While the pandemic has destabilized supply chains around the world, it also presents an unexpected opportunity for companies to accelerate their digital transformation initiatives — initiatives that were previously on multi-year paths to completion. Mahesh Rajasekharan, CEO, Cleo, shares his thoughts about the COVID-driven supply chain disruption.
COVID-19Opens a new window has significantly disrupted global operations of just about every industry, most notably those that are supply chain-dependent. What makes matters worse is that supply chains hold the greatest potential to impact tangential industries.Â
While the disruption caused by the pandemic has destabilized supply chains around the world, it also presents an unexpected opportunity for companies to accelerate digital transformation initiatives – initiatives that were previously on multi-year paths to completion.Â
The pandemic has led to a boom in e-commerce, forcing the adoption of digital solutions to enable supply chain-dependent companies to emerge from the pandemic stronger.
Learn More: Navigating Supply Chain Disruptions in a COVID-19 World: 4 Best Practices
A Forced Change of Strategy
In the second quarter of 2020, businesses without a robust digital transformation strategy needed to quickly pivot to match their shifting customer needs as the pandemic forcibly changed how companies distributed and traded goods and services. Over-reliance on legacy systems forced some supply chain-oriented companies to change their strategies to continue operating efficiently despite restrictions and roadblocks caused by the pandemic.
Even before the pandemic, legacy systems and integration problems were impeding revenue and costing supply chain companies an average of over $100kOpens a new window each year, and sometimes over $1 million. It is extremely likely that a massive supply chain disruption, such as that caused by COVID-19, has increased the average cost of maintaining legacy systems by an astronomical margin that is yet to be determined.
When supply chain organizations face disruptions caused by events completely out of their control – suppliers and trading partners cut off by trade embargoes, fluctuating consumer demand because of a pandemic, or even a hurricane — they must transform to navigate a rapidly changing digital world. And that means finding better ways to communicate with their external ecosystem of customers, suppliers, and partners if they are to continue to thrive during the disruption and through future supply chain upsets. However, the companies that are most equipped to handle disruptions are the ones that achieve end-to-end visibility before the upset.
Learn More: Top 5 Supply Chain Challenges in 2020 and BeyondOpens a new window
The Long-Term Effect of End-To-End Visibility
One doesn’t need to be a supply chain expert to notice the negative impacts of COVID-19 on a global scale: supplier disruption, trade blockages, strained access to source materials, and shipping/travel restrictions have noticeably affected consumers around the world. While supply chain disturbances are expected from time to time, and customers are, to an extent, understanding when it comes to events like COVID-19, an enterprise is still only as valuable as the customer experience it delivers.Â
Lack of end-to-end visibility is one of the biggest challenges supply chain companies must overcome. In times of disruption, visibility is especially valuable. Because ultimately, end-to-end visibility enables an agile and adaptable supply chain – one that possesses the flexibility to overcome any unpredictable event or obstacle since the organization has a granular understanding of the interactions between its networks of trading partners and suppliers. Once an organization has achieved an agile, adaptable supply chain — an outcome best achieved through modern ecosystem integration technology — they can be proactive rather than reactive when it comes to shifting partners, suppliers, or operations in the event of market disruption.
A centralized, cloud-based integration platform has never been more critical for companies in supply chain-driven industries. To centralize operations and communications for greater control, supply chain-focused organizations must make the shift to a cloud-based platform that enables frictionless business processes such as order-to-cash and procure-to-pay. Besides, a robust integration platform will not only seamlessly connect external partners and suppliers, but also link the internal ecosystem of business applications such as CRM, WMS, and TMS. This will enable speed and control, end-to-end business process integration, and visibility into exchanges and interactions impacting the overall business.
Learn More: What is ‘Agile Procurement’ and How is it Changing SCM?
Eliminating Complexity With Centralized Integration
Because they blend API and EDI on a single platform, modern and centralized integration solutions offer supply chain organizations the ability to manage operations and communications spanning both on-premise systems and cloud-based services, such as AWS, Microsoft Azure, or Google.
Centralized integration merges the visibility of on-premise systems with cloud-based systems by deploying intelligent agents to provide complete visibility – especially in environments where APIs do not exist. End-to-end visibility also provides the all-critical “outside-in view†across an ecosystem’s key integration through-points.
In the event of an unexpected market upset such as a pandemic, companies without a centralized integration strategy will scramble to realign supply chain dynamics and processes if they want to continue to operate as usual. According to McKinseyOpens a new window , that’s why companies should take cues from COVID-19 and start stabilizing their supply chains and distribution/fulfillment operations.Â
These steps include planning for future digitalization so an organization will be better prepared to manage unusual spikes in demand as supply ebbs and flows. Without centralized integration to provide end-to-end visibility, forward-facing, predictive planning can be difficult if not impossible, and often requires the expense of countless precious resources.
For supply chain organizations to successfully navigate the rapidly changing digital world and use it to their advantage to leap-frog competitors during a downturn, true end-to-end visibility is critical and fundamental for success.
As organizations adapt to the “new normal†that’s settling in, for both the real and digital worlds, they must leverage modern centralized integration technology to securely connect on-premise systems, while simultaneously encompassing their entire ecosystem providing extensive configuration and control in the cloud.Â
As demonstrated by the disruption wrought by COVID-19, the future is unknown; but that does not mean supply chain-dependent organizations need to fall prey to the whims of fate. Centralized integration and the merging of legacy on-premise systems with cloud-based services provide supply chain-dependent enterprises the agility to continue delivering exceptional customer service despite disruptive external factors.
Learn More: 3 Ways 5G Can Plot a Recovery for Supply Chain
Have tips for supply chain organizations to navigate successfully in the digital world? Comment below or let us know on LinkedInOpens a new window , TwitterOpens a new window , or FacebookOpens a new window . We would love to hear from you!