Not implementing technology like automated data collection software could prove to be a bane for suppliers as an increasing number of global supply chain disruptions could lead to substantial inefficiencies and revenue losses.
"Supply chains are increasingly complex, and their interlinked, global nature makes them vulnerable to a range of risks," said Deloitte Consulting principal Kelly Marchese, according to Material Handling and Logistics. "This increased complexity, coupled with a greater frequency of disruptions such as geopolitical events and natural disasters, presents a precarious situation for companies without solid risk management programs in place."
In a recent Deloitte survey of 600 manufacturing and retail executives on the impacts and causes of supply chain risks and challenges, 53 percent of respondents said that supply chain disruptions have become more costly over the last three years and 48 percent said the frequency of risk had negative outcomes like sudden demand change or profit margin erosion.
One of the issues found in mitigating supply chain risk is that management is not utilizing new technologies like automated data collection and analysis to improve operations and anticipate possible disruptions before they occur. Among the survey's respondents cited in Material Handling and Logistics, only 36 percent were using advanced supply chain software tools like predictive modeling and only 29 percent utilized risk sensing data, worst case scenario modeling or business simulation.
Holistic Solution Needed
Technology that allows suppliers throughout the world to have real-time access to information through data sharing capabilities is a significant first step toward improving processes. However, technology's effectiveness in improving supply chain management is beholden to how it is used. In order to optimize advanced data analysis outcomes and reduce supply chain risks, Deloitte found that suppliers should aim to achieve greater visibility so that they can monitor events and patterns throughout the supply chain proactively. Suppliers should also be able to exercise the flexibility of its operations in response to problems, and establish collaborative relationships with partners throughout the chain to identify and respond to problems. In addition, suppliers should have policies and control mechanisms in place so that a response to a disruption is followed through accordingly.
A supply chain operating to its optimal efficiency in today's global market is more challenging than ever before. Fortunately, by using the latest supply chain software and establishing sound processes, companies may find themselves less frequently in the midst of a global disruption and instead more involved in regular operations.