This article is by Rob Stummer, APAC CEO at SYSPRO.
There is no denying that the Coronavirus pandemic is a disaster for our economy, but could it provide a silver lining for the manufacturing industry in Australia in terms of instigating a revival? If Australia is to repay the debt that COVID-19 will leave in its wake, we need decisive action from our Federal and State Governments, manufacturing industry leaders and also consumers to put Australia first and buy Australian made goods.
The resulting financial boost for our manufacturers from the economic boost to our manufacturing industry will mean existing producers will be able to invest in business innovation and new start-ups will evolve, which will strengthen our manufacturing industry from within, creating new jobs.
As COVID-19 lockdowns begin to ease across the globe, our manufacturers will be fully aware of the need to urgently adjust their operational strategies, increase agility, while maintaining continuity. It may feel like steering into a storm, but there are three proactive steps that can be taken to ensure they can navigate safely through to calmer waters.
- Gain greater visibility of the supply chain
Global supply chains have been disrupted due to worldwide lockdowns and the closing of borders, airports, and ports to anything but essential items, which has seen procurement teams scrambling for locally-based suppliers to ensure they can fulfil existing orders and continue with new orders. To be more resilient, businesses need to be able to quickly switch their supply-chains and shift from cost optimisation to supply security; and at the same time, ensure diversification of distribution, logistics and freight channels.
By implementing a digitally enabled Enterprise Resource Planning (ERP) system that gives them greater visibility across their supply chain, especially inventory levels at the critical stages, procurement teams can play a significant role in solving supply chain challenges. The focus should be on calculating demand more accurately, posting new tenders, and ensuring that the right levels of inventory and raw materials are ordered and delivered, in the right quantities and at the right price.
By creating the much-needed supply chain visibility, ERP technology is enabling the application of different procurement practices and policies. It is helping to change the linear supply chain into an expanded network of stakeholders, allowing procurement teams to diversify their procurement mix and supply chains, and reduce their dependence on any single country or supplier. This new type of supply chain also allows for the addition of critical steps like temporary amendment of the planned process-steps for receiving and manufacturing, to include additional quality assurance and safety stock levels.
- Localise supply chains
Reducing costs has long been a primary driver for using international suppliers from markets with lower labour costs, such as China.
On-shoring may create a stronger localised supply chain but will most likely increase manufacturing costs, and ultimately create higher prices for consumers, but it brings with it several material benefits. The global lock-down has resulted in numerous small businesses suffering financially, for example. By re-establishing local manufacturers and bringing these smaller local businesses into your supply chain, you will be helping to bring much needed financial relief to your State and the Australian economy, increase tax revenues and boost the job market. With time, you will also benefit from enhanced product quality and improved supplier standards.
The environment will also benefit, as you will be able to reduce the carbon footprint of your products due to a reduced amount of long-distance transportation.
- Use technology to connect the remote workforce
Social distancing has become the new normal and entire workforces, while having to remain separated, have needed to connect and collaborate remotely. Some businesses are being forced to work with half their normal staffing levels, with split-teams working alternate weeks or moving to a 24-hour work cycle, to prevent transmission of the Coronavirus across the entire business.
For those who have already started their digital journey, and who have a digitally enabled ERP system, this sudden shift brought on by COVID-19 has been easier to respond to, than those who have not. ERP systems have allowed improved visibility into stock availability, material requirements, suppliers, and outstanding orders, and spend with existing suppliers. Businesses can also see the number of incoming customer orders, and gain insights into potential future orders, and see briefly what their customer’s financial standing is with the business, prior to accepting any new orders. The power of a fully integrated ERP system cannot be under-estimated in troubled times like the present.
Manufacturers who are still reliant on manual processing, data capturing and reporting, are at risk of not being agile enough, of delayed decision-making based on unreliable data, and even the possibility of falling short of new government-mandated automated document processing requirements. This can be detrimental to the well-being of the business.
Manufacturers can greatly benefit from using technology and ERP to enable their remote workforce by giving them immediate insight into business activities. Accessibility to information is critical for proper decision making in every business no matter the situation. The use of automated business systems supports the efficient management of procurement and sourcing policy changes, improved distribution and lead-time planning, and better decision-making based on relevant, and accurate real-time data.
The way forward
We have all had to accept and adapt to the changes that this new normal has brought, and these three steps will ensure businesses are more agile and resilient to an ever-changing environment. As more businesses reconsider their business model, and the challenges of a new operational environment, the requirement to implement a digitally optimised ERP system that can facilitate agility and resilience should be high on the management agenda.
For those who have been delaying the transition to digital, the lessons we are learning together around the world, are evidence of the clear need for a transition to a digitally smarter business environment.
This article is by Rob Stummer, APAC CEO at SYSPRO.