July 27, 2015
Around the world, supply chains face countless challenges and risks to their success. Throughout history, supply chains have consistently faced the pressures of supply and demand. With the Great Recession of 2008, companies found themselves looking for ways to cut out extraneous costs and improve efficiency. Unfortunately, these changes came at the cost of reducing flexibility. Less than a decade later, supply chain vitality teeters on the brink of destruction due to this problem. Modern supply chains must deal with advancements in technology, the growing trend towards automation, a multitude of competitors, natural disasters, political adversaries, and the “big-brother-mindset” of watchdog groups and public perception. Take a look at the primary reasons why supply chains must achieve flexible supply chain status thru the implementation of solutions, strategies, and support systems to enhance flexibility in the modern world.
Over the past 20 years, supply chains have implemented thousands of ERP solutions to attempt to reconcile information, orders, and processes into a single compendium of efficiency. However, today’s global supply chain needs to quickly access all of this information at a moment’s notice. Additionally, customizations of ERP systems have led to the successful disintegration of the global supply chain’s collaboration. To adapt to variable market conditions, supply chains need to have a fully integrated network and ERP, which will enable all aspects of the supply chain to communicate effectively and instantaneously.
In the past, a new economy heralded the arrival of a new purchasing power, thousands of potential consumers, and greater access to natural resources. Modern emerging economies have access to an unprecedented amount of information for use in making purchasing decisions. Furthermore, emerging economies tend to have extensive capital pools, which can be used to drastically alter the shape and behavior of the global economy.
Forecasts for emerging economies remain one of the most volatile aspects of expansion within a supply chain. Determining the best means of accessing the new economies requires vigilance and education about the respective area’s previous businesses. For example, newer technologies enable access to finite fossil fuel resources, such as natural gas, in untapped areas of the world. With each new discovery, the area experiences a surge in employment, development and standing on the global scale of supply chain justice. As a result, a single decision to expand, or contract, resources within any single area could equate to the difference between success and failure of a supply chain’s distribution system.
Purchasing power provides the metaphoric fuel for a flexible supply chain. Larger companies can purchase higher quantities of raw materials, order additional merchandise in advance, or evoke a consumer rush to purchase through dramatic lowering of prices. This explains how competitive factors affect flexibility. When a supply chain entity is unable to wait out their competitors’ increases and decreases in purchases, the supply chain’s ability to maintain sustainability diminishes. Ultimately, a flexible supply chain needs a larger partner to adjust and survive the surges in larger company sales.
Many think of natural disasters as acts of Mother Nature. However, wildfires, drought, changes in food supply, and contagious outbreaks also affect the market as natural disasters. Additionally, political instability in various regions, particularly surrounding the Iran Nuclear Deal, dictates how a supply chain adapts to the newfound environment and political climate. For example, current exports of oil from the Iran region may increase drastically once the Nuclear Deal passes, if House Republicans allow it to pass. Alternatively, a failure of this deal may result in additional political unrest in the region and bring oil exports to record-breaking lows, which will drive all processes within a supply chain upward in cost. Unfortunately, the existing efficiency standards of businesses will quickly falter under a dramatic change in fossil fuel resources, which affect all facets of the transportation and energy industry. For example, costs of running automated equipment could rise above the typical expenditures of employing people for the same purpose.
Today’s consumers can find out practically anything by means of social media. Massive breeches in data security continue to occur on a monthly, if not more often, basis. Consumers have grown to distrust big business when end-to-end visibility is not upheld. Therefore, supply chain suppliers, manufacturers, and distribution centers must take a proactive role in disclosing any potential threats, or problems in manufacturing, such as the purchasing of resources from politically-charged zones, to consumers. Moreover, watchdog groups have risen to quickly identify unethical, problematic supply chain processes, and more people look for the opportunity to organize a strike, boycott, or petition against a company. Consider how worker strikes at US ports brought imports to lows as enough workers were not available to keep up with transportation demands. Unfortunately, this causes additional costs to the respective company in the form of upset consumers, fine, penalties, and reduced consumer bases.
Creating a reliable forecast for the growing world economy presents a massive challenge to supply chains. Fortunately, Flash Global provides all of the resources, integration, analytics, advanced technological paths, and other factors in the supply chain to achieve an unparalleled level of flexibility. By ensuring a supply chain can survive sudden changes in consumer, material, or labor factors, fewer companies will face the pitfalls of bankruptcy and failure. Flexibility has become the new primary concern of supply chains in the modern world. Without outside assistance, how will your company guarantee a flexible supply chain?
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