[Column] Adriaan Rossouw: Reducing risks, increasing visibility in supply chain management
In the fast-paced supply chain industry, most efforts to outpace disruption are ultimately limited by the physical and financial constraints inherent to moving goods around the globe. Whether it is a strike or factory fire, new trade regulation or an unexpected supplier bankruptcy, much of how products are made and moved happens outside of our control.
There is no single fix for the many challenges businesses confront each day. However, as organisations seek solutions to deal with unexpected changes, several technologies have emerged to help manage risk and minimise losses.
“The foundation of strong supply chain management (SCM) is visibility,” confirms Adriaan Rossouw, Executive – Infor Services at iOCO, Infor’s Master Partner in Africa, operating as a Gold Partner. In many cases, visibility is simply a matter of having regular status updates or reports between a company and an individual supplier, factory, carrier, or bank. Sometimes it is done in a supplier portal or managed by a logistics provider, but rarely is visibility comprehensive.
“However, in a world where most of the information about a supply chain exists outside of the enterprise, visibility is a fundamental part of managing risk,” adds Rossouw. “Businesses that have end-to-end visibility of their supply chain are able to react to change more quickly and reduce the harmful effects of a breakdown somewhere along the way.”
Admittedly, achieving this takes more than simple point systems; it requires all parties involved in the supply chain to interact and share information in real time. Connecting all parties of a supply chain as a business network helps ensure that when something does happen, each stakeholder can adapt to the situation.
The second step in reducing risk in SCM is streamlining processes. “When supply chains achieve connectivity, paperwork is reduced, as are processes that slow production down,” believes Rossouw.
An example of where this can make a difference is in the sourcing and onboarding of new suppliers – an exercise that is traditionally slowed by the burden of contracts and letters of credit. Many companies source production in other countries as a means of reducing cost, but those costs eventually go up (especially in countries like China, Indonesia, or India, which are experiencing tremendous growth in the middle class). As the cost of doing business with these suppliers goes up, companies need to think about where to source their products next.
“However, moving into less established markets is not easy. Businesses can be slowed down by regulations and traditional processes involved with onboarding a new supplier,” concludes Rossouw. “The same network effects that promote visibility can also help here. Automated procure-to-pay processes, and greater connectivity with banks and financial institutions can help take processes and paperwork out of the equation, and in many cases, give companies a less risky way to test the waters with a new supplier.”
The state of both the local and the global economy can shift at any moment. Adaptability is the key to surviving (and thriving) in times of uncertainty. By adopting the right software that promotes visibility throughout the entire supply chain, suppliers can ensure each product has a landing point - even if it is not the one it originally set out for.
Adriaan Rossouw is the Executive – Infor Services at iOCO, Infor’s Master Partner in Africa.