Manufacturers and distributors struggled mightily with supply chain disruptions and escalating prices in 2021. The significant risks of the global supply chain were not only exposed but aggravated as clients experienced extended lead times, stock-outs, and increased levels of demand and supply volatility. Clients are increasingly wary of their dependence on China and lengthy and complex supply chains without the strategic inventory reserves to satisfy customer needs. The importance of including the supply chain in strategic discussions has become paramount to success.
The Customer Experience
The pandemic has started to separate the weak from the strong. Customers are tired of the excuse of the supply chain. A superior customer experience and high on-time-in-full (OTIF) performance are required for revenue growth. Manufacturers that responded rapidly to changing conditions during the pandemic have sped ahead of the competition. Whereas those that struggled to keep up, let alone raise the bar to provide value-add products and services, are barely surviving. The strong are partnering with customers to understand and predict changing customer behaviors and evolving needs as part of collaborative demand planning processes to take advantage of the opportunities and solidify their position in the marketplace.
Resiliency, Collaboration, Innovation
The most successful organizations are resilient, collaborative, and innovative. They can quickly adapt to changing conditions. For example, they will redesign materials or adjust manufacturing processes on the fly to address material shortages and changing customer needs. They are prepared to scale rapidly, adjust capacities (machine, people, storage, transportation), and reconfigure their supply chain footprint to take advantage of opportunities as they arise. The best are using SIOP processes (sales, inventory & operations planning) , also referred to as S&OP, to create predictable revenue forecasts and determine the best way to fulfill those needs. These executives do not see binary decisions. Instead, they look at the gestalt for opportunities and disruptors and believe in the power of their people. As the Great Resignation continues to escalate, only those executives who focus on retaining, developing, supporting and supplementing top talent will thrive.
The Digital Transformation and Data
The digital transformation and importance of data will continue to accelerate the pace of change. Manufacturers are quickly rolling out automation, robotics, machine learning, AR/ VR, digital twins, additive manufacturing / 3D printing, modern ERP and other technologies that will keep up with changing customer needs and customize on the fly more efficiently and profitably. E-commerce, predictive analytics, business intelligence, IoT, autonomous robots, blockchain, WMS and more are differentiating the leaders from the laggards. The appropriate use of technology can create adaptability, scalability and responsiveness – all vital in creating a competitive edge. However, no matter the advanced use of technology, the most successful clients realize the critical importance of data. They are cleansing, analyzing and utilizing data to generate insights and make strategic decisions.
Re-shoring, Near-shoring and Regional Clusters
Manufacturing is quietly on the move. Executives have realized that in addition to the total cost coming into alignment between North America and Asia for non-commodity products, there is no risk as great as the inability to control their future. Clients are concerned about lost customers due to service failures and the inability to pivot quickly with rapidly evolving customer needs. As a result, the ‘smart’ clients are quietly moving manufacturing capabilities closer to their customers (re-shoring, near-shoring, regional clusters), finding new suppliers and/or upgrading supply chain partners, and building the ability to adapt and customize on the fly into their processes to ensure resiliency, responsiveness and overall strength (financial, R&D, etc.). The U.S., Mexico and Latin America are increasing in attractiveness, with India in the driver’s seat for the Asian region.
E-commerce Driving Sustainability
E-commerce will continue to advance by leaps and bounds, changing distribution models and elevating the importance of the last mile and the technological transformation. Sustainability continues to increase in importance and must be considered in designing the supply chain of the future. The more technology and change, the more talent will become the critical differentiator. Lastly, those that advance their planning (demand, production, master scheduling, replenishment, distribution, inventory) capabilities will thrive as they better serve customers with greater efficiencies and margins and lower inventory levels/ working capital needs.
More companies will pull ahead of the pack as we emerge from the pandemic than any other period of time in our lifetime. The rest will diminish, be acquired or die. Will you get in the position to thrive for decades to come? 2022 will be your opportunity.
Insights from Trusted Advisors
I asked trusted advisors and experts in various disciplines what their most successful clients were doing and what we should learn from the supply chain chaos to thrive in 2022. Those focused on proactive strategies to align demand and supply (SIOP), reevaluate manufacturing/reconfigure their supply chains to better serve customers profitably, and roll out the appropriate technologies to support scalability, sustainability and agility will thrive in 2022 and beyond.
Thanks to Trusted Advisors for their Contributions
Last, I want to thank the Trusted Advisors, who are also colleagues, for their contributions to this Special Report. Your contributions have provided rich insight and perspective for the complexities and chaos that continue to challenge supply chains worldwide.
Vivek Joshi, Moe Fakih, Kendra Kalimanis, Keith Cerwinski, Michael Kouyoumdjian, Eric Roark, John Tulac, Esq., Bruce Robertson, Zachary Cohen, Courtney Casey, Margaret (Peggy) Hosking, Esq., Jolene Rice, B. J. Patterson, Kathleen McEntee, Ara Ohanian, Elizabeth Warren, Mark Wolf, Nicholle Trugman, Joe Van Tassel, Fran Inman, Veronica Reynolds.
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