Innovation for supply chain disruption
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Faced with a scenario marked by the irruption of the supply chain, companies have no choice but to seek solutions to combat it. And it seems that they have been put to the task quickly as can be seen from a study carried out by IFS.
Precisely in this sense, organizations have adopted a preventive profile that is reflected in almost two thirds of large companies (66%) retaining a greater volume of stock. Measures that seek to avoid slowing down their activity for long periods of time, even in the face of a shortage of materials, which has also been alleviated by opening up the range of suppliers in 70% of cases.
“The industry has been very punished as a result of recent events, and for this reason, they have given their strategy a new twist. Nearly three-quarters (72%) of the survey sample say they have increased the proportion of materials/products they source from domestic suppliers as a result of these issues” Explain Gonzalo Valle, pre-sales manager of IFS.
However, together, these innovative measures are also likely to add more complexity to the supply chain, at a time when regulatory burdens (highlighted by 15% as one of the main contributors to their current business disruption) are increasing and the need to take advantage of the many benefits of the circular economy, already contemplated by 95% of entities.
Yet, as the survey indicates, many large companies have innovatively redesigned their supply chain to reduce the risk of this disruption by: offshoring to improve security of supply; keeping stock on hand to ensure they can always meet demand and increasing the number of suppliers they use to eliminate any chance of disappointing customers.
Many large companies have innovatively redesigned their supply chain to reduce the risk of this disruption.
Maggie Slowic, Global Manufacturing Industry Director at IFS notes that “Large companies are likely to incur much higher costs as well as other negative financial impacts due to the measures they are taking to mitigate disruption. Relocating the supply chain often leads to having to invest in more expensive raw materials or product components, especially as inflation rises.”
In this way, the study points out that, despite the far-reaching benefits of the circular economy, the need to adopt it is a source of disturbance for many large companies, especially if their equipment and processes are not configured to face the waste reduction and reuse and recycling of materials.
At the same time, the survey reveals that many large companies suffer from talent shortages. 65% of respondents say their organizations find it difficult to fill open positions (with a lack of qualified candidates and talent being the most common reasons), and 39% think disruption related to skills shortages within their organization will last beyond the end of 2022.
as it concludes Slowick: “Companies urgently need to find a solution that will help them manage this disruption with increasing price volatility, transition to a circular economy, and address the supply chain complexities we face. today. For this, it is essential to invest in technology that provides sufficient agility to obtain information and better forecast demand. By tackling it now efficiently and profitably, they will put themselves in a great position to not only survive but thrive in the future.”