Digitalization of the Supply Chain During a Pandemic

Dave Evans, CEO, Fictiv, takes an unvarnished look at the numerous friction points and limitations that slow down traditional manufacturing. He highlights new and disruptive approaches available to companies that help build a resilient supply chain.

From healthcare to education, the coronavirus pandemic has forced a wide range of industries to prioritize digital transformation. The sentiment was confirmed in the 2020 State of Manufacturing ReportOpens a new window , which found that 87% of companies are focused on digital transformation to revamp supply chain strategies and avoid future disruption. 

For supply chain professionals, in particular, COVID-19 has urgently highlighted the need for new digital tools that replace the traditional way of doing business — i.e., late night international phone calls, laborious spreadsheets done in isolation, site inspection visits half-way around the world, insecure file transfers, and lengthy email chains that tend to get complicated. 

With travel at a virtual standstill and social distancing guidelines prohibiting teams from performing in-person inspections, the old ways of managing partners and supply chains no longer suffice. Companies need to compress the next decade’s worth of supply chain innovation into the coming months to survive. 

While it is certainly the most recent and urgent, COVID-19 is only the latest in a long string of disruptions. These disruptions stand as reminders of the frailty of static manufacturing and supply chain processes that have probably surpassed their shelf life. Per the World Economic ForumOpens a new window , the main categories of disruption are environmental, geopolitical, economic, and technological in nature. And if one reflects on the past ten years or so, starting with the Tsunami in Japan, we have experienced all of the above in spades, and will undoubtedly do so again.  

In each case, companies are shifting away from static processes and working within opaque systems, and towards the creation of greater business and operational agility. Sectors like finance and healthcare have led the way with digital investments that help connect various stakeholders into an ecosystem that delivers benefits, such as demand transaction processing,  mobile connectivity and instant gratification, and transparent, data-rich engagements. Per the survey cited above, COVID-19 is simply bringing things to a head in the manufacturing world. 

Yet, digital transformation is never easy — much less under pressure and with limited resources. Only 14% of respondents said that their digital transformation initiative is well-funded. 81% still face difficulty finding necessary expertise. 

Learn More: Navigating Supply Chain Disruptions in a COVID-19 World: 4 Best Practices

Restructuring the Supply Chain

Companies looking to restructure their supply chains must be smart and disciplined — the lessons from COVID-19 point to two crucial areas of immediate focus for supply chain professionals. 

1. Prioritize transparency

The opacity of traditional manufacturing is proving to be its Achilles’ Heel. With companies unable to send teams into the field for quality checks or to inspect parts because of the pandemic, most engineers and supply chain managers have few (if any) ways to ensure accuracy. It’s akin to building a product in a dark room and has an enormous impact on both timelines and cost.

To build a digitally-powered supply chain, teams must prioritize transparency. This confers the natural benefits of traceability, quality, and production schedule predictability. The table stakes of any transparency initiative should be the ability to locate parts and components. It should identify their current status on-demand with high-resolution imagery at all phases and stages of production, including visibility into quality control documents, order details, and invoicing.

Creating this level of radical transparency is very expensive. It involves many considerations and flows of data in multiple directions involving multiple stakeholders, connectivity to multiple internal business and operational systems, secure connectivity to supplier systems, quality systems, materials information, etc.  Although transparency is expensive, in the eyes of many companies, it is essential to their future, and frankly, their survival.  

Learn More: Top 5 Supply Chain Challenges in 2020 and BeyondOpens a new window

2. Emphasize agility

For decades, supply chain pros chased a combination of scale, expertise, and cheap labor. That led many to choose overseas options like Mexico, India, and China as manufacturing partners. But as COVID-19Opens a new window exposed the fragility of those supply chains, bringing production to a halt, a number of companies and experts have called for a new age of “reshoring” or rather “right-shoring.” 

This goal of bringing manufacturing back to America (the right way) involves using more advanced manufacturing processes like robotics, 3D Printing, and AI. It also dovetails nicely with calls for greater IP protection and job creation and coincidently delivers the recommendation above — transparency.

However, it is unrealistic to expect companies — especially those with intricate supply chains or complex products — to wholly reshore their operations and invest in this level of technology overnight. It is more likely that companies will seek to build redundancy into their supply chainsOpens a new window for a more agile response to potential future disruptions. 

This could take the form of a regional manufacturing strategy or a digital supply chain that taps into multiple production partners in different geographies. Again, a very expensive proposition.  

Learn More: What is ‘Agile Procurement’ and How Is it Changing SCM?

Looking Ahead to the Digital Transformation ‘Light’

Luckily, smart business leaders see the opportunity to turn the challenge of an economic downturn on its ear by enabling progressive thinking about the true cost of doing business. If time is money in manufacturing, the supply chain is the clock. 

One alternative to building transparency or agility from the ground up is a new trend called digital manufacturing ecosystems (DMEs).  These ecosystems are generally tied together through a cloud-based platform and play a role by helping engineers and supply chainOpens a new window managers source capacity, whether it’s prototype or production work, from different locations. This provides users with the ultimate agility and speed as well as transparency and allows cost-avoidance in terms of lofty digital transformation projects.  

It is telling that 88% of the State of Manufacturing survey respondents believe that the manufacturing companies who survive COVID-19Opens a new window will be the ones that saw the innovation opportunities in the mix – not just the problems. For many, DMEs will provide an efficient path to scaling and accelerating their digital transformations to avoid the next inevitable supply chain disruption.   

Learn More: Reinventing Supply Chain in the Age of Digital Disruption

Did you enjoy reading this article? Comment below or let us know your thoughts on LinkedInOpens a new window , TwitterOpens a new window , or FacebookOpens a new window . We would love to hear from you!