The world has become aware of the fragility of global supply chains in recent months. Ripple effects have been occurring due to port congestion and workforce shortages. This has caused disruption that has proved inconvenient for customers when supplies run short and costly for companies who lose sales and incur penalties.
Therefore, risk management plans have become key to examining, recognizing, and alleviating perils as much as possible to avoid such scenarios. The severity of those instances can be lessened by building resilience to anticipate the root cause of such issues in the supply chain.
This article looks at risk factors that need to be addressed for a fluid digital supply chain to become a reality, and implement appropriate risk management solutions.
Risk factor #1: Concentration
Suppliers find it challenging to handle their costs and scale up or down with the shifts in demand, since so many job duties are specialized and require thorough training during hiring. Supply chains are also becoming longer and increasingly layered, at which point their complexity pushes companies to seek suppliers based further afield.
The increasing number of transportation modes coupled with the integration of systems can add a degree of perplexity to the idea of end-to-end visibility, let alone the thought of digitalizing a supply chain. But it does not always have to be like this.
Production managers are asking supply chain designers to develop more efficient ways of carrying out day-to-day supply chain execution to help ease this mounting financial pressure. By carrying out a root cause analysis using data captured from visibility solutions to identify issues in the current process, more effective solutions can be designed and implemented.
Risk factor #2: Supplier interconnectivity
Interconnectivity covers all aspects related to the tiers of channel, supplier, logistics, and global trade ecosystem partners who make decisions and orchestrate global supply chains across industries.
Organizations should work jointly with their tiered suppliers to build more transparency and address any concerns. Efficiently implementing a collaboration structure across planning, transparency of inventory levels, capacity, and flexibility can help generate visibility into potential issues, improving the organization’s resilience for the unavoidable risks that can become a problem in the future.
These challenges compound the need to build higher degrees of flexibility and agility. Interconnecting networks make it faster and easier for clients to realize the benefits of a connected digital supply chain, enabling them to improve customer loyalty and increase productivity consistently.
Risk factor #3: Supply-chain depth
Assembly line downtime can cost manufacturers and suppliers responsible for transporting their product, meaning they face hefty fines if they fail to meet delivery deadlines.
ETAs help suppliers and carriers better manage their synchronization to satisfy strict manufacturing requirements. There is a demand for greater accuracy than the routing APIs used for navigation, as forecasts for arrival times are off by a considerable number of hours. These unfinished calculations fail to consider many variables specific to the road transport sector, such as driver breaks, historical dwell times, and vehicle-specific average speeds, amongst many others.
This level of inaccuracy is problematic for manufacturers. Leading to a rise in the use of real-time transportation visibility (RTTV) platforms, which automatically warn users if a shipment is likely to miss its planned time of arrival, allowing corrective action to be taken.
Greater ETA accuracy is advantageous, as it can also help manufacturers and suppliers to avoid paying significantly high fees or fines each year. The more precise level of ETA prediction also equates to hundreds of thousands of dollars in penalties saved by suppliers and carriers.