The new age of supply chains post-Covid

Treading a careful line of supply and demand is a tightrope for many businesses. Stock-out or excess inventory can wreak havoc with cost estimations and delivery.

Covid-19 and Brexit have exposed the risks of complex, dispersed and disconnected supply chains. Many businesses have realised they need to reach a state of greater visibility and agility across their supply chain, both internal and external, with an increased move to near-shoring and indeed on-shoring. Covid-19 has been described by McKinsey as the Great Accelerator, and for manufacturers this is true.

This crisis has required practical, agile thinking, giving many the courage to test, fail fast and try again. Decision-making and digital transformations that would have taken months or years are being done in a matter of weeks.

Scale and competition have always been factors that drive costs down in any supply chain. Many businesses are now facing changing levels of demand, availability and renegotiations. Creating and actively participating in a collaborative supply chain ecosystem can benefit each vendor, while respecting the need for suppliers and customers not to be locked into long contracts. In the context of Covid-19, this flexibility is key.

Consumer goods companies, for example, are investing in transformation programmes around this concept of marketplace collaboration. The traditional competition is brought into one platform to simplify routes to market for retailers and distributors. This collaboration is helping manufacturers to stay relevant to customers and competitive in a challenging environment, despite offering space to its rivals.

Managing all of this has meant that manufacturers are coming closer to partners, suppliers and customers, receiving more feedback, requests for products and insights. All of this can be daunting for businesses when it isn’t understood within the wider context.

To turn insights into a competitive advantage, manufacturers need to ask themselves: how do we use this data to drive business outcomes? How do we get low costs, global presence and regional-specific focus? And how do we reduce the speed at which we’re doing all these things? Turning to a coherent digital strategy that combines the ability to execute supply chain strategies globally and locally, is an imperative for genuine innovation.

Planning based on historic patterns of demand is becoming increasingly unreliable as more globally disruptive events occur. Today, manufacturers need to be able to join up all available data sources to weave another level of return on investment into existing data assets and cross-functional processes.

In aviation, for example, underpinning traditional design-to-manufacture processes with digital capabilities is delivering sufficient efficiency and time-to-market benefits to protect UK manufacturing from being moved to lower-cost regions. Layering technologies such as data analytics and artificial intelligence technologies can help to predict demand. This data unification model helps to drive reliable decisions at a speed that has previously been impossible.

Technology platforms are now mission-critical to manufacturers, which are therefore seeking advice on their digital strategies from trusted advisers. Technology knowledge and skills across the supply chain provides a comprehensive foundation for strategic decision-making.

Manufacturers have been innovating and adapting for years now, but events such as Covid-19 have accelerated the digital imperative. Next-generation customer relationship management is offering greater visibility across supply chains and all stakeholders.

The nirvana is to enable and support complete digital marketplaces that bring together technology, human capital and integration with financial services. Manufacturers are soaking up information on technology skills and culture and customer feedback to reach new levels of agility and innovation.

John Kelleher is UK head of manufacturing at Salesforce