Companies everywhere are following a new trend that goes by a number of names: onshoring, homeshoring, nearshoring – or my favorite, friendshoring.
The idea is to move production closer to home to avoid the risk of disruption increasingly associated with models that put low-cost overseas production at the center of supply chain planning and operations.
Such moves may or may not minimize risk. But to the extent that companies equate onshoring with a kind of self-sufficiency, it’s important to remember that no company is an island. Even if you can stroll over to your manufacturing plant during your lunch break, you still need to collaborate with partners and make good decisions quickly based on complete information from up and down the supply chain.
Too bad, then, that many recent efforts to increase supply chain resilience have been piecemeal and far too narrowly focused. Process improvements and system upgrades focused on one aspect of operations to the exclusion of the rest of the company only amplify the problem of silos operating in isolation.
The vision needs to be bolder.
A supply chain to protect your entire business
Today’s supply chains cannot be an either-or proposition – either homegrown or global, either efficient and low cost or reliable and resilient. Today’s supply chains need to be both.
Supply chains, in other words, need to be risk-resilient and efficient. They need to take into account cost, speed, profit, customer service, and risk. This can be accomplished by connecting every process, contextualizing every decision, and collaborating with partners without obstacles.
Connect every process
Risk-resilient supply chains integrate design, planning, manufacturing, logistics, maintenance, and service. This helps to minimize data disconnects and process silos. Now, you can innovate faster and speed manufacturing runs – even for the individualized products customers increasingly demand.
Let’s say you offer customers the ability to configure products online and place an order to meet their individual requirements. When all critical phases of production are connected, you can smoothly integrate design requirements with production engineering. You can manage engineering bills of materials or recipes through a consistent digital thread that’s ready to be handed over to manufacturing.
Production engineering keeps last-minute engineering changes in sync with the shop floor, and the delivery of raw materials and parts is orchestrated between manufacturing execution and warehouse management systems. That’s a smooth process – one enabled by improved process integration and greater digitalization.
Contextualize every decision
Risk-resilient supply chains bring accurate, in-the-moment operational data together with always-up-to-date business information. This allows supply chain managers to make better decisions in the moment.
Should you offer a discount to valued customers? If a supplier fails to deliver on time, how will this event reverberate downstream and impact customer satisfaction? What would be the impact of a 5% increase in the price of your products? Is there enough demand for an enhanced product feature to ensure profit? How much more will products cost if manufactured in Plant A versus Plant B? If you offer sustainable parts, will more customers purchase?
Contextualized information is needed to answer any of these questions. If you can empower your people with contextualized data that highlights the tradeoffs for any decision point, you can improve performance. What’s needed is a platform and tools that allow you to take full advantage of AI and other intelligent technologies. By identifying patterns impossible for humans to detect, these technologies can help you make better business decisions without hours of analysis.
Collaborate with your ecosystem
Risk-resilient supply chains create dynamic, digital connections across all your suppliers, contract manufacturers, logistics partners, and services providers. These digital connections facilitate fast, intuitive collaboration on demand.
Such collaboration helps you gain full visibility into your partners’ capabilities, capacity, and performance. Now, you can plan with precision and confidence. You can better coordinate with partners to ensure that supply meets demand – and that you meet your commitment for on-time, in-full delivery.
Don’t invite risk – prevent it
If minimizing risk is the new supply chain zeitgeist, then it’s only more important to connect every process, contextualize every decisions, and improve collaboration with partners. No supply chain runs in isolation. Greater connectedness that spans the entire enterprise and extends to partners helps you identify risks early and react quickly in an informed way based on the latest information. This is what helps you build a risk-resilient supply chain.