For the first time in modern manufacturing and distribution industries, demand, supply, and workforce availability have been impacted globally at the same time. Every major manufacturer has experienced disruptions across the supply chain for parts and raw materials, much of which has been driven by recurring volatility of supply from Asia.

Short-term measures put in place to promote business survival in the early days can lead to changes that last for decades, which means the new normal has already shifted. But while companies work through the short-term situation, it’s imperative to also consider long-term changes to the industry. Many of these changes were already stirring in early stages; they’ve simply been accelerated by the current crisis.

As COVID-19 lockdowns begin to ease across the globe, manufacturing and distribution organizations are learning the importance of being able to quickly adjust operational strategies, procurement, and the supply chain.

The Demand for Real-Time Visibility

Global supply chains have been disrupted due to worldwide lockdowns. The closing of borders, airports, and ports to anything but essential items has sent procurement teams scrambling for locally based suppliers to ensure they can fulfill existing orders and continue with new orders. Businesses need the ability to quickly revise supply chains and shift from cost optimization to supply security. At the same time, they must ensure diversification of distribution, logistics, and freight channels.

By implementing a digitally-enabled Enterprise Resource Planning (ERP) system that gives greater visibility across the supply chain—including inventory levels at the critical stages—procurement teams can play a significant role in solving supply chain challenges. Teams should focus more on accurately calculating demand, posting new tenders and RFQs, and ensuring the right levels of inventory and raw materials are ordered and delivered, in the right quantities and at the right price, while still helping to mitigate risk along the supply chain both now and into the future.

This visibility in ERP technology is enabling the application of different procurement practices and policies, changing the linear supply chain into an expanded network of stakeholders. This allows the procurement team to diversify their procurement mix and supply chains, reducing dependence on any single country or supplier. The new supply chain also allows for the addition of critical steps like temporary amendment of planned materials to receive and manufacturing process steps to include additional quality assurance and safety stock levels.

Local, Regional, and Global Supply Chains

For many manufacturers and distributors, reducing costs has long been a primary driver for using international suppliers from markets with lower labor costs, a practice now at risk with border and port closures across the globe.

On-shoring, a recent trend, “brings home” offshore manufacturing. By investing in local manufacturing, you can help bring much needed financial relief to the regional and national economy, increasing tax revenues and the job market. With time, your business will also benefit from enhanced product quality and improved supplier standards while reducing dependency on affected nations.

That’s not to say you shouldn’t continue building regional and global suppliers. Existing contractual agreements across a spread of geographical supplier networks maximizes your agility to respond to price hikes or enjoy lock-in contractual pricing regardless of current circumstances, instead of living with significant margin loss due to emergency purchases with costly suppliers due to global shortages.

Connect Remote Workers Through Technology

Social distancing has become the next normal, and entire workforces have needed to connect and collaborate remotely. Some businesses are being forced to work with half their normal staff complement, with split-teams working alternate weeks. Manufacturing and distribution operations can greatly benefit from using technology and ERP to enable remote workforce by giving immediate insight into business activities.

ERP systems allow improved visibility into stock availability, material requirements, suppliers, and outstanding orders and spend with existing suppliers. You can also see the number of incoming customer orders, and gain insights into potential future orders, seeing at a glance what a customer’s financial standing is with the business prior to accepting any new orders. The power of a fully integrated ERP system cannot be underestimated in both troubled and “normal” times.

MOM Fosters Business Continuity

The first step for manufacturing and distribution in embracing the new economy is appreciating the importance of digitizing operations. An entire production line can be digitized for an overview of where chokepoints are, and process and production efficiencies gained with Manufacturing Operations Management (MOM).

MOM creates a layer across all your machinery and production lines which is then plugged into a central ERP, complemented by automation machinery (or semi-robots) that help to manage the various machinery mechanically for downtime, or simple tasks like pushing the stop/start or temperature adjustment buttons, where no automation existed for the original equipment.

Adapting Manufacturing and Distribution to the Next Normal

Looking throughout history, global crises have typically created fundamental shifts that affect government policies, consumer behavior, and industrial sectors for a long time. It’s important for manufacturing and distribution to understand which parts of the social, business, and political environments will change post-COVID so they can plan and invest accordingly for the next normal.

Ready to take a fresh look at your operations to convert your manufacturing and distribution challenges into opportunities for growth? Talk to a software expert at PositiveVision now.