What can Supply Chain Management do?

What was not an issue before 2020 has been a real challenge for many companies since Covid-19: delivery difficulties and interrupted supply chains affect production, inventory management, and sales – and thus business success.

As early as 2020, 52% of all company managers surveyed wanted to make changes to global supply chains due to the effects of the Covid-19 pandemic. 31% of the companies were planning changes to the digital transformation due to the crisis, and another 38% wanted to reassess digitization in the company.

Digital management of supply chains can help effectively – but isn’t that just something for large companies? Or can supply chain management also help small and medium-sized companies in a crisis to have more security in their business processes and ensure stable supply chains? And how are supply chain managers dealing with the consequences of the pandemic?

There are already some insights from what has now been two years of crisis.

Was it Supply-Chain-Management (SCM)?

Supply chain management is all about optimizing supplier and customer networks, which are often complex and sometimes changing. A common definition describes supply chain management as the strategic coordination of all business functions and decisions along the supply chain, both intra- and inter-organizational and system-wide. The goal is always to improve the performance of the company and the entire supply chain.

Or to put it more simply: A management that coordinates and optimizes the flow of all materials and information in the value chain. This includes the construction and management of integrated logistics chains (material and information flow) from the extraction of raw materials through the processing stages to the end consumer.

The core task of SCM is therefore always the planning of processes to secure the flow of goods – other definitions include not only the flow of information but also the flow of money in the company.
For an effective supply chain, management numerous departments of the company have to be coordinated: procurement, purchasing, production, and sales, but also other areas such as accounting or research and development. IT tools are often used for analysis.

Digitization of business processes, for example with an ERP system that can record and map all resources and processes in the company, is a good basis for successful SCM. In line with the respective company, production, merchandise management, and also trade via online shops can be easily planned and controlled. Such an ERP system, in turn, can be easily supplemented with business intelligence (BI) solution that efficiently analyzes extensive company data.

Supply chain management also for medium-sized and small companies?

While supply chain management is a matter of course in corporations and large companies, many small and medium-sized companies are still wondering whether they can really benefit from it. However, due to globalization and ever more rapidly changing markets, SMEs are also increasingly under pressure and competition. It is also worthwhile for medium-sized and small companies to think about optimizing logistics and supply chains – or to rely on competent external partners for this purpose. Even without a supply chain manager, it makes sense for every company to take a close look at its own supply chains, warehousing, and logistics, especially now in the crisis. There is always a potential for improvement, and precautions for any delivery problems that may arise should be planned in good time.

Delivery bottlenecks due to Covid-19: Does SCM help with broken chains?

Due to the global trade routes, supply bottlenecks already affected many companies in 2020 at the beginning of the pandemic. Further bottlenecks and delivery difficulties are to be expected in the coming months. The difficult delivery situation around the world will very likely continue to accompany us in 2022. Some leading economists even see a prolonged trend towards a scarcity economy. So the question that affects all organizations is: what is the best way to manage supply chain threats from outages?

The consequences of Covid-19 are also new territory for supply chain management. Even the best supply chain management has no influence on a lack of chips and parts that are not available anywhere on the market or deliveries that are stuck in containers in the Suez Canal.

Supply chain managers have therefore also become crisis managers during the pandemic. Like everyone else, you are facing challenges from Covid-19 that cannot be mastered with previous methods and common solutions. Even seasoned professionals are beginning to falter since hardly all influencing factors and changes can be taken into account and predicted.

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As far as possible, preventive emergency plans and measures are developed in advance that takes effect in the event of supply chain interruptions. It is important to create transparency at all levels of the supply chain and to analyze the mutual dependencies of the supply chains in the respective regions. Precise requirements planning is required, combined with a well-founded assessment of how demand is changing. Contracts need to be scrutinized and re-examined, force majeure clauses and exclusions re-evaluated. With regard to uncertain material deliveries and unreliable logistics, the formation of buffer stocks makes sense. A balanced inventory should always be in focus. Assessing alternatives and diversifying suppliers are other options that can be used to prevent business disruption.

Above all, in the crisis, with the ever new challenges, flexibility, new ideas, and improvisation skills are in demand. Therefore, medium-sized and smaller companies currently have advantages, since they can usually react more quickly.

Enterprise resource planning as the basis for supply chain management

Successful supply chain management and optimized supply chains are always based on comprehensive, up-to-date data on all company processes and resources, which can be clearly processed and analyzed. In small companies and craft businesses, consistent digitization of business processes makes a significant difference and decisive advantages: from a simpler and faster overview of inventories and finances to easy and efficient planning and control of processes. Modern company software for enterprise resource planning (ERP) enables even smaller companies to react even faster to changing market requirements and crisis events.

The advantages of ERPs for your warehouse and logistics processes:

• transparent inventory management in real-time
• Minimizing the capital commitment
• optimized picking, efficient storage location coordination
• effective team support, best possible workflow
• improved customer service through interlinked logistics processes
• seamless connection to third-party systems, better system security
• Simplification of logistics processes also through the mobile provision
• Acceleration of business processes

If you integrate storage and logistics modules into an ERP system, you not only significantly speed up the processing of orders and can reduce the error rate. All logistics processes are managed efficiently by you – from procurement to delivery. In this way, you optimize your storage and logistics processes and are better equipped for current challenges such as interrupted supply chains. Intelligent digitization can be the key to success.

Even after Corona, integrated business planning that aligns sales, supply chain, and financial goals will be one of the most important business processes. Supply chain management will play an even greater role in the future growth and survival of a business than before.

If you would like to find out more about supply chain management, integrated warehouse, and logistics processes or the possible optimization of your business with ERP systems, we would be happy to advise you personally.