Evaluating your supply chain

Supply chains work best when economies within each link of the supply chain are in harmony. Goods and services flow unencumbered and a pattern forms, allowing producers to re-stock in time for an increase in demand and de-stock as that demand drops away. For perishable, or short-lived goods this process is central and a key to bringing costs down and efficiencies up. We have seen disruption to that harmony. Ultimately, this means higher production costs and lack of availability in materials and unfinished goods. SME’s traditionally have a greater concentration of suppliers and therefore this has a potentially greater impact upon an SME business than larger global organisations.

No organisation was prepared for a global level pandemic and the huge surge of demand in certain products and services, where we immediately saw supply chains broken, logistical nightmares and a shortage of supply.

In a recent survey conducted by APQC, it was found that most companies missed their supply chain performance targets in 2020, which is not surprising given the massive disruptions from the Covid-19 pandemic and Brexit. Only 27% of the surveyed organisations met their customer service and inventory goals

Moving forward SME’s need to evaluate their engagement with their supply chain and consider what can be done to improve its flexibility and resilience. To ensure it is fit for purpose in the future, there are three main areas to consider:

Investment in supply chain visibility

How much visibility do you have on your end to end supply chain? There can be no flexibility without the visibility of the entire process, starting from raw materials, through tiers of suppliers, manufacturers, distributors, to end customers. It is about consolidating data obtained throughout the whole chain to establish real-time visibility on key operational information, including source of origin, location, temperature, status, inventory level, throughput, capacity utilisation, and bottlenecks.

As an SME you will need to work proactively with other organisations in your supply chain, to be able to better predict supply and demand patterns and improve overall planning accuracy. To create that visibility, incorporating technology is critical and therefore you will need to invest in building systems with integration capabilities to enable data to flow throughout the supply chain. Larger organisations will be doing this, and without playing your part an SME will be left outside.

Questions to ask on supply chain adaptivity

When did you last evaluate your suppliers? How quickly can you scale up/down your capacity in response to unpredicted demand surge/dive? How quickly can you adapt your supply chain to respond to changing consumer behaviour?

We have seen businesses shipping from overseas experiencing extreme difficulty with shipping disruption. Are alternative suppliers closer to your market readily available?

Raw materials have been a bottleneck for many SMEs during the pandemic. Maybe it's time for you to re-evaluate your supplier’s ability to adapt. Alternatively, can you assess the feasibility of adopting different designs, manufacturing processes and materials for your products?

Critically if you have a sole-source supplier, how resilient are they? Do they have the capacity to expand as you may need, or are they limited? Perhaps a partnership or investment would be prudent? Remember, how adaptive your entire supply chain can be is limited by the least adaptive link.

For an SME that manufactures, tooling and production lead times for certain parts could be very lengthy. Production processes take time to be set up, and then can be inflexible to change. Have you or your supplier considered 3D printing as an additional manufacturing strategy?

All businesses are currently seeing a shortage in labour in the UK. If you find this is your bottleneck can technology solutions like robotics and Robotic Process Automation (RPA) help you automate some of your operations and significantly reduce reliance on labour? Alternatively, outsourcing has already been utilised by many SMEs to mitigate supply chain risks and increase flexibility. Where within your SME could this be applied?

Playing your part in the supply chain

Your SME also has its own responsibilities within a supply chain. Remember that all the points mentioned above are likely being considered by your customers, looking at your business. If you are part of a supply chain to a larger business or government entity, you will also need to keep in mind additional factors, namely Net Zero Carbon and ethical considerations.

Increasingly organisations are actively looking at their carbon footprint, which includes the impact of its suppliers on CO2 emissions, in order to comply with both legislation and public expectations. They will want to know that your SME is playing its part. If part of your supply chain is in a global market, then you may also need to consider issues such as those of human rights. Even for SMEs a backlash on social media, or negative feedback on Google Reviews can seriously damage your business.

In conclusion, there is no single solution, but it is clear that as the world moves on from the pandemic and Brexit, it is critical that as an SME owner you should evaluate your entire supply chain, and re-think your strategy to ensure long term success.

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