Showing posts with label Supply Chain Disruption. Show all posts
Showing posts with label Supply Chain Disruption. Show all posts

Wednesday 1 June 2022

Operations and Supply Chain Visibility - what is it and why do you need it?

 

SYNOPSIS: Having no visibility, real-time insights, or reliable data on business operations or the current status of your supply chains is conceptually not too far removed from driving blind. This article briefly explains some use cases and advantages of operational and supply chain visibility platforms and systems.

ESTIMATED READING TIME: 5min

First posted on LinkedIn - read the ORIGINAL POST here

You wouldn’t drive your car blindfolded, would you?

Driving blind is a dangerous and potentially life-threatening practice, perhaps best left to trained movie stunt professionals on movie lots. The rest of us, social influencers included (even those with very deep pockets and extensive liability cover), should best stay far away.


While the image in the title has been Photoshopped somewhat, this image ☝️☝️ is the real deal and comes from a YouTube video in which a popular YouTuber filmed himself driving blindfolded. The video sparked a public outcry and negative news coverage, as one could expect. This resulted in the video initially being age-restricted and demonetised, and then subsequently removed by YouTube.

The risks caused by driving blind are rather obvious and easy for all to see - apart from the aforementioned YouTuber, and include at least the following:
  • Inability to see where you are going.
  • Inability to see how the situation around your vehicle and inside the vehicle is changing in real-time.
  • Inability to effectively make informed decisions in real-time or timeously execute corrective action to best adjust to the developing risks and changing situations around you.
  • You are very likely to cause or end up in an accident, incurring costs, losses and liability claims, including but not limited to loss of life.
Swimming in a Sea of Business, Operational and Supply Chain Risks

The same goes for managing and coordinating the various activities inside a business: in today’s equally volatile and fragile economic climate, no accountant worth his salt will manage the finances of a business blind-folded either – meaning without knowing with a reasonable degree of certainty how much the expenses are, who needs to be paid or when the payments are due, or how many invoices are outstanding and how much is owed by each debtor.

If visibility is such an obvious requirement for driving and finances, why are there parts of business operations that are still “operating in the dark”, figuratively speaking?

Have a look at almost any media outlet or newspaper and one will see headings describing losses, damages, delays, bottlenecks, shortages, and other supply chain challenges brought on by a mix of internal and external factors as well as foreseeable and unforeseeable risk events. Many existing but previously manageable challenges were upgraded and further exacerbated by the great Supply Chain crisis of 2021-2022. This in turn was brought on by (some would say ill-considered) pandemic emergency measures, which caused systemic shocks, stock outages, and shortages, shutdowns of suppliers (both temporary as well as permanent in nature); significant supply chain delays; economic hardship; and increased volatility around the world. In the process, some entirely new problems were created. The only constant is change.

In no specific order, below please find a short list of 12 examples of current supply chain and operational challenges, many of which may or could affect business operations in the Southern African (or international) market:

















Please scroll through this list. While this is by no means intended to be an exhaustive or comprehensive list, it does highlight the wide range of challenges that local businesses confront from time to time, some of which occur daily, including:
  • Supply disruption due to lockdowns 
  • Cargo and freight handling delays, accidents and incidents
  • Wastage, damages and shrinkage to perishable foodstuffs, fresh fruit and veggies
  • Political unrest, riots and looting targeting the supply chain, transporters, and warehouses
  • Import and export delays, shipping delays, border congestion and delays
  • Counterfeit products, supply chain control gaps, shortages and stock-outages
  • Natural disasters, flooding, transport infrastructure (ports, docks and roads inaccessible), unavailability of services due electrical outages, water bursting, etc

Many of these problems are caused by external factors beyond the control of the average company; they are not isolated occurrences; they are not limited to specific suppliers or carriers; they are not necessarily industry-specific; and they can and do affect the entire Southern African economy, including international supply chain networks. And these issues have disastrous effects on operational efficiency and bottom-line profits. Research by McKinsey indicates that “supply-chain disruptions cost the average organization 45 percent of one year’s profits over the course of a decade.”. For South African businesses, the cost of e.g. importing goods has increased significantly, with a 400–500% cost increase for freighting a 12-meter container by sea from China to South Africa, even for large organisations with bargaining power. On some international trade routes, shipping costs have increased much more. Risk has increased significantly. Many of these costs are passed on to the consumer, who is now faced with rapidly increasing living expenses, rising inflation, and considerably less discretionary spending power, which, in turn, reverberates throughout the economy.

It is therefore advisable to use every tool in your arsenal to pro-actively respond to the changing situation around you. Because every load counts.

So what is Visibility?


Visibility platforms (software + tracking devices) compile and analyse real-time data across the shipping journey to provide end-to-end shipment visibility across different industry applications.

