Visibility across the entire length and breadth of your supply chain is required to predict and overcome supply chain constraints.
- Risks must be mitigated, and supply constraints identified with a proactive approach
- The only way to predict current and future constraints is through complete visibility throughout your supply chain
- Supply chain visibility means more than looking at your top tier – it’s quite likely that disruptions will manifest in the lower levels of your supply chain
- The visibility you need to deal with supply constraints is only available via a digital supply chain platform
- It’s not just about visibility and risk: you can save 50% on supplies and boost revenue by 10%
It’s a balancing act. Too much inventory means demand constraints, too little causes supply constraints. It’s far from an uncommon situation, but the pandemic served as a wake-up call as manufacturers realized they didn’t have the visibility into their supply chain to identify risks and get the commodity intelligence they needed. Changes and challenges continue to cascade at an unprecedented rate, leaving many to ask what comes next.
Everything revolves around planning that mitigates risk and identifies supply constraint vulnerabilities before they result in negative consequences. This involves top-to-bottom supply chain transparency, data gathering, and putting that data to good use to discover and mitigate predictable risks.
Supply constraints have affected every industry, but in-the-know companies are using modern software to conquer the turbulent seas. Navigation requires a structured approach as well as a purpose-built digital supply chain platform. In this blog, we’ll look at what supply constraints mean for your business, how to protect yourself with better planning, and why you need a digital platform to survive.
How Supply Constraints Affect Business
The answer to how supply constraints affect business is obvious. But the implications of today’s problems created by a pandemic, Russia’s invasion of Ukraine, other geopolitical factors, and supply bottlenecks have hindered overall industrial recovery. At the same time, demand for goods increased as the pandemic eased while production and distribution were disrupted.
It is predicted that ongoing supply shortages will mean further production challenges at the same time demand is increasing and supplies are insufficient. Does this mean you should offer fewer product options or configurations to improve availability where you’re able? Do you have the data you need to make that an informed decision?
Supply chains are complex with many moving parts. Planning is key, but what should go into those plans?
Foresight is Paramount: Be Proactive Rather Than Reactive
Being proactive isn’t just about predicting problems, it’s essential to quickly detect them and take corrective action. This requires leveraging both supply chain visibility and data-driven intelligence at lower levels in the supply chain, and then using those capabilities to make rapid changes as necessary in vendors, facilities, and modes and routes of transportation.
How do you do this? It starts of course with your planning department, but they need to partner with sourcing and procurement. Increased investment in the form of human and technology resources is required for a truly integrated planning process that includes key suppliers – and remember that all of them are not tier one. Visibility is required throughout the entire supply chain network.
Here are some key strategies to consider when you’re dealing with supply constraints:
- Use incentives or other methods to shift demand to available products
- Secure your lower tiers to keep a continuous supply
- Collaborate with your suppliers to optimize your slice of the supply pie
- Adapt your product portfolio to limit configuration options and use alternative materials where possible.
Managing any sort of crisis is not possible without the ability to recognize current and potential supply constraints and trigger the right actions to solve them. What’s required is an intelligent supply chain that provides the necessary visibility. A digital supply chain platform not only helps you handle supply chain constraints but also integrates everything involved in your supply chain to better manage your everyday business and withstand crises.
A Digitally Integrated Supply Chain is a Must
You can’t solve a problem if you can’t see it. And you can’t just take someone’s word for it or lump yourself in with your competitors, assuming they are under the same constraints. Your business and supply chain are unique. You need to know what’s actually happening throughout them so you can leap into action when necessary. It’s time to build the optimal supply chain.
Many benefits come with a digital supply chain platform. Adoption of a digital platform, which increases visibility and provides essential data, can reduce your supply costs by 50% and increase revenue by 10%.
Supply constraints can be addressed via real-time communication between all gears in the wheels of your supply chain: manufacturing, logistics, suppliers, warehouse management, transportation management, and order management as well. Informational silos are eliminated, and you’ll gain valuable insights that can be shared across your entire organization.
Constraint management requires a digital system that provides a single source of truth for your entire supply chain ecosystem with complete visibility, produces timely performance reporting, and allows you to develop an effective strategy across the supply chain that enables collaboration as well as:
- Improves response times
- Automates responses
- Manages inventory and replenishment
- Prioritizes exception-driven workflows to quickly resolve and rebalance supply and demand.
Only a digital supply chain platform can give you the essential visibility you need to get a clear view of what’s happening now, anticipate what might happen in the future, and make informed, proactive decisions to head off supply constraints, pare costs, and boost profits.
Don’t Be Constrained by a Lack of Visibility
It’s possible to see everything going on in your supply chain so you can mitigate supply constraints. The Logility® Digital Supply Chain Platform accelerates the sustainable and resilient digital supply chain by leveraging data-driven tools such as advanced analytics, machine learning (ML), and artificial intelligence (AI) to empower your business with greater visibility.
This means better sourcing decisions, more accurate planning, accelerated cycle times, improved precision, and increased operating performance – all the things you need to weather supply chain disruptions and constraints while meeting your environmental, social and governance (ESG) goals.
We help organizations sense and respond to changing market dynamics and more profitably manage their global businesses to become resilient, sustainable enterprises. It’s time for a digital, sustainable supply chain. Reach out to our specialists today to discuss our supply chain solutions.