Four Reasons COVID-19 is Accelerating the Supply Chain’s Digital Transformation

By Chintan Sutaria

COVID-19 and Digital Transformation

The current pandemic has delivered the electronics manufacturing industry one blow after another. First, the industry saw supply disrupted as the issue impacted suppliers in China at the end of their traditional Chinese New Year celebrations. Second, demand was disrupted as the virus spread around the world, forcing both industry and retail to slow and in many cases, stop. Third and finally, the pandemic has impacted the working practices in factories all over the world, in many cases resulting in partial or complete closures.

And it’s not over yet. While China seems to be returning to some form of normality, the rest of the world seems to be moving from one crisis to the next, with the potential of a second wave of infections looming large as governments juggle the needs of their economies and the safety of their citizens. 

Even the disruption to demand is less than straightforward. Some industries, like aviation and automotive, have suffered huge drops in demand, while others like healthcare are booming. All in all, it’s as volatile a market as any of us have seen in our working lives. From what we have seen so far, there has been real variability in how manufacturers have been able to manage their business through the crisis, exposing real shortcomings and stressing the importance of digitally transforming the supply chain from quotation to completion. 

Following are four of the key reasons COVID-19 is not only underlining the need to transform, but actually accelerating the transformation.

1: Without Real-Time Visibility, We Might As Well Be Guessing

From the very start of the crisis, there were data-haves and data-havenots. Those with access to real-time data and the ability to dive into that data to pull availability suffered the least. Those without data were unable to see what the disruption looked like and what the impact might be. They were unable to take the necessary steps to correct course, mitigate disruption and ensure as much continuity as possible. 

In previous disruptions, lack of visibility created similarly debilitating challenges. The so-called “tech-wreck” of 2001 was amplified by poor inventory visibility. The cost of overstocked components, often redundant, ran into the billions of dollars and slowed the subsequent recovery.

2: Supply Chains are More Complex Than Ever

When supply chains are disrupted, it quickly becomes apparent that they are substantially more complex than often realized. Supply chains are, after all, chains. They are a combination of interconnected links and, like any chain, when you move one link you disrupt the others. Also like a chain, they fail when a single link breaks down. For that reason, supply chain modeling software that can see the impact of any change has proved to be very valuable, if not essential. The ability to model what-if scenarios for any single part disruption is the only way to ensure continuity. If 99% percent of the parts are available in the right place at the right time, the 1% that is missing will cause 100% of the product to not be shipped or completed.

3: The Need for Speed

COVID-19 is not the first supply chain disruption, and it certainly won’t be the last. The truth is, we have no idea when this disruption will be over or what to expect from the next one. But, we do have to plan for the remainder of this crisis and recovery, and we do need to do all we can to be ready for the next disruption. As is often said, “it is not the big that eat the small, it is the fast that eat the slow.” Nowadays, the ability to adapt to changing circumstances is essential, and speed and agility are the keys to success. Those that have digitally enabled supply chains are ready for change, they are ready for disruption. They are the companies that quickly ramped up ventilator production and knew exactly where the materials they needed were. These faster, more agile manufacturers are the most likely to survive, and even thrive, in the current crisis and will lead the way out.

4: The Future is Digital

The writing has been on the wall for some time, and those that have embraced smart manufacturing, smart supply chains and smart procurement are already reaping the benefits. They have the aforementioned agility and speed, the required visibility and the ability to manage complexity. They also have greater efficiency, which in turn makes them more competitive. They get their quotes out first, they win more business, they efficiently place orders and get new products into production and ramped to volume. They respond to disruption fast and they keep their customers informed, which means they keep their customers!

As the EMS industry continues to respond to COVID-19, OEMs are increasingly looking to digitally transformed manufacturers. If we are to see reshoring, it is those digital-first companies that will be most competitive and prosper as a result.

In the future, digitally transformed manufacturing and supply chain management will be essential. Right now, it’s what gives the winner their edge!

 

To learn more about how CalcuQuote supports digitally transformed supply chains, please contact us at info@calcuquote.com

Author

Chintan Sutaria
Chintan Sutaria

Chintan Sutaria is Founder and President of CalcuQuote, a comprehensive RFQ management software for the Electronics Manufacturing Services industry. CalcuQuote handles the entire RFQ process from capturing customer requirements, calculating material, labor and overhead costs, and following up with a customer to win more business.

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