Supply Chain Challenges: How Resilient Is Your Contract Manufacturer's Supply Chain Management Process?

8 March 2022
Supply Chain Challenges: How Resilient Is Your Contract Manufacturer's Supply Chain Management Process?

Over the past year, the term "supply chain" has entered the vocabulary of the everyman. A topic of boardroom and dinner table conversations, supply chain issues are one of the tangential areas associated with the various COVID-19 disruptions. Where previously customers would look at a supply chain and demand why their product did not arrive on time, the public now has a more nuanced perspective on the challenges associated with international trade and logistics.

During the pandemic, many businesses faced weaknesses in their supply chain and logistics management processes. Whether EMS companies are OEM players or big contract manufacturers, they will still be affected. Operations that were previously "good enough" could not withstand the mounting stress of increased demand combined with increased restrictions. Loss of manpower, money and clients were huge blows to many organisations globally. However, the businesses that survived and even thrived during the worst of the pandemic were those that optimised their supply chain management for increased resilience. Here are a few things your business can learn from companies with resiliency built into their supply chain.

What is supply chain resilience?

A resilient supply chain is characterised by its capacity to resist or avoid the negative impact of supply chain disruptions and quickly recover from unavoidable turmoil. Many points in a supply chain pose a threat to operations-global disasters like COVID-19 have shown the devastating and far-reaching consequences of supply chain disruption for supplies, workforces and customers. Challenges to the supply chain can also emerge through sudden market trends, unexpected competition and rapid changes in customer shopping behaviours.

Developing resilience strategies and behaviours in your supply chain are necessary for EMS businesses that want to remain competitive. In the current economic climate, modernisation and major changes to traditional supply chain strategies are essential to ensuring the longevity and security of an organisation. Here are a few ways your business can develop greater supply chain resilience in a post-pandemic economy.

Tips for greater supply chain resilience

When it comes to supply chain disruptions, it is essential to liaise with your contract manufacturer to improve their supply chain process and protect your business. This will mitigate the possible damage from disruptions and ensure you provide high-quality service to your customers. Use the following strategies to build resilience in your supply chain:

1. Mitigate risks by diversifying suppliers and building redundancy into your system

In the past, supply chain managers have tried to limit the number of partners and contractors in their network. This strategy values simplicity in the supply chain and minimises logistical complexities. However, this operational model can only flourish in environmental, social and political environments that are highly stable. Unfortunately, if there's one thing we know about the global market, it's anything but stable. Unforeseen disruptions in any of these areas can dramatically affect a simplified supply chain - a political move in one region could impede or halt productivity in another.

A post-pandemic supply chain should limit heavy reliance on one provider. Popular strategies like the 'China + 1' elect to rely on China and a Southeast Asian country like Vietnam, Thailand or Indonesia as a manufacturing partner. Businesses will face a more logistically complex supply chain model by diversifying manufacturers and suppliers, but this should be considered the cost of sustainable business, not a threat to efficiency. Consider how your organisation can use supply chain management in manufacturing to establish effective resilience strategies.

2. Plan for disruptions by having a backup plan and communicating with stakeholders

Tensions can arise when expectations of stakeholders and businesses are either misaligned or poorly communicated. In the event of a supply chain disruption, your stakeholders should be informed of resilience strategies and backup plans so they can feel secure in the longevity and profits of your business. When companies are aware of available tools and use them to work with their EMS provider, it creates a technological synergy. Your resilience strategy should include practices and contingency plans at all stages, including sourcing materials, manufacturing and delivery. These strategies should constantly be revised and improved to account for novel threats and the ever-changing global economic landscape. Effective communication and a fluid resilience strategy can help your organisation better prepare for and bounce back from supply chain disruptions.

3. Test your plans regularly to ensure they will work in a crisis

Having a resilience plan that only works in theory wastes time and resources. All businesses should examine their vulnerabilities and develop strategies and practices that alleviate them. Supply chain resilience is not a one-size-fits-all solution; the challenges your business faces are unique to your industry and socio-political relations. You can test your supply chain resilience by aggregating theoretical changes at the segment level and evaluating the resulting network at a company level.

4. Stay up to date on current events that could impact your supply chain

Your organisation can only develop effective resilience strategies once its threats are identified. Staying up to date on local, national and international developments is essential for a rounded understanding of possible vulnerabilities. Gartner predicts companies redesigned for modularity will "operationalize business model innovations in half the time of competitors" and that "by 2026, more than 50% of supply chain organisations will use machine learning (ML) to augment decision-making capability." By keeping abreast of technological, business and political developments globally, you can adapt your supply chain to employ modern technologies which provide further resilience against crises.

How PCI can help

PCI is dedicated to helping our partners develop a resilient supply chain that accounts for market fluctuations. We provide integrated business planning, digital supplier network, warehouse digitalisation and manufacturing execution system (MES) to achieve this.

With integrated business planning, PCI uses real-time informatics and agility to help businesses quickly respond to unpredictable disruptions such as changes in supply plans, schedules and allocations. This means products can be delivered on time despite supply chain disruptions.

Our digital supplier network is an excellent option for clients looking to diversify their manufacturing suppliers without over-complicating their logistics. We provide our partners with data visibility and transparency across the entire supply chain network, in real-time, two-way and always-on communication and collaborative channels.

Alongside these, we offer state-of-the-art digital warehousing solutions to help clients pursue a modern and technologically advanced storage solution. Our team is equipped with real-time access to our warehouse management system-even on mobile devices-resulting in improved speed, agility, efficiency, and productivity. More importantly, passing all of these benefits to our partners.

PCI is, of course, known for its sophisticated MES, which streamlines order and production processes to optimise resource management and provide a systematic evaluation on respective yields and quality.

These services are just a sample of what PCI can offer organisations looking to implement competitive security practices into their supply chain and logistics management. If you think PCI is the partner for you, then get in touch with our team to discuss how we can help your business in its resilience strategies.

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