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Over the past year, supply chain has become a ubiquitous term around the globe. The unprecedented challenges brought on by Covid-19 required us all as business leaders to rethink our norms and pivot quickly to adapt.
In particular, four key challenges raised by the pandemic shifted the spotlight on supply chain from cost centre to competitive differentiator. As a leading B2B tea and coffee solutions supplier, Finlays’ operations span five continents and 10 countries. Our bush-to-cup agricultural and commercial value chains were already tackling these challenges. The pandemic simply accelerated the platform for investment and change.
So what are these four challenges? And how can organisations seek to turn each challenge into an opportunity?
Challenge #1: Kick-starting a digital transformation. Overnight, many businesses had to migrate from office to work from home. Geographically dispersed and culturally diverse, we had relied heavily on traditional forms of communication and collaboration, from e-mails to cross-country travel for in-person meetings. Reliance on paper document hand-offs quickly converted to digital files to sign and transmit with customers and suppliers alike. Tools like Microsoft Teams and SharePoint be came everyone’s online file cabinets and break rooms for sharing and connecting. The value of virtual and digital now fuels new ways of working.
Challenge #2: Managing customer demand through volatility. Forecasts are always wrong, but they remain critical to business planning, management, and strategy. Sales & Operations Planning (S&OP)had been implemented in only part of our business, with focus on monthly risk and opportunity reviews on volume and revenue over an 18-month planning horizon. S&OP is now more than ever a differentiator for fast-growing and complex commercial regions, connecting customer-forecasted demand to supply and service.
Challenge #3: Balancing inventory and service. The quest to reduce working capital and increase service to the customer brings constructive tension to Finance and Supply Chain. We quickly concluded that optimising stock levels and On Time-In Full performance could not be sustained through manual data and spreadsheet analysis. Supply Chain Planning solutions, which we are now evaluating to select and pilot by year-end, should translate to multi-million-dollar inventory improvements and double-digit percentage gains in efficiency and time savings. Pursue value beyond cost.
Challenge #4: Building business continuity with complex supply chains. The Suez Canal blockage from the Ever Given container ship in March 2021 heightened vulnerabilities in global supply chains. Ports and ocean container shipping lines face ongoing challenges of congestion, capacity, and misplaced equipment. Strengthening logistics supplier relationships are even more critical, especially where working capital includes transit inventory on ships traveling thousands of ocean miles for weeks at a time. Forecasts and committed volumes to carriers are levers to negotiate extended shipping rates in a market that is still experiencing 3x-4x increases in spot prices. Real-time visibility and predictive ETA’s are now must-haves.
This brings us full circle. The pandemic crisis has created a burning platform for digital capability. The roadmap and transformation journey must start from a business strategy and have a destination in sight. Where we work from now matters less, but how we work must adapt and change. Digital competence in our supply chain had been seen as an enabler, but it is now a necessity. Returning to business as usual in 2021 looks and feels different. Act with urgency to move from challenges to solutions. After all, it’s good for business– and for our people.