The Importance of Mitigating Supply Chain Management Risks
The Importance of Mitigating Supply Chain Management Risks
How S&OE (Sales And Operations Execution) reduces this risk is a big concept both in terms of importance and how many elements of global supply chain management it includes.
We are talking about the risks and factors that manufacturing companies must address and fight against to ensure stability and reduce the amount of uncertainty in a globally competitive and variegated landscape.
No matter how diligently planners and logistics managers work to reduce this uncertainty, risks of all kinds can plague companies throughout the value chain, from planning and procurement to production and transportation logistics.
All of this being said, there are some strategies, solutions and principles that manufacturing companies can implement and integrate to reduce risk levels across the organization which also helps to increase productivity and increase efficiency.
To also promote higher levels of agility, transparency, and end-to-end (E2E) visibility across multiple channels including sales and operations (S&OP), inventory optimization, demand capacity planning, production programs, and transportation management, planners and managers must understand and realize the importance of managing and mitigating risks, especially to reduce the possibility of disruption or damage.
With this in mind, let's examine the importance of risk management in global supply chain management and how companies can reduce this risk by leveraging some important principles and concepts.
1. Embracing Industry 4.0
If we consider Industry 4.0 to be the evolution of a “smart factory”, then it makes sense how the Internet of Things (IOT) and its reliance on communication between machines and systems were the core drivers in helping a damaged company. Communication and functional silos for increased efficiency and productivity.
This means a more consistent flow of information about inventory levels, facility capacity or transport routes and allows larger segments of the value chain to anticipate potential breakdowns or bottlenecks.
The ability of systems and solutions to work with each other not only drives greater productivity and accuracy, but also provides greater visibility into the company's overall supply situation.
Also, embracing Industry 4.0 helps reduce the risk of disruption or damage by optimizing production programs and processes to maintain high levels of productivity and efficiency.
Through the acceptance and application of advanced analytics, planners and managers have the power to harness data-driven insights to make informed decisions about planning strategies and planned production programs.
Industry 4.0 uses advanced analytics to support the drive for greater end-to-end (E2E) visibility and improve supply chain agility, both of which are key to avoiding bottlenecks and creating stability across the value chain.
2. Applications of Advanced Analytics
I have discussed earlier in this recent entry how advanced analytics are a key driver in leveraging Edge-to-Edge (E2E) visibility and insight into the overall producer supply situation.
Applying advanced analytics to demand planning strategies in conjunction with other smart planning solutions such as BOM management, Plans for each section, and each interval allows planners and logistics managers to optimize their planning platforms to ensure continuous production without hitches or breakdowns.
Also, while some decisions in today's integrated supply chain still depend on human intervention, more and more decisions can be completed more accurately and more efficiently through automation platforms.
For example, the need to manage inventory levels and replenish specific parts or manage container movements across pages are prime candidates for automation through the application of advanced analytics. Also, job allocation, management of raw materials or resources, and scheduling of work on the production floor are contexts in which advanced analytics gives planners more power and control over production programs.
3. Make use of "What-if"
Scenarios What-if scenarios are useful in both medium- and long-term planning and allow planners to play disruptive simulations that would be too expensive or unfit to operate in a real-life manufacturing environment.
While integrated solutions such as sequencing, order-slotting, balancing are essential in carrying out efficient production at this point, what-if scenarios allow planners to test the limits of specific production facilities based on defined parameters to understand how well the facility can handle orders, modifications, and changes to production rules or definitions.
Also, what-if scenarios give planners and managers the ability to optimize and increase efficiency with inventory. What if scenarios give planners a window into the current section coverage and what steps should be taken to ensure sustainable production if the flow of materials and resources stops for a long period.
Planners and logistics managers can also decide whether to increase inventory or yard ownership or utilize a modified sourcing or haul strategy to ensure sufficient coverage to withstand large scale disruptions.
4. Understanding And Delivering S&OE
For logistics planners and managers, supply chain agility is a major concern when evaluating overall supply chain management. Micro-agility, or the ability to respond to sudden interruptions daily, has recently emerged as a pressing issue in capitalizing on the principles of lean and effective supply chains.
Late deliveries, forecast errors and other small scale disruptions can be reduced through S&OE through better scheduling and reliability of deliveries, reduced raw material excess or shortage, or fewer sample production programs that are rescheduled or reallocated to meet customer demands.
Also, because S&OE provides a window into the weekly supply chain situation, planners and managers can essentially work backward or forward in the demand planning process to increase visibility across supply flows at several levels, whether daily, weekly, monthly, or even annually.
This structure improves the supply chain and makes it easier for individuals throughout the value chain to uncover weaknesses or inefficiencies at each stage of the process, which in turn makes streamlining and optimizing the supply chain a much easier and more effective result to achieve.
Hopefully the description of this article on the Importance of Mitigating Supply Chain Management Risks was useful and useful for you.
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