Supply Chain Management: Creating Stable Supply Chains
The geopolitical events of recent years have fundamentally changed the procurement landscape. Purely cost-driven supply chain management no longer reflects business reality. In the face of ongoing multi-crises, stable and secure supply chains, designed to be sustainable and strengthened by digital transparency and risk management, are becoming a competitive advantage.
What Factors Contribute to Creating a Stable Supply Chain?
A stable supply chain ensures that production can continue even under volatile conditions. It defies disruptions to the global transportation of goods by identifying early warning indicators and proactively and continuously adapting to new conditions. We also refer to this capability as supply chain resilience.
To achieve this, companies must reconcile supply chain management with deliverability, profitability, and sustainability. This challenge will shape the management of global supply networks in the future.
In the past, sourcing companies used to assume that their suppliers would always be able to deliver optimally, due to global competition among suppliers and raw material providers. Experience has shown, however, that this idea is not realistic in the long run – just consider the restrictions in context of the COVID-19 pandemic. This means that in the future, companies will need to strongly protect their planning and processes against disruptions that occur at short notice and adapt their supplier structures accordingly.
Moving forward, cost-effectiveness and cost efficiency will continue to be the primary focus of procurement activities. A global supplier network will become a cost driver for companies in the future, which therefore must be optimized through strategic supply chain management. Sustainability and resilience are additional success factors, meaning that a balance is required. It is likely that the previous “battles of cost” will increasingly be replaced with “battles of supply chain.”
Legal requirements at both the national and EU level demand high environmental and social standards along the supply chain (for example, Germany’s Supply Chain Due Diligence Act or the EU Corporate Sustainability Due Diligence Directive). The emission of greenhouse gases will be increasingly limited and will also be expressed financially via carbon prices. As a result, sustainable operations will become a prerequisite for being part of a supply chain and remaining competitive in the years to come.
These three factors will form the cornerstones of successful supply chain management in the future. They are mutually dependent. Changes to one aspect have a direct effect on the other two.
How Can Companies Increase the Resilience of Their Supply Chains?
Modern supply chain management offers various mechanisms and initial steps that can be taken to increase the resilience of supply chains. They directly contribute to the three success factors of deliverability, profitability, and sustainability.
Identifying Weaknesses Through Risk Management
Under increasingly volatile conditions, companies need to identify the weaknesses and interdependencies within their global supply chains. By knowing these and utilizing early warning indicators, they can identify risks early on and make better decisions to mitigate them. Implementing supply chain risk management is a prerequisite to increasing the resilience of supply chains.
Increasing Transparency and Leveraging Potential Within the Network
Overarching collaboration in the supply chain is almost nonexistent at most companies. Therefore, the greatest potential for increasing supply chain resilience lies in customer, producer, and supplier networks. For example, establishing strategic partnerships regarding demand management and delivery reliability ensures greater transparency and flexibility. But this requires some give-and-take from all parties involved.
Mastering Complexity Through the Digital Transformation of the Supply Chain
Digital technologies make the complexity of multilayered supply chains manageable. Disruptions in the procurement network, potential optimizations, or even noncompliance with sustainability plans can be identified more quickly using IT solutions, analytics, and big data. Prerequisites for the digital supply chain include a high level of data quality and a collaborative relationship between customers, producers, and suppliers.
You can find more on the topic of "Digital Transformation and Industry 4.0" on this website
In What Areas Can Ingenics Support You?
In the supply chain consulting field, Ingenics AG possesses strengths in both strategy development and implementation. Our consultants bring many years of procurement experience to the table and have both the industry-specific and cross-supply chain expertise necessary to solve your supply chain issues.
Our range of services in the supply chain management field includes:
- Designing, evaluating, and optimizing supply chain networks (inventories, supplier, and procurement strategies)
- Developing and establishing the organizational structures needed for SCM
- Implementing a 360° assessment of supply chain risks along the supply chain including identifying, evaluating, managing, and monitoring risks
- Identifying the cost and GHG footprint in the supply chain
- Identifying and optimizing control mechanisms of an end-to-end process
If you are wondering whether we are the right partner for you, take a look at the following references:
Development of Supply Chain Processes and SCM Organization (Mechanical Engineering)
Development of a supply chain strategy and target vision
Analysis and clustering of relevant families of parts (using scoring model)
Application and evaluation of the new supply chain strategy
Development of an implementation strategy and roadmap
Optimization of Production and Supply Chain Footprint (Construction Machinery)
Identification of site-specific action areas via assessments
Development of a target vision in the production network about capacities, technologies, and necessary sourcing concepts
Development of Measures for Resilient Logistics (Automotive OEM)
Outside-in view of success factors for resilient logistics
Identification of best practices and the necessary success factors
Determination of areas of potential and recommendations for action to increase resilience in the supply chain
N-Tier Supply Chain Management (Electronics)
Establishment and evaluation of the target vision for the future management of the supply chain
Definition of the procedure model for the development of a supply network monitoring and management concept (n-tier)
Evaluation and selection of suitable software tools for n-tier monitoring