Manufacturers and Distributors looking for reasons: 2021/22 Supply Chain Disruptions
Merchants worldwide—both traditional and online shops—are worried about sourcing products due to disruption in today’s global supply chain. That’s why manufacturers and distributors who regard their supply chain passively or rely on just-in-time logistics are making a costly mistake.
This discovery is one of the most critical lessons business leaders learned in the wake of delayed goods, raw material shortages, and empty shelves during the pandemic.
But supply chain disruptions are not new to manufacturers and distributors. Why then has the impact been much more significant between 2021 and 2022? What has inspired the supply chain to become a top-of-mind issue for many CEOs and consumers in the manufacturing industry?
No one was prepared
Before the pandemic, optimizing manufacturing and logistics systems seemed to be working: costs were reduced, assets utilized, and inventories minimized. No one was expecting a pandemic that would upend the global economy or another upheaval from the Ukrainian war just as the economy was recovering.
The pandemic caused a shift in the supply chain that left many businesses with inadequate stock and customers fighting for a limited supply of goods. A good example was the reduced supply of tissue papers during the pandemic and the food shortages during the 2021 Christmas period.
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The pandemic also brought to light that manufacturers and distributors have relied on inadequate port infrastructures. And now, the war in Ukraine is proving that supply chain systems might continue to operate under disruptive conditions for a while.
Think about it, fuel and gas prices are increasing, which has caused a ripple effect in the increase in product production costs. Additionally, the war is threatening a shift or cancellation of shipping routes and supply sources, something that will, without a doubt, affect almost every supply chain in the global economy.
The same outcome is expected to happen to the supply of food, imported inventory, and component parts resulting from a shortage of sea and air transportation. The current inflation is also increasing local manufacturing and transportation costs.
But the biggest problem is the lack of flexibility many manufacturers and distributors have, a limitation that is making it that much harder to adjust to these supply chain delays and disruptions. For example, industries that deal in the supply of raw materials like natural gas, oil, and metals are very unpredictable.
As the global supply chain continues to face price increases and delays, the impact on the industry might be damaging. This equally applies to rare earth minerals and high-tech electronics and semiconductors industries.
This is why the supply chain is now top-of-mind for many CEOs, manufacturers, and distributors. It is time to adapt and build resilience through the disruptive conditions of the supply chain.
Operating in disruptive conditions
To blame the entire supply chain disruption on the pandemic and Russia would be inaccurate. Most manufacturers believe supply chain bottlenecks have been building for while, COVID-19 and rogue leaders were simply a breaking point for many businesses.
The pandemic, in hindsight, was an excellent opportunity to pinpoint weaknesses in what was initially considered efficient and affordable in the manufacturing and supply chain industry. For instance, many manufacturing companies are still dealing with labor shortages like everyone else.
Differentiating in a crowded market
Businesses in the supply chains need to invest in modern digital technologies like ERP solutions to gain transparency, traceability, and collaboration. Technology is especially critical for providing long-term and short-term value analysis for companies.
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The goal is to make the supply chain more predictive, flexible, and resilient, which, in turn, should give manufacturers and distributors a competitive advantage. For instance, an ERP system provides manufacturers visibility into supply chains and more reliable suppliers.
Data gathered from these systems can also offer transparency into a manufacturing company’s demand, capacity, inventory, supply, and finances. It becomes easier to identify what recipes need to change, what sources are missing, and how to shift supply to meet customer demands.
Automating operations makes managing sourcing policies and their changes and distribution easier too. This, in turn, with the use of data, helps manufacturers and distributors make informed and relevant decisions in real-time, thus, propelling business growth.
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An ERP solution should help you understand what is happening in your manufacturing business by providing real-time insights into your operations and departments. The visibility an ERP system offers makes it easy to tell whether you have the suitable materials, can handle price fluctuations, and can meet specific customer demands or not.
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A manufacturing ERP system ensures the data collected from your business operations are accurate and timely and in one central location. You can always see your inventory stock levels, supplier prices, and manufacturing schedules.
With a manufacturing ERP solution keeping a record of your historical operations and transactions, you can make important decisions like changing your suppliers by determining the ones that have been reliable over time.
Getting prepared for 2023
The disruptions in the supply chain have inspired organizations to reassess end-to-end processes in a bid to create a manufacturing and distribution system that thrives.
As a business in the supply chain, you need a system that enhances your efficiency as you navigate through the changes in supply chain distribution. Digital technology and an ERP system can help implement your automation, open visibility, streamline workflows, and enhance customer satisfaction.
Don’t let 2023 arrive without tackling your supply chain problems first.
What caused the supply chain crisis of 2021/2022?
The COVID-19 pandemic caused delays in shipments and the global supply chain, which resulted in shortages that affected customer behavior. Other factors like labor shortages because of the spread of the infection also contributed to the crisis.
How is the Ukraine war affecting the supply chain now?
The alignment between Russia and China is expected to change the supply of raw materials like oil and gas. Many companies are reducing their dependence on the two nations in favor of local and regional sourcing options.
How does ERP software help the supply chain crisis?
ERP software automates goods, services, and resources in your manufacturing and distribution channels, making the entire supply chain process seamless and effective from production to delivery. This is important in the current crisis because the software can propel your business towards growth and sustainability amidst the inflation chaos.