May 16, 2024
Availability and reliability are critical for successful and sustainable manufacturing operations. For many company decision-makers, this necessitates relying on a plethora of suppliers to keep supply chains moving and customers satisfied.
However, these partnerships are not without challenges. Research reveals manufacturers worldwide lose an average of $184 million annually due to supply-chain disruptions.
Where do these disruptions come from? A substantial number can stem from suppliers. Discovering methods to mitigate these occurrences can instigate a ripple effect, allowing your company to streamline processes with those suppliers and deliver more reliability to your clients and customers.
The Challenges Faced by Suppliers
When suppliers falter, the reasons are not singular; they can be multifaceted.
Lack of resources can lead to disruptions by impeding suppliers’ ability to maintain consistent production levels, resulting in delays or inability to meet demand. Furthermore, a deficiency in critical inputs such as raw materials, skilled labor or technology not only affects the quality and quantity of outputs but also escalates operational costs, putting financial strain on suppliers and potentially leading to cutbacks or shutdowns.
Confusing sub-supply chains can also introduce multiple points of failure, making the entire supply chain more susceptible to disruptions as issues in any single link can ripple through the network. The complexity reduces visibility and control, making predicting or quickly responding to problems challenging. It often complicates coordination and increases reliance on intermediaries, heightening vulnerability to delays, quality issues and increased costs.
Furthermore, insufficient compliance and auditing within supply chains can lead to disruptions by exposing companies to regulatory penalties and legal challenges that interrupt operations and damage reputations. Without rigorous auditing, unnoticed quality or safety issues in products can surface later, necessitating recalls or causing harm to end users, thereby straining customer trust and relationships.
All these outcomes contribute to struggles in visibility and communication, two critical aspects of any partnership, regardless of the tier.
How to Leverage AI and Advanced Analytics
To mitigate or lessen the impact of the challenges posed by these issues in the supplier/client relationship, recognition is essential. This involves acknowledging the issues themselves and understanding the best ways to address them. The following four strategies are well-suited to help overcome these obstacles:
Incorporate digital tools. Acquiring tools that enable real-time progress tracking and parts availability can provide insightful glimpses into what is and isn’t working, with minimal downtime and disruptions. Research and procure tools offering analytics and parts-management features, accounting for supplier performance, parts availability, compliance and risk, among other variables. This proactive measure can foster better information exchanges, allowing both sides to understand each other’s current status. They can voice risk concerns, examine supply volumes and forecast disruptions rather than merely reacting to them.
Assess suppliers regularly. As times, regulations and circumstances change, ensuring suppliers remain on the same page with your company is crucial. Otherwise, both your business and your partners will linger in a perpetual state of catch-up. Leveraging advanced analytics to scrutinize extensive data regarding supplier performance, dependability and potential risks significantly improves the process of evaluating and choosing suppliers. This approach allows businesses to make better decisions on their supplier partnerships, minimizing the risk of operational disruptions.
Conduct regular audits. Regular audits of on-time, in-full rates can enable companies to leverage advanced analytics and AI on existing data to quickly identify supply-chain bottlenecks, obtain swift near-term predictions and receive intelligent recommendations for making high-impact decisions. This empowers organizations to proactively respond to demand signal changes at the right time and place, optimizing planning, production, logistics and distribution across the end-to-end supply chain.
Improve communication and teamwork: AI technology can improve interactions and cooperation throughout the supply chain. Leveraging capabilities such as advanced analytics and machine learning, AI tools can seamlessly help prioritize suppliers, highlighting crucial updates or concerns requiring immediate action. This capability ensures that vital details are promptly noticed and addressed, enabling companies to react quickly to any disruptions.
Supplier relationships are valuable when they yield dividends, but managing them can be challenging. Understand the risk specific to your supply chain, then integrate these strategies into your process to maintain robust processes and relationships.
Anita Raj (pictured, left) is a product marketing expert at ThroughPut, responsible for the vision, strategy and execution of go-to-market and product marketing initiatives.
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