Supply Chain Resiliency During Crisis
With disruption lurking around any corner, manufacturers and distributors must set their ERPs up to focus on supply chain resiliency.
The COVID-19 pandemic has thrown manufacturing facilities, warehouses, and distribution centers into a frenzy as companies scramble to balance customer demand for products with new workplace rules.
As research shows, a decade-long focus on minimizing costs, reducing inventories, and driving up asset utilization has removed buffers and flexibility to absorb disruptions. As a result, many companies are not fully aware of the vulnerability of their supply chain relationships to global shocks.
Operating Your Supply Chain in Unusual Circumstances
Focused on meeting demand for essential products while also prioritizing worker health and safety, companies are running at full speed while employees work to fulfill unprecedented demand for essential goods.
For example, a manufacturer that can’t get the raw material that it needs to make its goods, or that can’t keep those finished goods on its shelves, risks losing both money and customers. “We went through our 3-month forecast in one week,” one company told us. “Our shelves are bare.”
An environment where fulfilling orders remotely and working from home are not viable alternatives, manufacturers and distributors must ensure that workers remain six feet apart, wear the proper protective gear, stagger their lunch breaks, use new sanitizing protocols, and practice social distancing.
“In this pandemic, manufacturers that rely on labor-intensive processes that require people to work closely together have been disrupted because of social distancing requirements,” Johns Hopkins Carey Business School’s Goker Aydin points out. “It’s difficult to predict exactly where disruptions will be felt the most, but specific supply chains have been affected.”
Within those supply chains, companies are:
- Reinventing their workdays and moving to 2-3 shifts in order to get the work done while adhering to social distancing and related regulations.
- Splitting orders by pick wave and group work according to carriers/region/delivery speeds.
- Sorting on an aisle-by-aisle basis to help team members fill shelves more efficiently while also complying with workplace health regulations.
- Dealing with more shipment delays and, as a result, requiring better tracking statuses and visibility of orders.
- Placing maximum quantity limitations on orders of some essential goods—a move that necessitates better forecasting automation.
Overcoming these challenges requires a resilient, adaptive mindset that goes beyond the “set it and forget it” approach that many companies took when implementing an ERP like JD Edwards (JDE). If your company falls into this category—and if it hasn’t made any changes or implemented new configurations since its ERP implementation—then it won’t be able to build out a resilient supply chain that’s sustainable over time.
Withstanding the Rigors in Your Supply Chain
While JDE’s demand planning, forecasting, and manufacturing requirements planning (MRP) functionalities work together to help companies overcome the rigors of the current business environment, if the system was set up to run status quo, it won’t be able to withstand the shock of today’s manufacturing and distribution environment.
Take the company that’s historically run a single 7:00AM to 6:00PM shift Monday through Friday, and that now has to break those days up into two (or more) shifts per day in order to comply with social distancing rules. Complicating the situation even further, the same company can only have every other machine running at any given time—again due to the need for social distancing.
These pivots may sound fundamental enough in theory, but both require the right setup in the company’s ERP in order to function properly. That means making changes to inventory management structures, demand planning, demand sensing, and workforce configurations. These changes don’t require much additional effort, but when orchestrated properly they can lead to a significantly more resilient supply chain now and in the future.
Keeping Essential Businesses Running with Supply Chain Resiliency
With many companies falling into the “essential business” category, the ability to keep the manufacturing wheels turning will have an overall positive impact on the world’s interconnected supply chains. When one luggage maker learned that one of its biggest retail distributors was shutting down and no longer accepting orders, for instance, GSI helped it create temporary planning cycles, reroute its shipments, and make other quick moves to avoid storage fees at the dock for the thousands of products that were en-route to that now-shuttered retailer.
Working with GSI to maintain supply chain resiliency, ERP users can avoid unnecessary shutdowns, keep their workers safer, maintain a happy customer base, and have confidence in knowing that their operations will be productive through these uncertain times…and beyond. While the global pandemic is top of mind right now, by next year at this time another type of disruption could be rearing its ugly head. The agile companies that prepare in advance and set their ERPs up for success now will be well braced to survive and thrive, no matter what’s thrown at them.