The Fukushima Daiichi nuclear disaster, Trade Wars and now the Covid-19/Coronavirus disaster. A wake-up call to management teams to re-design Supply Chains.
Covid-19 came out unexpected. The virus was found in Wuhan, capital of the Chinese Hubei province. The virus was reported in January 2020. The virus is spreading quickly throughout the world. It is reported that more than 100,000 people are infected by the virus in China. Other countries have been impacted. The virus has spread to Italy, Iran, South Korea, Spain, Germany.
The impact to companies is real. BRACHIN LLC estimates that approximately 40% of Fortune 500 companies have production in Wuhan. Wuhan is the capital of the Covid-19 virus and the Hubei province. The Fortune 500 companies have Tier 1 or direct suppliers in Wuhan. The Tier 1 suppliers in turn work with Tier 2 suppliers and the Tier 2 suppliers work with Tier 3 suppliers in China. A frail daisy chain of suppliers. In addition, most Fortune 500 companies cannot identify Tier 2 and Tier 3 suppliers. The Chinese Supply Daisy Chain provides little or no transparency nor visibility. A disruption in Chain leaves you in the dark. Apple is facing Supply Chain challenges. Airlines and Cruise ship companies are also being impacted. Tesla is reevaluating its expansion to China. Tier 1 and Tier 2 suppliers in China are facing cash flows problems. Their factories are shot down and their production capacity is idle.
Companies need to Digitize their Supply Chains. The Digitized Supply Chains need to support Flex Procurement, work with alternate suppliers outside of China and other affected areas, evaluate the risk of Tier 1, 2 and 3 Chinese suppliers, implement a plan centered on demand, supply, risk, technology and finance. The plan needs a Flex Sourcing Scheme that allows you to shift suppliers to other locations including those located in North America. The main driver should not be to lower costs. The focus was to concentrate on cost minimization, inventory reduction, maximize utilization of assets, and the complete elimination of safety or buffers. China provided lower costs and now your Supply Chain is paralyzed. The Covid-19 virus has shot down production in China. It has some European countries in locked down. Transportations companies have been affected. Global Supply Chains are frail. China became the world’s production center. The Chinese production is breaking down and companies need to diversify their source of production. Currently, there is little or no risk management for supply chains.
Digitalization of Supply Chains will enable the speed and flexibility to react to world events. Digitalization will also enable companies to predict and mitigate challenges. The introduction of Artificial Intelligence, Machine Learning and Robotics Process Automation – RPA to Supply Chain Management is a game changer. Current inventory levels need to be optimized. Just in time manufacturing only considered Supply and Demand. That works fine with ideal conditions but not in emergencies. A solution is a Flex Supply Chain that allows companies to predict and adjust in times of crisis. For some companies, managing their Supply Chain is a tedious and time-consuming process because they have little or no digitalization of their Supply Chain. A robust Supply Chain provides full traceability from source to destination. Companies need to know where products were produced and/or were the products are and all stages of a product in the Supply Chain. The Supply Chain Traceability needs to be auditable. Digitizing your supply chain will also position your company for the ramp up after all current disruptions are eliminated. SAP and BRACHIN LLC support technologies that optimize and provide a Flex Supply Chain. Some of the technologies are SAP IBP, SAP S/4HANA, Cloud Computing, AI, Machine Learning, Robotics Process Automation – RPA, and Internet of Things (IoT) – provides data-driven intelligence from machines, products, supply chains, customers, and partners.
BRACHIN LLC offers Operations Inventory and Supply Chain Optimization
AI models help companies streamline their most time-intensive back-office processes. Our technologies automatically extract data from ERP systems, then we use AI models to forecast and create trend analysis. AI algorithms help improve material flow, fleet management, warehouse administration, logistics processes, and freight processing.
Artificial Intelligence (AI) and Big Data turn large amounts of structured and unstructured data into logistics and supply chain insight and allow companies to optimize their supply chains. The benefits are accurate time of delivery estimates, optimize vehicle routes and sequence deliveries, efficient shipment consolidation, insight into damage claims and returns and traceability, accountable sourcing.
For more information, please contact:
Tel. 1-(302)-715-0062, 1-(877)-212-9407