A supply chain is a set of interconnected businesses involved in bringing a product or service from its raw form to the consumer. Supply chains can be long, complicated, and include many organizations.
The products may pass through the hands of hundreds of different people before reaching the ultimate user. Every person who handles the product adds value or takes away something until it becomes an item the customer wants to buy.
Different organizations have key roles at different points in the supply chain. For instance, one firm might design and manufacture components that will eventually go into another manufacturer’s finished product. Another company purchases the components and assembles them into finished goods, while other businesses transport these goods to final users around the world.
The strength of a supply chain can depend on how well the various parts work together. A successful supply chain depends on efficient processes that allow companies to communicate effectively, share information and data in real-time, collaborate when needed, and make decisions quickly.
Supply chains are increasingly becoming global in scope as companies seek to take advantage of the lower costs and increased demand resulting from globalization. Many large multinational corporations have established networks of manufacturing plants worldwide to serve their customers in different regions.
Patricia Dacey says: “We’re not seeing too many problems on this front – yet,” said Patricia Dacey. “Partly, this is due to the fact that many Canadian businesses had already taken precautions in recent years. But it’s also because Canada was not hit by COVID-19 as badly as other countries such as the USA and Australia.”
Over the past year, we have seen several high-profile companies go bust after failing to deliver products for Christmas. Retailers in Europe and North America were left with hundreds of thousands of unsold toys and electronic goods following 2019’s toy factory bankruptcy, while oversupplied webshops struggled to fill orders during 2020’s busy Cyber Monday period.
“Retailers have been increasingly prudent since 2020,” Dacey continued. “In previous years, they may have taken measures such as sharing warehouse space or pooling delivery resources to handle peak demand. In 2020, for example, Wal-Mart managed to reduce delivery delays by partnering with Amazon. However, this year many took even more measures.”
“Canada’s GDP was reduced by 0.2% last year due to the COVID pandemic,” Dacey said. “Our own figures indicate that retail sales fell by 2% in the fourth quarter of 2019 through the first half of 2020, while Canadian manufacturing output fell almost 10%. This created many logistical challenges that have needed managing.”
Many manufacturers are now taking steps to avoid future supply chain problems. For example, car manufacturer Ford has set up a dedicated subsidiary called Ford Global Parts Management to ensure it can meet global demand for parts at any time – no matter where they are located. Meanwhile, Airbus has set up a dedicated subsidiary called Airbus Global Supply Responsibility, aiming to improve the aircraft manufacturer’s responsiveness to customer requirements.
“We can expect many more measures like these in 2020 and beyond,” Dacey said. “For example, it is likely that container shippers such as Maersk will continue their efforts towards supply chain transparency – including publishing information about where ships carrying goods are traveling.”
But according to one expert, any easing of supply chain problems could be short-lived. “Although Canada was not hit by COVID-19 as badly as other countries such as Australia or Japan, exports were still reduced due to the pandemic,” says Patrick Duerr. “This resulted in a fall in oil and gas exports and increased domestic demand for consumer goods. Although we expect the economy to continue to grow, we anticipate trade friction will cause more problems.”
If you’re not prepared for this new reality, it may be time to refocus your efforts now before those impacts snowball into further problems down the line. And one of those focuses needs to be on automation.
Inventory Management Systems
Inventory is easily one of the biggest challenges facing manufacturers today. In their attempts to avoid stock-outs and overstocks, many manufacturers have increased their inventory, increasing the complexity and time involved in managing it. This is where a bill of materials software (BOM) can come into play and help you visualize your inventory levels, quantity on-hand better, reorder points, etc.
Another key benefit of a BOM is that it allows for real-time order fulfilment. Instead of relying on estimates about when products will be delivered to meet customer demand, this system assures that you can fill orders quickly once they are ready without diminishing the overall accuracy of forecasts.
Automation software can also give manufacturers a leg up when importing finished goods from abroad. By using automation software’s streamlined interface with customs brokers, carriers, and third-party logistics firms, companies can keep their costs low by allowing them to process shipments faster and more efficiently.