Most companies in the business of selling products have been suffering from supply chain issues since the pandemic. The supply chain is how raw materials are acquired to be manufactured into parts that are then purchased by other manufacturers to be made into finished products. These are, in turn, purchased by retailers and distributed to retail outlets and the public.
Today, this supply chain spans the globe because raw materials are usually from certain countries, manufacturing into components are in other countries, manufacturing into finished products are in separate countries, and major retailers are usually in first world countries.
Covid-19 disrupted supply chains around the world. It halted the collection and transportation of raw materials and the manufacturing of components such as computer chips or lumber, thereby halting finished products such as automobiles and houses. Supermarket goods were also affected. According to CNBC, economists from Euler Hermes attributed 75 percent of the decrease in trade volume worldwide to production shortages and 25 percent to logistic jams.
Supply Chain Management
The Council of Supply Chain Management Professionals (CSCMP) highlights that businesses must provide customers with seven rights of order fulfillment. First, they must ensure that the customer’s chosen product is available. Once the order is in, it must be processed correctly and quickly. Payment must be convenient and safe for the customer. The product must then be shipped immediately through the means chosen by the customer, and the customer must be provided with the tracking number and other shipping information. The product must be delivered on time and with no damage. This is why the use of forklift fork covers is essential. Completing the seven steps will encourage customer loyalty and repeat orders.
However, the availability of products can only be possible with proper supply chain management (SCM). This is challenging during the pandemic. According to NerdWallet, technological tools using artificial intelligence (AI) for data collection and analytics can help companies manage the supply chain. Today, even small businesses can afford such software. They are worthy investments because they can make the difference between success and failure.
Inventory tracking software automatically logs every sale and can send a notification when certain items are running low. Synchronizing it with reordering software will ensure that the next step is on time. To determine the level at which an item needs replenishment, the company can use sales analytics software that identifies trends on which items are selling fast and which have low demand. The company can then focus its resources on high-demand items and not waste capital on having a large inventory of slow-moving items. The software can also collect data on customers’ online behavior to predict any upcoming changes in demand.
Thomasnet recommends that businesses source their raw materials, components, or finished products locally. It is much easier to communicate with suppliers nearby or at least in the same time zone. This also ensures quicker deliveries, lowers the cost of transportation, and reduces the need for additional warehousing between the supplier and the buyer. This will increase revenue not only because of lowered costs but also because the consistent availability of products will please more customers.
Data from Thomasnet surveys show that in March 2020, only 54 percent of manufacturers planned to use North American suppliers. Now, 83 percent intend to shift within 2022, with 72 percent of industrial buyers intending to always buy locally. In contrast, just 10.8 percent would rather always use suppliers from around the globe.
Sustainable SCM and Social Responsibility
Sustainability is also now a must in the supply chain and its logistics. All businesses must contribute to the goal of reducing dangerous greenhouse gas emissions to net-zero by 2050. For that goal, major changes must be implemented now. Sourcing locally meets sustainability goals. Shortening the distance for the transportation of goods means lower emissions.
Businesses that must still source globally bear the responsibility for ensuring that emissions are lowered at every point—from the manufacturing practices of their suppliers to the entire logistics of delivering the products to them. Current government regulations require them to include this as part of their sustainability reports.
Social responsibility is also a must for every business. People have become aware of oppressive business practices in which products are manufactured overseas in subhuman conditions just to increase profit. Many companies have already earned the public’s ire and have felt this in the form of boycotts. Today, businesses must also take responsibility for human conditions in their supply chain and logistics.
The problems brought about by the pandemic in the supply chain, and logistics are a wake-up call to businesses. These also provide them with the opportunity for a reset. Mindsets and processes must evolve to meet the current needs of the planet and its people. Only then will success benefit everyone.