Businesses continue to feel the pressure of the supply chain, most recently through the surplus of inventory. Despite inflation, consumer spending remains high, and companies are preparing to face yet another complicated holiday season.
In 2022, holiday retail sales in the U.S. are expected to increase 3.3% over 2021, reaching $1.3 trillion. But businesses can only take advantage of this surge if they properly prepare their supply chains to meet the demand.
With the holidays quickly approaching, and the reality of supply chain challenges and economic factors continually bearing down on the marketplace, those companies that are prioritizing agility and transparency will be the ones to win through this coveted and competitive season.
Supply Chain Considerations to Keep Top of Mind
COVID-19 caused unprecedented disruption in the global manufacturing and supply chains. Moving forward, businesses must have strategic approaches in place to safeguard their supply chains and strengthen their overall resilience.
Streamlining a supply chain starts with operational performance, factoring in more predictability despite external circumstances like a new variant surge or extreme weather conditions. One approach is to continue to modernize the factories to make them more reliable and predictive, deliver to commitment and predict the issues in advance.
To further streamline operations, businesses are starting to multisource — looking at all aspects of the supply chain from an “end-to-end" approach, including all the key players involved in the process. In doing this, vulnerabilities are being better identified and collaboration is enabling greater success in the management of supply chains.
Many companies have begun considering whether products can be simplified / redesigned to better align with the way the supply chain currently works. Or whether there are ways to better work together strategically or operationally with vendors. Resiliency is the key to maintaining the right customer engagement for the long term.
Modernizing and localizing operations can also help minimize the risk of interruption businesses face when unexpected global economic changes occur. Reshoring and nearshoring manufacturing operations and partnerships help to shorten the supply chain and increase speed to market. From the automotive sector to semiconductors, many industries are looking to do this in order to have fewer supply chain disruptions. While labor shortages continue to be a challenge, many companies are trying to transition operations closer to home, top U.S. companies are working to invest in upskilling their workforce and recruiting next-gen talent to fill in these skills gaps.
Leveraging Digital Technology for Greater insight
In order for companies to digitally transform their supply chains, it’s necessary to integrate innovative technologies. To do this, companies should focus on transitioning from ‘connected’ to ‘intelligent’ technology that is automated with end-to-end orchestration. However, this does not necessarily mean needing to make an expensive investment in an entirely new system.
“Brownfield” innovation is deploying a new software system within existing systems. Transforming software systems within supply chain manufacturing can be as simple as introducing the latest Industrial Internet of Things (IoT) digital tools, such as remote monitoring and predictive maintenance. These modern tools can drive agility and cost savings even in old, legacy systems. A semi-automated upstream supplier readiness solution can help to assess risks better. Edge-based and cloud-based descriptive and predictive analytics assist in driving efficiencies across a company’s entire operation.
Mapping out the current state of the supply chain helps businesses get ahead of potential issues and minimize disruption. Artificial intelligence and machine learning technology in the supply chain space are now powerful enough to proactively identify potential disruptions while also optimizing resources. A digital twin framework can help determine the problems that need to be solved along your existing supply chain. Adaptive machine learning can optimize performance-related parameters, such as minimum order quantities and lead times, in real-time.
The threat of an economic downturn and the expectation of increased seasonal demand has left some businesses unsure of the best moves this holiday season. By preparing ahead of time, companies can positively impact the bottom line and thrive amidst periods of uncertainty. Regular roadmap alignments and implementing technologies that allow them to anticipate change will help businesses enter the holiday season by being proactive and agile, ready to meet customer demand.
Bharatbhushan Virmani is vice president of Supply Chain Performance and U.S. Make-To-Stock/Make-To-Order Production at Schneider Electric.
