In response to COVID-19, the global electronics value chain and global manufacturers have responded in numerous ways. In some cases, we’ve seen heroic efforts that overcame impossible odds to provide critical devices to hospitals in the worst days of the pandemic. In other cases, we saw organizations accelerate their digital transformation to stem the tide of delays and shortages.
Still others fell into a war room style of management, becoming wholly reactive and focused on solving the immediate problems as quickly as possible, with minimal costs. As the dust begins to settle and we move towards a new year, what lessons have we learned from this? What can we carry with us into 2021 that provides a foundation for future resiliency and new forms of intelligent, cross-functional decision making across engineering, supply chain, finance, and commercial teams? It’s time to look back, so we can move forward.
Covid-19 Pandemic Exposes Major Gaps in Intelligent Supply Management
We have long known about conventional risks in the supply chain. Variables in technology, price, demand, and logistics are always a distinct possibility, but are ultimately manageable with the proper mitigation strategies and visibility to orders, shipments, and inventory.
What we have rarely focused on in recent years is the non-market risks that lay outside the purview of your typical experts and supply chain professionals. These are the environmental issues, catastrophic weather, factory fires, and now, as we’ve seen, pandemics.
This global pandemic is something that science warned us about as a society, and yet manufacturers failed to incorporate potential pandemic risk in their planning for business continuity. Now, faced with no other choice, we are forced to rethink and redefine our approach to resiliency and agility in facing such challenges.
In the end, supply risk has become a data problem. While procurement is often focused on reacting to continuity of supply issues as they appear, this broader view of operationalizing risk intelligence has far-reaching implications on how market leaders will emerge in the next normal with success.
The data and related insights are out there, but we have failed to harness it. Disparate third party market intelligence and related external data remains difficult to quickly filter and translate into relevant insights in the context of key tradeoff decisions. Spreadsheets, phone calls, and email threads cannot capture it, let alone analyze it. COVID-19 exacerbated all of these issues, and showed us what happens when managing supply risk is based on siloed processes and enterprise systems.
Redefining The Concept of Digital Transformation
Digital transformation, as a term, is often murky in its meaning and overused to the point of being a vapid buzzword, but at its core, a transformation is exactly what needs to happen in light of what we have experienced in 2020.
Taking a new approach to the concept, digital transformation should turn its focus towards the electronics value chain, and how to properly create, distribute, store, and utilize data about design, manufacturing, and sourcing.
The ultimate goal of any digital transformation should be to map the supply chain from end-to-end, and understand the inherent risks present throughout. Ask yourself these questions:
- What are you actually seeking to transform?
- How is risk management connected to your transformation?
- How can you provide insight into supply markets and risk drivers and access intelligence when it’s most relevant to decision-making, collaboration, or risk mitigation?
If the global supply chain is a car on a road trip, then we, as industry professionals, have been driving without a GPS. We know vaguely where we are going, but we have no insight into traffic, weather patterns, or other types of data that could easily affect our ability to reduce risk and increase efficiency in real-time.
Beyond the injection of data and intelligence into the process, your transformation should also focus on collaboration. Prior to the pandemic, the supply chain has faced issues with component shortages, conflict minerals, and increasingly complex integrated circuit designs.
All of these things represent varying levels of risk, but that risk is nigh-impossible to pinpoint or mitigate when the various associated data streams are locked in silos. With 68% of a product’s life cycle risks decided at the point of design, why are our engineers working in a digital vacuum devoid of all external relevant cost and risk insights into the various components on a BOM?
These vulnerabilities, along with potential solutions, became a major point of discussion in the recent Supplyframe Executive Insights roundtable event, hosted by Supplyframe CMO Richard Barnett.
Click here to view the full recording, and learn more about what lessons we can take away from the events of 2020 as we set the foundation for the coming year and beyond.