The debate between lean manufacturing methodologies versus value chain redundancies has been going for quite some time. However, in terms of relevance, it has never been more important than now. Although it may seem a bit counterproductive at times, adding buffers or contingencies may increase the value chain's efficiency, but the associated costs over time can be also quite high.
A long-term solution may lie with processes and technologies enabling supply chain visibility, which may be expensive in the short term but cost effective in the long run. Moreover, this is a business case that ensures embedded resilience of shop-floor operations.
The latest IDC Manufacturing Insights Asia/Pacific report, Embedding Value Chain Redundancies Versus Upstream Visibility to Drive Resiliency in Asia/Pacific (Excluding Japan) Manufacturing, revealed that 58% of the organizations indicate that their immediate focus is on increasing supply chain visibility to help create operational resilience.
Figure 1: Investments in visibility versus maintaining redundancies
Sampath Kumar Venkataswamy, research manager at IDC Manufacturing Insights Asia/Pacific, says that the need for supplier diversification was also highlighted in other surveys undertaken by IDC in the last 12 months.
This substantiates the need for technology investments that can provide real-time data for creating a digital twin of the overall supplier ecosystem.
"The common thread before, during, and after the COVID-19 crisis has and will be around improving supplier networks with an intention to streamline the upstream functional processes to make the midstream operations seamless," said Venkataswamy.
Over 45% of the manufacturers in Asia/Pacific indicate that supplier management improvement and procurement is one of the areas expected to see further changes as companies seek efficiency improvements.
IDC believes that in addition to intent, manufactures need to invest in IT infrastructure that allows them to manage, track and trace their supply chain elements better. This will require both financial and cultural investment.
It is also significant that organizations wading through the current crisis have identified ecosystem transparency and automation as key changes likely to become the permanent post the COVID-19 crisis.
Manufacturing organizations need to be ready for the Next Normal where they will rely on process innovations to pre-empt and address disruptions to ensure readiness for the next big challenge (or opportunity).