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How to achieve supply chain agility

Manufacturers should focus on improving by continuously working on new ideas and strategies to stay relevant. Moreover, they also need to drive out costs and improve customer service. 

It has been proven that companies that work on supply chain agility have better customer service rankings than their competitors. Companies using strategic supply chain models with interactive software build up the core of their business.

Supply Chain Agility

When a market responds to changes smoothly, it is referred to as supply chain agility. Moreover, these changes are vast and involve everything from what the customer prefers to economic and market volatility.

It isn’t just about adjusting the daily operations and workflow to meet internal KPIs. It is about changing the process internally by improving manufacturing supply chain agility. It means data management, adopting new technologies and vendor service agreements.

The aim is to maintain a responsive and informed supply chain that can get through the market changes without hassle.

What does a successful supply chain agility rely on?

Successful supply chain agility relies on the following.

  • Understanding what the external factors are shapes your supply chain logistics. It needs to be considered even if the business is stable.
  • The value chain components affected by the disruptions in the industry should be explored.
  • Integration of a proactive technology for addressing the value chain points.
  • The new process should be regularly analyzed, for example, production cost savings, and cross-functional collaboration. Moreover, adjustments should be made when needed.

How to improve supply chain agility?

Here are some strategies that can help you in improve your supply chain agility

Examination and Adjustment

A successful supply chain doesn’t start by isolating your company nor requires you to create key performance indicators just for new ones. If a business wants a true agile chain, it should respond to the changes within the broadest industry. It allows the organization to be aware of what is happening in the market, why it is happening, and what can be done about it.

Since the outlook is comprehensive, the companies face struggles managing the facilitation, considering a true agile system. The leaders expect changes in everything—for example, the labor, inventory practices, logistic providers, and product development relationships.

Real-Time Point of Sale

Manufacturers have started using software for demand planning. They gather insights for aggregate historical data and focus on making improvements through inventory. Moreover, their shipping schedules are based on the previous cycles. However, this makes the pattern monotonous. Though it is essential to supply chain agility, it should not be the only focus point. When companies balance their demand and planning, they witness greater success.

Production and Selling Data Synchronization

Production planning and scheduling data systems should be aligned with demand-driven sales. It creates a more efficient and effective chain of networks. When these databases are integrated, it removes the response times according to the variable demand cycles. In addition to reducing out-of-stock issues, and improving the overall control of inventory.

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Supply Chain Visibility: All There is to Know!

Why should you care about supply chain visibility? 

Supply chain visibility means being aware of what is happening in your supply chain. Moreover, although the meaning is simple, it isn’t something that can be achieved easily. Since the past few years, multiple organizations have experienced disruptions in their supply chain due to weather changes, unforeseen circumstances like fire, and natural disasters, for example, storm warnings.

After a thorough analysis of the companies, the observation suggests that most companies were caught off guard since they had a poor supply chain. Furthermore, in some cases, companies were unaware of their supplier’s and sub supplier’s whereabouts. Some of them were also unaware of the critical dependencies. 

Supply Chain Visibility

There are various definitions for supply chain visibility. However, the most common one is the ability to track raw materials and components from the original manufacturers and suppliers. It is all through the organization’s manufacturing facilities provided to the customers. In addition, for retail operations, the goods are tracked from the suppliers to the end customers.

When the situation is ideal and the supply chain visibility is good, chief officers have access to the following data

  • Supplier’s order receipt
  • To complete the order, the status of the raw materials is available
  • Manufacturing program and status of the supplier
  • Supplier’s delivery date
  • Details of shipment
  • Regulatory and customer information
  • The status of the order regarding the progress plan

If companies want to gain full benefits of supply chain visibility, all the information should be trackable in real-time. However, some organizations can and do achieve this.

A manufacturer has the option to digitize his entire factory to track the transformation of raw material to finished goods. However, they will not be able to keep realistic estimates until they don’t integrate IT into their system with the suppliers. Based on that, there are two parts for visibility

  • Operational Visibility 

It means that you can gain visibility for your operations, for example, whatever product is under your care can be tracked at any time. Considering a factory, it can be the IoT sensors monitoring machine usage and inventory levels? Moreover, data silos are reduced when the IT network is interconnected.

