Digitization: A Path to Resilience Through Disruption

Posted: 08/11/2021 - 09:00
Digitization: A Path to Resilience through Disruption

Digitization: A Path to Resilience Through Disruption

The supply chain headaches continue. Only 40% of global container ships were on time in March 2021, with average delays extending more than six days.

The pervasive disruptions have made effectively managing supply chain demand, accurately forecasting inventory levels, and ensuring on-time delivery mission critical in today’s market. Coming out of a recession, the stakes have never been higher.

Organizations will continue to struggle and play catch-up until they fundamentally change their approach. Here’s how to build resilience and overcome delays and disruptions by adopting a proactive and digital approach to supply chain management.

A Rising Dilemma Around Inventory and Delivery

Volatile inventory demand coupled with delivery issues are wreaking havoc on supply chains. Economic stimulus spiked consumer spending up to 4.2% – and while positive for the economy, heightened demand is leaving suppliers scrambling to keep up. Rising costs of materials, short staffing, and lack of communication further exacerbate the dilemma.

Why? Because when operations shut down in 2020, manufacturers deployed the standard recession playbook – slash costs to preserve as much cash as possible. The lockdowns and quarantines multiplied the problems. But when demand rebounded sharply just weeks after the shutdown, warehouses were left unprepared. Now, manufacturers also face severe labor shortages.

For shippers, crowded oceans and airways – not to mention the blockage of major passageways like the Suez Canal debacle – continue to hinder deliveries, causing a domino effect of delays down the supply chain. 

As we look ahead, buyer demand is bouncing back with accelerated velocity. Companies are placing larger orders to overcompensate and avoid being stuck without products in the face of another crisis or inventory shortage. But with limited budgets, manpower and inconsistent third parties, manufacturers are struggling to keep up with the renewed demand.

The Costly Consequences of Shortages and Delays

The price of being ill-prepared takes a toll across the organization. When companies can’t meet sudden spikes in demand, customers look elsewhere to keep their business afloat, which results in lost revenue.

The lack of contingency really hurts. Backorders can cost companies thousands, millions, even billions of dollars. As the current global chip shortage has shown, major manufacturers such as Ford have experienced unforeseen headwinds of $2.5 billion hitting its bottom line.

Furthermore, delivery delays can result in fines – or chargebacks – that come with hefty price tags. Big brands like Walmart recently informed suppliers that all orders are required to be 98% full and on time. Missing or delayed items would be hit with a 3% fee. What may seem like an insignificant number can equate to thousands – even hundreds of thousands – of dollars.

With your reputation – and bottom line – at stake, it is critical to digitize processes in order to better manage supply chain demand, accurately forecast, and anticipate inventory levels to ensure business continuity and strong partnerships.  

Digitization Provides a Competitive Edge

Overcoming significant inventory and delivery issues begins with real-time visibility. But as supply chains grow and expand, maintaining visibility is no easy task. With millions of datapoints and hundreds of touchpoints, information often gets trapped in silos and is rendered useless.  

Digitizing the supply chain and EDI creates a clear view into every aspect of your operations and suppliers. When all relevant data and communications sit in a central and intelligent platform, supply chain planners benefit from crystal-ball like insights that enable them to make strategic, prudent and impactful inventory decisions.

For example, real-time transparency into warehouse and labor resources enables businesses to swiftly anticipate supply chain backlogs, shifts in demand, third-party shortages and more. Organizations can act before disruption occurs by proactively identifying weak spots.

The right digitization strategy centralizes your supply chain data and unveils a comprehensive view across your enterprise – and helps you ensure on-time deliveries by giving you a clear view into operations. And with the right data analytics platform, this allows you to prevent disruptions before they occur. 

Given the millions of data points, dozens of touchpoints and constantly changing information, the ultimate driver in the success of operations comes with investing in the right technology to aggregate and sort through this vast amount of information. From analyzing your supply network and flagging potential threats to integrating and streamlining complex EDI data, the right tech and analysis will pivot you from a reactive to proactive approach.

The Path Ahead

With operations running at optimal level, businesses can ensure the speed and agility needed to deliver accurately and on time. This competitive edge enables brands to rise above simply surviving and begin to thrive.

The ability to expect separates who sinks or swims in business. While COVID-19 drove disruption on a monumental level, supply chain disturbances will continue to occur as complexities in global market demand mount and delivery expectations grow higher. With proper preparation, robust procedures, and contingency plans complimented by the right tech, organizations will put themselves in a prime position to survive any unforeseen circumstance.  


About The Author

Michael Rabinowitz's picture

Michael Rabinowitz is the Founder and CEO of CoEnterprise. He is responsible for leading the development and execution of CoEnterprise's software and services portfolio. He also helps define CoEnterprise's technology innovation strategy to transform how people connect, communicate, and collaborate through integrated software platforms and architectures