Insulation against supply chain instability

The impacts of supply chain disruption are becoming all too familiar — shortages, inflation, factory closures, goods waiting at ports to be unloaded in, and so on. Stephen Hayes, managing director at Beckhoff UK, discusses how manufacturers can increase supply chain stability.

Disruptions to supply chain operations are set to stay in 2023 and beyond, be it geopolitical conflicts, inflationary pressures and the recessionary environment, climate change weather events or other issues yet to emerge. As a result, research from KPMG has revealed that six in ten global organisations plan to invest in digital technology to bolster their supply chain processes.

These disruptions have a huge impact on a business, and not a good one. From shipping delays to complete stoppages of production, supply chain disruptions leave manufacturers with financial losses, customer dissatisfaction, reputational damage and increased costs.

Therefore, it is crucial that businesses gain a clear understanding of what a supply chain disruption is and how it can affect their operations, before implementing the necessary measures to protect themselves against any uncertainties.

Diversification strategy

Some might say a diversified supply chain is simply a variety of supply and manufacturing channels to meet business needs, but it is much more than that – it is the heart of supply chain resilience.

Manufacturers should minimise risk and increase agility by developing a flexible risk management strategy that involves multiple suppliers, the reimagination of manufacturing and distribution networks, and the use of redundant and multimodal logistics methods.

In fact, well known food manufacturer Kellogg Co realigned its sourcing strategy and distribution network in the wake of packaging bottlenecks during the Covid-19 pandemic. As the region’s Korean supplier ran short due to shipping delays, Kellogg Co found an alternative supplier in New Zealand, which was based closer to home and reduced transportation costs.

Technological enhancements

Research from KPMG has revealed that over 50 per cent of firms believe increased digitisation and automation will increase the resilience of their supply chains, with real-time tracking and monitoring systems able to offer insights into inventory levels, production progress and shipping statuses.

Tracking systems can provide data to help manufacturers improve supply chain management by showing inefficiencies and unnecessary expenses. Plus, tracking systems can also alert supply chain managers to any problems during the supply, production or delivery process, helping businesses to act quickly before product is damaged or wasted.

Returning to our aforementioned example, Kellogg Co uses software to review disparate sources of data relating to various demand signals. When it senses a disruption, or a pattern that might lead to a disruption, it provides a recommendation on how to avoid it. This helps them to adjust and prevent an out-of-stock issue from occurring, days to weeks in advance.

Leveraging these software tools is crucial for proactively managing disruptions and building more resilient supply chains. That’s why software, such as Beckhoff’s PC-based control systems and IPCs, plays a crucial role in ensuring scalability and modularity for when quick adjustments in production and the integration of alternative suppliers are needed.

No matter the event or issue, supply chain stability can only be possible with software like this, coupled with the right operational changes. The past few years have shown us that disruptions in the supply chain are inevitable and costly, but like Kellogg Co, restructuring and automating processes can reshape companies faster than you might imagined.