In our previous post, we explored different types of crises and a couple of ways in how organizations can overcome them. Today let’s look at the remaining ways in which organizations can overcome crises and how technology can play a significant role in supply chain crises management.
• Increase the agility of the supply chain:
Agility is more than performance. There can be financial impacts like loss sales, recovery costs, reputational damage but it is always best to build extra inventory and capacity into the supply chain for a rainy day. For example, Solectron, a $10.6 billion contract manufacturer with U.S. headquarters in California with supply chain that stretches around the world, always had a crisis management plan. In 2005 Hurricane Rita had hit the Gulf of Mexico. Solectron immediately started notifying their supply chain partners to hold additional shipments until the area their shipments were moving was out of danger.
• Measure what matters:
A company should have a balance mix of KPI’s to provide maximum value of measuring. The key is to measure those that matters like Delivery In Full and On Time (DIFOT), Line Item Fill Rate (LIFR), Perfect or error free measurement. Organizations should also incorporate resilience metrics like Time To Recovery (TTR).
• Inter- department collaboration is a must:
There should be collaboration on the decisions taken at departmental as well as geographical levels, as decision taken by one business unit can have a significant impact on the performance on the company as a whole.
Technology can play a significant role in supply chain crises management:
• E-sourcing tools help companies to engage with suppliers early via a portal. A centralized supplier data repository makes it easier to screen, analyze and assign scores to select suppliers. This can also be done by involving all the stakeholders so that the selection process can be transparent. This selection process can also be standardized to make it more effective.
• Contract Management solutions can provide a collaborative platform for supplier and the buyer for exchanging information and to create contracts.
• Supplier Management tool enables buyers to keep a check on the supplier’s performance, product quality, innovation, on-time delivery, carbon emission, etc.
• IT solutions provide a common platform between stakeholders and suppliers so that transparency and communication between them are maintained. This helps organizations to monitor KPI’s, suppliers, contracts and overall performance of suppliers.
It is not necessary that every company should go through a crisis. But saving up for a rainy day is always a wise decision.