Discover how DHL Group increased connectivity across the enterprise and automated multiple processes end-to-end
Anything that interrupts the production, sale or distribution of products, goods or services can be defined as a supply chain disruption.
The most recent major supply chain disruption that comes to most people’s mind is of course, Covid-19, which threatened and halted supply chains around the world.
Supply chains can face disruption as a result of:
Failure of IT systems: If the technology supporting your supply chain fails, then your supply chain as a whole is likely to fail too.
Inflexibility to supply chains: It can be difficult to adapt if there is an issue somewhere in your supply chain, like shortage of a raw material or closure of a shipping route. An inflexible supply chain also makes it hard to meet customer demands for personalization or customization.
Logistical delays and failures: Issues with machinery or transport can really disrupt supply chains, as organizations have to wait for repairs or clearances before the supply chain can run smoothly again.
Product problems: When products do not pass quality assurance, this can cause delays to deliver goods, which has a knock-on effect and can disrupt the entire supply chain.
Natural impacts on raw materials: World events and pandemics can cause issues at the source, meaning that goods can’t be manufactured until alternative suppliers or replacement materials are found.
In terms of particular events, there is of course the aforementioned global Covid pandemic in 2019, which impacted supply chains around the world. The national lockdowns that took place to prevent the spread of the virus also prevented the flow of raw materials and impacted manufacturing, leaving shortages and long lead times on goods. A survey of 200 supply chain executives by EY found that only 2% of companies felt fully prepared for the pandemic, with 72% reporting a negative effect.
Additionally, in 2021, there was further global disruption when the container ship, Ever Given, got stuck in the Suez Canal, causing an estimated $15 billion losses per day it was stuck (a total of six days) as it blocked the route which facilitates about 12% of global trade, including around one million barrels of oil per day, according to the BBC. Goods such as spare parts for motors, coconut milk, and Amazon products were halted on their routes.
A disrupted supply chain can pose severe challenges for organizations. Aside from the obvious immediate effect of delays to product availability and delivery, supply chain disruptions can cause problems such as:
- Revenue loss: Delayed orders may have to be discounted, or manufacturers may incur fines for failing to meet contractual obligations if they fail to deliver goods on time. Some customers may cancel orders altogether, resulting in a loss of revenue to the business.
- Additional expenses: It can be costly to rectify issues of supply chain disruption, such as expedited shipping to meet deadlines, which are more expensive, or alternative transportation such as air rather than sea freight. Disruptions caused by a shortage of raw materials can also lead to increased prices, so companies need to pay premiums to secure the scarce materials or source alternatives.
- Customer dissatisfaction: Customers are understandably frustrated when they do not receive their goods on time. This can reduce customer loyalty and force them to take their business to competitors.
- Longer lead times: It can take significantly longer to manufacturer and send goods to customers, and even after the initial incident, there can be knock-on effects that increase lead times.
- Reputational damage: Repeated disruptions can harm a company’s reputation and brand image. Supply chains need to be flexible and reliable so that organizations can deliver high quality goods, on time.
“A resilient supply chain is one that can easily adapt, rebound, or recover when faced with economic shocks that are either idiosyncratic, e.g., a local supplier plant shutdown, or systemic, e.g., the COVID-19 pandemic,” reports the White House in the report, Issue Brief: Supply Chain Resilience.
You can minimize the impact of supply chain disruptions and create resiliency by:
Flexible business processes: Mapping and automating your supply chain business processes end-to-end helps visualize where potential bottlenecks may arise, and gives you the option to adjust processes if there is a disruption.
Creating a collaboration portal: Having all suppliers supported on one platform eases vendor relationship management, and helps to coordinate with supply chain partners. This brings agility to operations by enabling collaborative workflows and helping with risk management, milestone tracking, capacity collaboration, and predictive analytics.
Incorporating AI and intelligent automation: Bringing AI and intelligent automation to your supply chain can help with lead time predictions to keep orders on track, predictive analytics and forecasting to foresee potential bottlenecks, inventory management to predict demand management and manage warehouse stocks and reserves. Automation can prevent bottlenecks in areas such as intelligently planning shipping routes, automated taxing, and journey tracking that provides real-time updates to customers.
Enabling real-time communication between parties: Being able to communicate with vendors, transportation providers and customers in real time helps to manage issues should they arise and gives organizations the power to make informed decisions. You can also communicate disruption to customers to adjust expectations and show that you are being proactive.
Conducting supply chain risk assessment: A very worthwhile task is assessing areas of your supply chain that are likely to experience disruption. You can then create contingency plans and adjust accordingly so you are prepared should these events occur.
Smart Factories: Also known as Industry 4.0, smart factories enhance the resilience of supply chains by allowing for rapid adaptation to disruptions as it is easier to adjust production processes. Additionally, intelligent technology such as IoT sensors provide an immediate feedback loop that can flag if there are any manufacturing issues, resulting in fewer disruptions and allowing for quick corrections.
DHL Group automates Cross Border VAT: The Duty VAT Billing process was almost entirely manual, handling over 2,500 shipments a day in Switzerland alone, so was valuable to automate and save time and money on this high-volume process.
Bizagi acted as the process automation orchestrator to connect technologies including UiPath RPA, ABBYY Flexicapture and the Oracle finance system to provide end-to-end automation. Bizagi has achieved a 95% automation rate by eliminating manual tasks and providing end-to-end orchestration of technologies.
CBC intelligent order management and route planning: CBC have multiple strict SLAs that they need to meet as part of their dispatching process, including quick turnaround times and ensuring delivery trucks comply with strict regulations for early morning deliveries.
The vendors now submit their information for orders and dispatches through SAP, with Bizagi providing end-to-end orchestration of the process. SAP sends a notification to Bizagi to plan the dispatch route. Specialized software is used to map the routes, taking into consideration the volume of the delivery, number of stops and distance covered. Every step in the process is tracked and handed off through Bizagi to ensure that all steps are accounted for, and all SLAs are met.
Secure your supply chain to prepare for any potential disruptions with a low-code automation platform. This helps you take a flexible approach to your business processes, offering agility in the face of disruption. And the platform offers a collaborative, informed approach to working, helping to foresee certain disruptions, respond to any issues and communicate with stakeholders to negate knock-on effects.
Find out more about Bizagi’s supply chain solution and how it could support your business.
