By Guy Yehiav, General Manager of Zebra Analytics
It is no secret the COVID-19 pandemic has had a devastating impact on global supply chains. Despite the progress made toward curbing the pandemic, the high levels of supply chain vulnerability in Australia have not subsided. In April 2021, the Australian Bureau of Statistics found more than half of the country’s retailers are still facing supply chain disruptions in 2021. Across all industries, three in 10 Australian businesses have experienced supply chain disruptions this year, with 37% seeing major delays that have prevented them from delivering items to customers. The meteoric rise of e-commerce since the start of the pandemic coupled with global trade restrictions and shifting consumer behaviours have tested the strength of supply chains unlike ever before.
In order to prevent disruptions that result in lost sales and negative customer experiences, businesses must strive for greater resilience and flexibility in their supply chain management (SCM) strategies. According to the Boston Consulting Group, the most effective way to build supply chain resilience is through increased flexibility, supply chain digitalisation and early SCM planning.
A Deeper Look at the Challenges
The global semiconductor chip shortage plaguing a wide range of Australian companies exemplifies the consequences of poor SCM planning. From computers and smartphones to automobiles and household appliances, semiconductor chips are behind a majority of the world’s electrical and consumer technology products. As families adjusted to lockdown restrictions, full-time remote work and virtual learning, the demand for cloud computing services and digital devices skyrocketed. This led to massive spikes in product orders from cloud infrastructure providers which, in turn, depleted supply and slowed production.
Meanwhile, businesses in harder hit sectors such as the automotive and industrial manufacturing that originally cancelled their orders in response to reductions in demand did not conduct effective planning in anticipation of demand returning. With inefficient supply chains and operational models that heavily relied on just-in-time delivery of parts, the automotive industry was neither equipped with the resilience nor the flexibility to withstand business disruptions caused by the shortages.
Navigating Swings in Consumer Behaviour
An effective SCM strategy is essential for managing demand volatility that arises from rapid changes in consumer behaviour. The pandemic altered existing consumer shopping habits (e-commerce acceleration) and ushered in a range of new habits (panic buying), both of which have heightened the need for businesses to ramp up their early planning and enhance cross-sector collaboration with suppliers. With increased planning and collaboration, supply chain leaders can:
- Quickly adjust to shifts in consumer behaviour that cause demand swings
- Leverage supply chain flexibility to prevent disruptions
- Prevent, identify and alleviate bottlenecks in real-time to avoid out-of-stocks.
By avoiding out-of-stocks situation and in turn meeting consumer demand, businesses will be able to offer consistent customer service that helps build brand loyalty and increase profit margins.
Leveraging Advanced Technology and Data Analytics
Embracing supply chain digitalization can empower supply chain leaders to develop effective SCM strategies by linking early planning with execution. The use of advanced SCM solutions that integrate artificial intelligence and machine learning can drive more automated data analytics and provide real-time visibility into every stage of the supply chain. This enables businesses to better optimize their inventory levels and labour resources to fulfill customer expectations. In addition, insights generated by the automated analysis of inventory data and point-of-sale (POS) data furthers the supply chain planning process by telling key stakeholders the specific actions that must be taken at any point in time to resolve or prevent issues. These highly prescriptive instructions are the key to creating excellent customer experiences that give businesses a competitive advantage over industry peers.
The businesses that combine early SCM planning, supply chain resilience and advanced forecasting will better position themselves to take full advantage of revenue-generating opportunities and continue on the road to recovery.
Visit Zebra’s website for more information on how prescriptive analytics can be used to improve SCM.