Supply Chain Flexibility: Why your customers need it
Being able to respond to supply chain disruptions, changes in demand and external market variations is supply chain flexibility. For many businesses, to thrive and gain a competitive advantage, they need to be able to flex and scale their supply chain quickly. Having the ability to; scale production, find a new supplier, implement cutting edge technology or even enter a new market, could make or break your customers business growth plans!
In this blog article, we highlight why as an ERP business, your customers need supply chain flexibility. Additionally, we uncover how you can set yourselves apart from the pack to become their go-to provider for business growth-focused solutions.
Winning new contracts
Businesses at the top of the supply chain who are creating finished products for the consumer, drive customer value. They have to understand the consumers wants and needs to ensure they meet their expectations as well as the demand. This means developing or evolving products, which as a result, filters down the supply chain. In turn, the suppliers need to be able to shift to meet the overarching consumer demand.
Without this potential to transform, it is unlikely that these supply chain businesses will win new contracts and as a result, struggle to grow. Below we take a look into this supply chain flexibility requirement that your customers need to win new contracts in more detail:
Agility and Scalability
Supply chain agility is the ability to respond to rapid changes in demand or to deal with external disruptions, for example, to quickly turn around supply goods to meet accelerated market needs. For example, the recent pandemic has caused this:
By YE24, following the COVID-19 pandemic, more than 30% of manufacturers will have changed their business models, compared with just 10% before the crisis.1
In addition, having the ability to scale up and down to meet demand is a scale supply chain. Whilst agility is to be able to respond to the market or disruption, the scalability aspect of supply chain flexibility comprises the capacity to ramp up volume production as well as being able to dramatically slow it down, all whilst keeping a viable business model.
With 94% of Fortune 1000 companies seeing supply chain disruptions from COVID-19, having a flex and scale supply chain is a must in today’s market.2
Another aspect to supply chain flexibility is to be able to adapt. As mentioned above, products often evolve or new products are needed. But how does this come to fruition? Suppliers who produce parts will need to adapt to be able to produce a new part that fits into a whole new product for the consumer. For your customers, that could look something like this:
- They need to win a new contract
- The market demand has changed
- The product they need to make is very different
- Therefore they need new machinery/different parts/raw materials to produce the product
- Resulting in finding new suppliers who can meet this criterion
- They then need to onboard the new suppliers to ensure a seamless supply chain process
Looking at a volatile market, this would mean the business would need to onboard new suppliers frequently. Technically, onboarding a new supplier into a supply chain business takes expert knowledge, which is a niche area with limited resources. It is a common problem supply chain businesses often approach us with.
Suggested reading: For more on supplier onboarding, take a look at our blog: Agile Supplier Onboarding: Supply Chain Security in uncertain times
Meet customer requirements
Depending on where a business sits within a supply chain, its focus may be different. However, all have customers they need to impress! But the question is, how do they meet their customer requirements? Let us look into how supply chain flexibility allows these businesses (your customers) to meet their customer requirements.
Source and Supply
Businesses (your customers) that produce finished products (or large products that use many different parts) will need to source to meet their deadlines. Sourcing is to find suppliers, once found, these suppliers sit within an overall contract that the customer is responsible for fulfilling. Tracking supplier performance is essential to ensuring the best outcome for their customers (your customers’ customers). By selecting the top-performing suppliers for future contracts, the customer is setting itself up for success.
On the other side, those businesses that supply smaller parts (your customers) need to deliver on time and in the correct quantity. Within this area of a supply chain, the relationship is vital. As a supplier, having mutual trust between you and your customers will enable them (your customer) to meet their customers’ requirements. Thus, ensuring the supplier is valued by the customer.
But where does supply chain flexibility fit in?
Visibility leads to flexibility
How can these supply chain businesses (your customers) “rate” their suppliers to ensure they can be flexible in their choice and reach top performance? And keep a good relationship with these smaller businesses (your customers) Well, it’s all about having visibility…
Visibility is needed to achieve supply chain flexibility. Let us play your customer’s scenario out.
They have sourced four suppliers for a contract they need to fulfil, three of these suppliers they have already worked with before, and one of them is new. They didn’t have an existing relationship with a supplier who could produce X, so they had to source a new supplier. As a result, this is a risk factor, they might be able to look at industry-related ‘supplier points’, but they have no inside knowledge.
However, the other three suppliers they have an existing relationship with, therefore, they could have chosen them based on data they have from previous contract work. For example, do they deliver on time? Have they ever made any mistakes? This type of supply chain data visibility provides them with the flexibility to easily choose top suppliers. Meaning that they can quickly decide to switch suppliers for different contracts ensuring they always have the best ‘team’ possible for the job.
By 2023, 50% of global leading enterprises will have invested in real-time transportation visibility solutions.3
In addition to this, having supply chain data visibility provides the customer with real-time data. This enables them to manage their suppliers in an agile way, highlighting issues as soon as they arise preventing costly mistakes and allowing fruitful relationships to be built and maintained.
We can see a market need and growth for this vital visibility, but the real question is, how can you offer that to your customer
How can you provide your customers with visibility?
Offer them a Supply Chain Management solution that provides them with the visibility they require. The demand in this market is set to at least double over the next decade4 and the supply chain management software market is also set to follow suit.5 This proves that supply chain centred businesses, such as your customers; are crying out for a solution that gives them the visibility they need to be able to manage their supply chain efficiently.
Here at Data Interchange, we have been providing our customers with supply chain visibility for over 35 years using Electronic Data Interchange, known for short as EDI. EDI is useful for efficient and effective supply chain management because EDI can help reduce lead time, save documentation processing cost, eliminate procurement errors, clarify inventory status information, and enhance strategic alliances throughout the supply chain.6
We have been working with ERP businesses for the last 9 years to allow them to offer this visibility to their customers.
Suggested reading: Take a look at our QAD Case Study: an ERP business who have provided their customers with many benefits, including improved visibility.
Why should I provide my customers with Supply Chain Flexibility?
There is a knock-on effect of your customers not being able to win new contracts and meet their customers’ requirements because of a lack of supply chain flexibility.
- They become less profitable
- The employees become stressed, putting strain on your relationship
- Meaning they can’t continually invest in systems and software, such as ERP
- Therefore they can’t afford to carry out transformation projects
- They then lose their competitive advantage
- Their retention rate drops dramatically
- They continue to struggle to bounce back
With that said, over three quarters (79%) of supply chain professionals reported using a “suboptimal method” such as emails and spreadsheets to manage the processes around the supply chain.7 Meaning, the majority of your supply chain centred customers currently manages themselves using a manual process.
Paired together, the manual processes and lack of supply chain flexibility will be hindering your customers and causing a lot of pain, both for the business and its employees. Therefore, it’s time to take advantage!
- Empower your customers with a solution that will provide them with the ability to flex their supply chain and they will be forever grateful.
- Improve your relationship with your customers and see your retention rate sky-rocket.
- Together with an end-to-end solution and a great relationship, your customers ‘stickiness will strengthen.
1Gartner – Predicts 2020: Resilience in Industrie 4.0 for Advanced Manufacturing Builds on Data and Collaboration Models. 2Accenture: Building supply chain resilience: What to do now and next during COVID-19 3Gartner Predicts the Future of Supply Chain Technologys 4Size of the global supply chain management market worldwide from 2020 to 2026 5Statista: Supply chain management (SCM) software market revenues worldwide from 2019 to 2024 6Springer Link: ELECTRONIC DATA INTERCHANGE IN SUPPLY CHAIN MANAGEMENT 7CIPS: Delivery demand challenges supply chain professionals