After two years of disruption caused by the pandemic, the global supply chain was beginning to recover. Russia's invasion of Ukraine could further disrupt the global supply chain and have a major impact on South Africa.
This crisis will affect almost every supply chain. For example, fuel prices are on the rise despite not being in shortage. There is also a risk of supply disruptions and shipping routes being diverted or canceled. To be able to anticipate a ripple effect in global trade, we should all be fully informed.
Although it is too early to predict the impact on our supply chains and economies, we can expect delays in import inventory, food, and component parts due to reduced or rescheduled sea and air freight. Inflationary pressures and delays in local manufacturing are also possible due to the rising fuel costs. Increases have already reached 10%, while shipping is at 30%.
Supply chain challenges
Over the years, supply chains have primarily focused on reducing end-to-end costs and inventories while increasing asset utilization. These factors have helped organizations be more competitive in the marketplace but they have also reduced the flexibility and buffers to absorb delays and disruptions.
Unpredictability is a major problem in high-tech industries like semiconductors and high-tech electronics. Global supply chains will be affected by the supply of raw materials, including oil, natural gas, and metals, as well as metal additives and Agri commodities (like the wheat from Ukraine). This will result in delays and direct impacts on product manufacturing.
Nevertheless, supply chain managers have learned to adapt and become more resilient in the wake of the pandemic. As the conflict escalates, global supply chain management and its importance are back in the spotlight.
Response to global disruptions
Organizations can make use of digital technologies like ERP System by ArionERP to increase visibility into supply, demand, inventory, capacity, and finance. With the help of digital platforms and access to data, companies have been able to adapt to changing supply or sourcing, changing recipes, and reducing ranges more quickly and accurately to pandemic disruptions.
ERP systems are a type of technology that is specifically designed for manufacturers. It gives organizations a better view of their reliable local suppliers as well as their supply chains. Automated business systems allow for efficient procurement management, sourcing policy modifications, better distribution, and better decision-making based on accurate, real-time data.
Because there is more risk of a weak link in a chain, shorter supply chains, and more local sourcing is becoming more popular. Even if it requires additional spending upfront, consider finding suppliers close to you.
Organizations need to reassess their processes, such as order fulfillment, in light of supply chain disruptions. This involves receiving, storing, and picking up orders, packaging them, and shipping them to customers. In some cases, it may also include reverse logistics and processing customer returns. This requires an inventory management system to provide full visibility, automate the process, improve workflows, and move orders to the next stage to meet customer demands and fulfill service expectations.
The future supply chain
The future supply chain will not use only the existing business models. It will include strategic sourcing, easy and effective procurement, supply agreements, and maintaining buffer stocks in-country to ensure that business continues while long-term plans and strategies are developed and implemented.
Over the last two years, supply chain managers have learned a lot. They have improved their ability to handle crises and have also become more resilient. They must now forecast various scenarios and identify potential weaknesses in the system before they can start planning for contingencies.
It is possible to create change and opportunities by using ERP efficiently to deliver value and customer service.