COVID, wars and international tension cause complications in the global supply chain. In the early stages of the virus, however, many companies are now realizing in particular how little they know about their own supply chains.
The world is networked – both digitally and through flows of goods and millions of travelers. Globalization has brought prosperity to the world, but also new risks. The coronavirus crisis has shown us how quickly and comprehensively a potent virus can spread and paralyze the global economy. Various pandemics have been contained locally over the last two decades and their effects have been more or less contained. Nevertheless, they have also brought pain and suffering to people and, to a lesser extent, affected supply chains, as have natural events, disasters, political and social unrest. How wonderful it is that we humans can develop a certain numbness and an extremely short memory in the sheer volume of such reports.
There has not been a pandemic event like Covid-19 since the Spanish flu at the beginning of the 20th century. In contrast to the situation today, however, there was much less international trade at that time and hardly any distributed multi-level supply chains. Together with issues such as wars and global political tensions, completely new challenges arise for companies.
Understanding Supply Chain – Analysis
Since the quarantine over the Chinese metropolis of Wuhan, a number of my customers have attempted to break down their supply chains within the shortest possible time and to map them transparently with a high level of personnel effort. A lot of telephone calls, discussions, and documentation are involved. However, the information comes too late to be able to initiate effective countermeasures, and often the facts collected at great expense are quickly outdated. Under this impression, systems and full-service providers for supply chain risk management are finally coming into focus. With an SCRM solution, the entire supplier structure including sub-suppliers is mapped. In many manufacturing companies, this structure is now very complex and extensive.
With the help of a distributed system, however, this complexity can be divided up sensibly and thus significantly simplified. Every manufacturing company knows its direct suppliers and can also name the key suppliers. Each of these suppliers in turn knows its sub-suppliers and so on. This creates a structure that resembles the root of a tree, and everyone is only responsible for maintaining their relevant suppliers. Alternatives can also be entered and, in addition to geographical criteria, other decisive criteria can be queried, such as certificates, contractual rights of intervention, permits, or proof of origin. Such a structure can be kept up to date at any time with little effort and provides risks in the supply chain at the push of a button if global or regionally limited problems occur. And of course, the supply chain map is the indispensable basis for developing and evaluating countermeasures and playing through threat scenarios.
Promotes risk management in the supply chain
Some providers of SaaS-SCRM solutions have now established themselves as full-service providers. One such provider has global information networks to detect local incidents early on and to continuously monitor all supply chains for impact. In addition to the political, social, and natural events already mentioned, media reports, trade restrictions, and bankruptcy notifications can thus be taken into account. A definable and rule-based warning system enables every manufacturing company and also its suppliers to proactively manage supply chain risk – with manageable effort.
Incidentally, for many service companies that are subject to the control of banking supervision, the documentation of supply chains is already mandatory today, as failures of (sub-)suppliers can have massive consequences, especially in IT. With the appropriate digital solutions, risky single-sourcing situations within the entire supply chain can be detected and optimized. Recognizing and reducing Covid-19’s influences on your supply chain at an early stage