Like most business operations, COVID-19 has disrupted the supply chain function too. Given the globalized nature of manufacturing and sourcing inputs, the worldwide lockdowns, and restrictions on the movement of goods proved to be the proverbial spanner in the works. However, disruption is not completely new for supply chain professionals because it is often the first function that gets impacted during natural calamities, wars, trade restrictions, and in recent times, epidemics like Ebola, SARS, and MERS.
While the prolonged impact of the pandemic has hit hard and supply chains will likely remain fluid through 2021, lessons from earlier instances and the adoption of technologies like cloud apps have shown what the next generation of cloud-centric supply chain management could look like.
Why the supply chain matters, now, more than ever
The pandemic has highlighted the importance of having a robust and reliable supply chain, particularly for European companies that have globally distributed manufacturing and depend on imports (including the free movement of material within EU members) to sustain a regular supply of goods. And the situation is further exacerbated with Brexit and other international trade complications that have come to the fore in recent years.
From a business perspective, the impact of COVID-19 varies highly between, and even within, sectors. While companies in the luxury segment have experienced a drop of up to 50% in sales, pharmaceutical companies experienced exceptionally high demands for products essential for delivering patient care and for drugs of certain diseases such as influenza, diabetes and infectious diseases. Whereas, non-critical surgery-related products saw a steep drop in demand, followed by massive spikes as the infection rates plateaued; nose diving once more with the second wave of COVID-19.
Then there is the retail sector which has witnessed the emergence of new business models like direct-to-consumer and servitization of consumer-packaged goods. While each of these presents a unique challenge, what connects them all is the need for a supply chain that is responsive to changing demand and provides resilience against future breakdowns.
The role of cloud applications
As companies unpack the lessons from the analyses of their supply chains, it is becoming increasingly clear that certain well-entrenched concepts like ‘Just in Time’ inventory and offshore manufacturing need to be revisited. And while some large enterprises may have the resources to undertake such a mammoth initiative, time is also a key factor. On the other hand, smaller companies do not have that kind of access or the time. This is where cloud apps have a pivotal role to play.
Owing to its design and tiered structure, cloud apps are relatively easy to integrate with existing systems which makes them quicker to deploy. Being cloud-based, they do not need an expensive infrastructure to run, and offer flexibility in terms of use and computing capacity.
Additionally, cloud apps are designed for non-IT users and run on common devices like laptops and smartphones. And since the efficacy of any technology is as good as the manner in which it is used, the user-friendly nature and access of cloud apps make it a more-than-viable solution.
Key trends powered by cloud apps
- Real-time visibility and traceability
The efficiency of a manufacturing schedule relies on the regular and timely receipt of material. Any delay, particularly in a multi-step or multi-location production set-up can have a ripple effect through to the retailer. So, if a material is imported from China, it needs to pass multiple ports of entry along the route, and with constantly changing lockdown laws, a few weeks of lead time can become a few months.
Cloud apps allow manufacturers to integrate the supply chain and all participants from vendors to last mile sellers which enables real-time and precise traceability of every component that constitutes a finished product. Such visibility enables affected parties to make alternate arrangements or take corrective measures. For example, Infosys helped pharma companies use real-time data, leveraging our cloud-based solution, part of Infosys Cobalt, to increase their planning frequency to manage production schedules.
- Enhanced demand forecasting:
The unpredictability of demand is perhaps the biggest challenge companies are grappling with in a pandemic-induced environment. Add to it, changing consumer trends, the restricted labour supply due to social distancing and short supply of raw materials, and the task becomes that much more challenging. To address this, several manufacturers are turning to technology.
A cloud-centric supply chain allows all the data to reside on a single platform and offers computing power that is manifold faster compared to legacy systems. This democratization of data allows supply chain managers to run more simulations and scenarios to enhance demand forecasting. For example, the luxury goods sector can use projections to reset their inventory targets and optimize their capacity utilization to account for the drastic fall in demand.
- Cross-pollination of technologies
The compatibility and interoperability of cloud apps are its biggest differentiators, and its ability to leverage data to aid decision-making, its biggest utility. This also makes it apt to be used in conjunction with other emerging technologies like IoT, AI, ML, Blockchain, and Analytics among others. It also allows a sophisticated level of automation on the shop floor or warehouse using robotics, autonomous vehicles, and unmanned aerial vehicles.
And so, as supply chain becomes a cross-functional activity, the combination of cloud apps and other technologies could become a versatile solution in the hands of future supply chain leaders.
