Disruption Powers Digital Supply Chain Investments

By ETQ on November 2, 2021

Supply Chain Disruption Powers Investment in Supplier Quality Automation

Besides the devastating human impact of the COVID-19 pandemic, business leaders must adapt to global supply chain disruption. The reaction to this uncertainty has been a driving force for change, with many businesses investing in protection for the future and manage supplier availability, consistency and quality. This newfound resilience has been at the forefront of the global supply chain recovery.

According to the newly published MHI industry report released in collaboration with Deloitte, nearly half the supply chain leaders surveyed increased spending on digital technologies. These investments were made to create more immediate stability for operational teams and secure a robust longer-term plan for the future.

Commenting on the report’s findings, John Paxton, CEO of MHI, said, “Supply chain resilience has never been more important. Companies that made investments in digital technologies prior to the pandemic were more prepared and able to adapt, survive, and even thrive during this disruption. They will also be ready when the next crisis inevitably hits.”

That’s been noted in various industries, and the push toward digitization is a top priority for overcoming supply chain challenges.

Top supply chain challenges

While the pandemic destabilized supply chains, there are several other challenges facing leaders. Digital solutions can help build resilience in these areas and strengthen a recovering supply chain.

Talent Shortages

Over 50% of the MHI report respondents acknowledge that their organization’s greatest challenge is hiring and retaining qualified workers.

Customer Demands

Nearly 50% of respondents stated that their customers expect  faster response times and lower costs.

Disruption

Nearly 40% of survey respondents stated that disruption was also a significant challenge.

Building resilience goes hand-in-hand with overcoming these challenges, as there are plenty of digital tools that can help organizations deal with disruption while helping to meet increasing customer demands. Supply chain quality drives overall product quality and meets customer expectations for quality products at a reasonable cost. Supply chain quality management software can help build the supplier quality and resilience that will support organizations in all types of market “weather.”

How technology can drive resiliency

Things moved quickly when the pandemic first hit. With everyone required to stay home, e-commerce sales jumped 44% in 2020, according to Digital Commerce 360 estimates. That makes online ordering 21.3% of total retail sales in 2020, up from 15.8% in 2019. The businesses responding to the global situation and offering online ordering were the ones getting through the worst of the lockdowns.

However, many well-known retailers filed for bankruptcy as they couldn’t adapt to the sudden change in shopping behavior. With the right technology in place, other businesses could move forward and remain resilient when things got tough.

Now, businesses are applying these lessons to an uncertain future. It’s clear how technology has played a part in resilience and, as a result, 49% of supply chain leaders have accelerated spending in digital technologies, according to the MHI report. These companies are investing in cloud computing, remote and connected worker technology, robotics, inventory optimization, advanced data analytics and more.

The Three Phases of Resiliency

The MHI report also identified a resiliency lifecycle that industry leaders typically navigate during global business disruption:

Respond Phase

That’s where businesses do whatever is needed to keep things up and running when the disruption occurs. We saw this in companies offering in-store pickups and curbside delivery as the first lockdown prevented shoppers from leaving their homes.

Recover Phase

This phase takes place in the middle of ongoing disruption and continues as things ease. Businesses will start adjusting their operations to become more efficient and effective. That includes adopting new technologies to help companies adapt to a new way of working.

Thrive Phase

Businesses that responded and recovered will enter a thrive phase where they revise their strategies and models for sustained long-term success following the disruption.

The common theme across all three phases is, by harnessing the power of technology to survive disruption, it can emerge even stronger than before. The lessons from these challenging times and the investment in digital can help businesses thrive — whether that’s in adapting to a “new normal” or just finding more effective ways of doing business.

How to embrace digital innovation

No matter what phase you’re in, embracing digital innovation is key to long-term success. Now is a great time to challenge leadership teams to identify where your business stands on its digital transformation journey.

Part of this comes down to leaders’ attitudes and their readiness to respond to change. According to the 2021 Deloitte Global Resilience Report, five characteristics show up within a resilient organization. Having these within your business is just as vital as having the correct technology.

  • Prepared: Leaders that plan for both the short- and long-term future of the business.
  • Adaptable: Flexible teams that can respond to disruption and other challenges.
  • Collaborative: Leaders recognize the importance of collaboration in accelerated decision-making, which mitigates risk and fosters innovation.
  • Trustworthy: Open communication and transparency build trust among employees and key stakeholders.
  • Responsible: Leaders of resilient organizations understand they have a responsibility beyond that bottom line that balances the needs of all stakeholders.

Resilience comes from both your people and the tools you use. Digital innovation helps businesses stay ahead of the game and improves adaptability when disruption hits. There are plenty of lessons to come from the pandemic, but it’s clear that businesses of all types and sizes are looking toward technology to help them thrive.

If you’d like to speak to an expert on how you can adapt and automate your supply chain quality programs, get in touch (CTA button to Ask an Expert)

FAQ

What is digital supply chain management?

Digital supply chain management uses tools, emerging technologies, and systems to streamline processes and increase efficiency across the supply chain.

How does digitization build supply chain resilience?

Digitization provides greater visibility into the supply chain. That allows long-term supply chain partnerships to grow for mutually beneficial outcomes. The data and insights can also help predict future needs and challenges, allowing leaders to pivot when faced with challenges confidently.

How can I improve my digital supply chain?

You can improve your digital supply chain by embracing new technologies, developing a resilient leadership team, and providing training opportunities for your staff.

Why is digital transformation in the supply chain important?

Digital transformation allows a connected workforce to thrive and allows a deeper insight into the entire supply chain. That enables businesses to meet demand accurately, identify trends, reduce waste, and drive profit. These can help a business become more resilient, and these digital tools can improve decision-making when things feel uncertain.