  • Partner Integration

Partner integration means that a company can choose a partner to drive high-level internal visibility. Furthermore, they can also extend it to their supply chain partners. When you have your real-time tracking system, you can easily schedule a suite. This additional integration can help in covering the whole value chain.

Importance of Supply Chain Visibility

Modern supply chains are very complex in most cases. According to the statistics, supply chain complexity is unignorably when supply chain visibility is considered. A lot of companies also had the misconception that their company could achieve complete visibility over internal, inbound, and outbound aspects of the supply chain. Moreover, the surveys were all unanimous and most companies viewed the importance of improving supply chain visibility for availability and on-time delivery. In addition, companies with full supply chain visibility achieved a higher EBIT on average.

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3 Learnings for More Diversity in Supply Chain

Although the pandemic caused significant damage to the supply chain and logistics, supply chain organizations couldn’t stop staying committed to diversity, equity, and inclusion also known as DEI. Supply chain organizations are holding larger companies and depicting a solid representation of people of all colors. The main focus areas for diversity in supply chain are recruitment, learning, and development. These three areas are keys to DEI’s success.

However, the pandemic didn’t leave a chance to disrupt supply chain operations in the workplace and production units. But high levels of dedication and motivation of supply chain organizations and their employees didn’t stop them from working for their companies’ sustainability. The recent work survey by Gartner Research and the Association for Supply Chain Management released a report on the current state of DEI in supply chain. 

Dana Stiffler, VP analyst at Gartner, said that:

“Our 2022 results find that supply chain organizations show strong intent to encourage inclusion, diversity, and equity, especially for women and marginalized racial and ethnic groups. However, we also see a chasm between global, publicly held companies and the rest in terms of commitment and results.”

Scarcity of working talent:

Supply chain organization heads are currently dealing with an extreme shortage of working talent. To hunt for new talent, leaders need to closely reassess and evaluate candidates’ DIE’s commitment and relevant knowledge about supply chain management and logistics.

A study on diversity, equity, and involvement in the supply chain from Gartner in 2022 was conducted on a global level. This survey releases a report which stated three primary learning keys and methods for the respondents in Canada and Europe.

Learning No. 1: Big and global companies should lead the way

The major difference between global companies and smaller companies is the amount of commitment, interest and dedication of their employees. Besides these three factors, their pay equity is equally important. The reason behind this disparity and misbalance is a large amount of scrutiny that global firms face from their big financial investors and regulators. Their essential stakes are involved in the company; hence, if they wouldn’t scrutinize it, they have to bear potential losses.

However, color representation is better in all aspects of global companies. According to the data, 45% of full-time supply chain employees in international organizations are people of color versus 40% in their small peers.

Learning No. 2: Goals and prompt accountability are key to success

This does not mean supply chain team heads in smaller companies are supposed to make little progress in their respective firms. Everyone should work to their maximum capacity and implement the finest methods of supply chain sustainability which will result in DEI success. 

Goals ultimately need a working and active implementation of ideas. This is one of the working keys of global companies. Larger organizations have three times more fixed DEI initiatives. These organizations enhance and try to grow DEI outcomes at equal priority as other business goals. 

Learning No. 3: Recruitment should be an investment priority.

After you have understood your DEI goals, your immediate next step should be on how to accomplish those goals. With this, you also should realize how powerfully you can implement your DEI initiatives. Recruitment, learning and development, and employee engagement are essential aspects of supply chain organizations. Recruitment initiatives should focus on various interview panels and diversity referral programs.

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Metal Price Hike in US Amid Shipping Cost Surge

Rising prices of raw materials used for electrical appliances like refrigerators, microwave ovens, motorcycles, and plumbing tools depict no clear signals of lower cost because the United States supply chain crisis shot up indefinitely. It resulted in an unprecedented metal price hike.

