It’s been a rough year. Businesses have gone under with full order books due to supply chain disruption experienced on an unprecedented scale. They simply haven’t been able to get the materials they need to fulfil the orders they have. Some organisations have attempted to mitigate these problems with rapid ‘nearshoring’ strategies, but for most that’s not been an option.
2020 – The Year of Supply Chain Disruption
2020 saw one of, if not, the biggest supply chain disruption since World War II. The COVID-19 pandemic posed questions that we’re still yet to answer. But some lessons are already emerging. Tech, whether new or repurposed to fulfil a novel function, will be essential in steering us through the next globally disruptive event.
When supply chains experience a major disruptive event, the impetus is on managers to leverage existing and novel tech to find solutions. It is often the smaller organisations that are nimble enough to react first, setting standards and enforcing norms.
The Benefit of Supply Chain Integration
Martin Vares is MD of Manchester-based cloud manufacturing startup Fractory. Fractory enables remote, end-to-end manufacturing processes that are integrated with shipping. He believes the pandemic shutdown provided lessons to supply managers, if they want to take them.
Martin Vares of Fractory
“The Covid situation was unique. Supply chains barely managed because manufacturers were cutting their headcounts or stopping operations completely. Shipping delays added more difficulty. This meant many engineering firms were seeking solutions that solved both production and transportation at the same time. I believe this is why we got a big boost in interest in our service.
“The Fractory platform enables real-time online production quotes. We take care of everything from pricing and production to delivery. We outsource manufacturing to our carefully vetted partners. Some customers were wary of this dynamic but during the lockdown, they quickly discovered the benefits. We have more than 25 manufacturing partners, so are insulation from fluctuations in capability.”
Addressing Procurement Problems at Source
Tata Steel’s Matt Yeates, managing director of their SteelScout procurement platform, says that manufacturing companies with existing digitised supply chains were uniquely placed to support the economy.
“The power of digital in solving these problems, from 3D printing to multiple participant video conferencing, has never more been more apparent. Digital enablers for the manufacturing value chain are developing fast and their value at the moment is magnified against the challenges of continuity for key industries and workers.”
While there are lessons to learn from what happened when the global economy got locked down, it remains to be seen if industry leaders want to learn them.
How Tech Can Tackle The Next Supply Chain Disruption
A study conducted in December 2020 revealed that consumers and supply chain workers alike anticipate that Brexit, another potentially huge supply chain disruption – albeit localised to the UK and parts of the EU – will have a significant negative impact on supply chains.
The research found that 33% of UK workers think the UK’s customs infrastructure will struggle with the increased import and export paperwork and that 31% think UK businesses are insufficiently prepared for post-Brexit trading.
The survey, conducted on behalf of the digital customs clearance platform KlearNow, also found that 28% fear consumers will suffer as a result of poor customs infrastructure and 15% say it’s “unacceptable” for a nation like the UK to have a customs system that still relies on manual data entry processes.
Sam Tyagi is CEO of KlearNow and is an experienced global supply chain expert. He believes Brexit, combined with a COVID-19 hangover and historically poor customs infrastructure is a recipe for supply chain disaster.
Supply chain expert and American Red Cross advisory board member Sam Tyagi.
“It’s abundantly obvious that as of right now, there simply aren’t enough staff employed at UK borders to handle the increase in workload brought about by Brexit. Our fear is that this will quickly lead to a two-tier system whereby larger importers spending more money on landing their goods are prioritised at the expense of smaller business and their customers.”
Essential Criteria for Supply Chain Resilience
Resilient supply chains are built on the following criteria.
- End-to-end visibility – businesses need to know where things are at any given time. At present that’s almost impossible due to conflicting priorities across different border processes.
- Simplicity – customs clearance processes are opaque and error-prone. It’s not a surprise that shipments get delayed due to incorrectly filed paperwork and missing documentation. Border operators ought to be aiming for easy-to-follow processes that work globally..
- Consistency – customs clearance processes can vary from country to country and port to port. This creates unnecessary friction in global supply chains. Cooperation between nations and border operations, and the adoption of a universal standard, would be a great start in addressing sluggishness and low productivity at these common friction points.
The Need for Rapid Digitalisation
“Non UK businesses are already declaring their intention to stop importing to the UK as they discover the extra cost and workload required to land their goods. It is simply not going to be viable for a lot of smaller and medium sized businesses to land their goods in the UK.
“Without the rapid implementation of technology to make customs clearance easier, faster and cheaper, this trend will continue and UK consumers will suffer as a result” says Tyagi.
“Customs clearance is the most outdated and high friction part of the global supply chain. A lot of customs entries are still completed with pen and paper. This is unacceptable for such an integral cog in the global supply chain system.
“KlearNow has been designed to remove friction from the customs clearance process. The platform provides end-to-end visibility for all parts of the customs clearance process and to date has helped businesses in North America to export and import goods in a way faster, easier and cheaper.”
The Post COVID-19 Supply Chain Toolkit
The post-COVID supply chain tool kit will be virtual. And the most essential functions required will be remote access to, and control of, complex processes and system and end-to-end visibility. Supply chains are complex and the economy can longer expect them to rely on humans being in a specific place at a specific time, which is where we were at the start of the pandemic.
Without the rapid implementation of technological solutions at the most troublesome supply chain bottlenecks, we’re doomed to ignore the lessons we’ve learned this year.