will allow you to remain competitive and respond quickly to market demands.
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