John Gillespie, the current commodity manager of Superior Essex Company, stated in one of his press conferences that he is clearly seeing the significant problems and issues that will accelerate in the country in the upcoming days due to the inflation surge. Superior Essex contributes to supplying a more substantial amount of metal wiring to electrical grids, stations and homes in the United States. John Gillespie said that with the ongoing shipping costs surge across the United States, shipping and logistics of aluminum and copper are highly affected.

Pandemic lockdown also caused a significant rise in the costs of rail freights and trucks to transport things across the state, which indirectly affected delivery timings and caused delays in transporting raw materials to the customers. Manufacturers and owners of production facilities are paying all-time high prices to buy copper, aluminum, neon, zinc and other essential raw metals that are needed for something as large as automobiles and as small as a simple electrical socket at home. The shipping cost of copper and aluminum in the United States is record high right now if we match the data to 2004 when raw materials prices were also fluctuating. Aluminum transport solely makes up 30% of the total metal price.

Ships and boats are stuck in one place for days and rail freights do not have enough working staff and team. Eventually, rail yards are overly crowded with people and raw materials because it also been stuck in about 2000 cars and trucks. The working team is limited and they have to extensively dig it out with man force, which takes longer than usual. The ongoing storm also imparts a ripple effect and customers are demanding raw material but unfortunately, the material is not even present there anymore. 

Supply chain surge is all over the news bulletin and headlines these days stating that inflation surge is a rebound consequence of pandemic and key commodities prices are at record-highest right now which never happened in more than fifteen years. The reason for inflation is the limited supply of raw materials due to the ongoing pandemic. Federal and regional governments are trying to take immediate action on this matter but seems like things are out of their hands too. They are attempting to reduce the inflation surge and hoping that moderate hang-ups will help in smoothing out the stock market in the year 2021-2022. 

According to Fast markets, the premium price range of copper jumped up to almost 10 cents per pound which is nearly 25% higher than what it used to be back in 2004. Consumers who used to buy copper via Comex in the Midwest of the United States are paying double the rates after the pandemic to buy copper for the same quantity.

The cost surge is even worse and economically unbearable for aluminium. Over 50% surge has been recorded in aluminum rates in the past three months. Customers are paying an additional amount of eight hundred dollars per metric ton and the raw material price of 4000 per ton. Customers who buy aluminum from the London Metal Exchange in the Midwest of the United States are facing a surge of almost 40-50% over premium prices of aluminum.

As the year 2021 tapered off, the overall pricing of industrial metals came down drastically but another wave of inflation was observed with the discovery of the omicron variant. This developed even more pressure on the already shambled supply chain. In late January, a record increase in the price of industrial metals was observed.

Production owners and metal traders released an official statement in which they said that aluminum and copper are now available; however raw metals are not in an adequate quantity and place to be utilized due to the limited functioning of trucks and rail freights. Canada is one of the largest aluminum suppliers and makes up almost 60% of the aluminum supply to the United States. For that very reason, truck drivers across Canada and US were motivated to get vaccinated and be more active at work but somehow this twisted the matters even more.

Jorge Vazquez, a managing director and researcher at Harbor Intelligence, said it is highly likely that shipping rates and logistics will come down to the standard pricing range by the last six months of this year. The apparent reason for this decline can be the dissipation of logistics gradually. Harbor Intelligence also said Federal Reserve would revise its monetary funding policy and increase interest rates.

Jay Richman, the founder of New Jersey-based E.W. Berger & Bros., said that his company and relevant product services have to wait almost three to four months to deliver their delayed orders in time. He also added that according to last year’s data, their orders were delayed about seven to eight weeks and before the pandemic, the waiting time was around one to two weeks.

In one of his latest press conferences, Richman said that his company receives copper in pieces. If the company asks for 700 pieces, they will only receive 70 pieces, sometimes even less than that. There is no betterment so far. Richman is one of those manufacturers who buy from domestic and local sellers like Amtrak. Richman’s company suffers from a downfall because of the inflation surge and lack of raw materials.