This means a commercial customer has the ability to track-and-trace assets or inventory live and in real-time, e.g. from the point where the item/shipment leaves the farmer's, manufacturer’s, supplier’s, or service provider’s warehouse/distribution centre up to the point where it arrives at the destination, allowing you to keep track of the current location, condition, and status of these items throughout the journey.
  • Visibility platforms are frequently used for supply chain visibility but can have other related applications, e.g. large and complex business operations. It is important to understand that the visibility requirements can vary somewhat between e.g. a logistics business/farmer/manufacturer/distributor/retailer/importer/exporter, which could be very different from the visibility requirements of a bank or a pension fund.
  • Different technologies are on offer and the platform can obtain data via API, directly from telematics or other types of tracking IOT devices.

6 Reasons why your business needs visibility


Consider how your company could profit from having Real-Time Visibility into your operations and access to a Single Version of the Truth:

  1. Transparency - having real-time end-to-end IOT visibility on where your operational assets/inventory/shipments are, with hyper-accurate location information, despite using numerous 3rd party logistics providers or channels, such as warehouses, handlers, or distributors in multiple locations
  2. Tracking important performance data - Key indicators such as transit time, stops and halt periods, loading times, or whether unauthorised pauses or unexpected delays occurred are all available on the fly. This provides you with knowledge, allowing you to forecast if your operational assets, inventory, or freight will arrive on time, ahead of plan, or behind schedule. And allows you to keep track of supplier performance.
  3. Auditability - Having an audit trail to prove real-time conditions of fragile or high-value inventory / perishable shipments. Knowing if the cargo was handled in accordance with SLA and or regulatory compliance requirements for the duration of the trip.
  4. Real-time condition reporting - Knowing the condition of your perishable/fragile shipments in real-time, and being able to pinpoint and allocate accountability for damage if and when it occurs.
  5. Real-time actionable insights to:

  • Make fact-based decisions to respond to and manage exceptions,
  • Reduce costs and minimise damage to fragile and perishable goods, shrinkage and or losses of high-value goods,
  • Identify operational bottlenecks,
  • Make data-driven decisions to develop business cases, mitigate risks or loss prevention strategies,
  • Improve the quality of forecasting and inventory management,
  • Maximise operational efficiency,
  • Increase customer satisfaction,
  • Improve profitability,
  • Withstand and defend against disruption.

The aforementioned cover some of the advantages that Visibility platforms have to offer – including aggregated, real-time data about the movement of freight along the shipping journey, providing end-to-end shipment visibility.

6. For rather obvious reasons, then, it comes as no surprise that research by the authoritative market intelligence and investment advisory firm, CBInsights, emphasised the importance of prioritising supply chain and operational visibility platforms as a focus area for retailers. What’s good for the goose …er retailer, is probably worth seriously thinking about for other players across different value chains and different industries, too.

So, if given a choice, you would not drive blindfolded, right? Where do you see Visibility adding the most benefit to your business?


Need more information? Want to start a pilot project? Please contact us


If you have found this article useful or thought-provoking, please share it with others in your company or industry.

#IOT #retail #supplychain #riskmanagement

Photo-credits:

All media belongs to their respective owners.

Shark photo Jacob Owens + Warehouse Photo by Bernd Dittrich found on Unsplash

Wednesday 25 March 2020

(PART 3) - CORONAVIRUS BUSINESS CONTINUITY PLANNING

Business Continuity Planning for Corona, Financial Crisis

Doing business in a time of Coronvirus/Covid-19, Supply Chain disruption and Business interruption - Immediate and Short Term planning priorities


NOTE:


  • This is a developing situation. Accordingly, role players continue to react and markets continue to adjust to the emerging situation. The historical data, facts and figures contained in this article were accurate at the time of publication, but statistical figures and some facts can change over time (e.g. share prices, mortality figures, etc). References below for further reading.
  • This article is part 3 in a 3-parts series:
  • Part 1. What happened and how did we get here? (Word count: ±852)
  • Part 2. How can the current crisis affect commerce and industry? (Word count: ±1080)
  • Part 3. What are the business priories – immediate and over the next few months? (Word count: ±1675) 



C. What are the business priories – immediate and over the next few months?

If you have not yet read the previous articles (see links above), it is recommended that you read them to see the bigger picture. At the very least, read Part 2 - possible impact of the crisis on business 


 SA President announces Corona lockdown 23 March


On the 23rd of March 2020, the South African President announced several far-reaching and bold emergency measures, including a country-wide lockdown which comes into effect 26 March until 16 April 2020. During this lockdown period only selected types of organisations and businesses will remain open. For South Africa* this has been broadly defined as:
  • pharmacies
  • laboratories
  • banks
  • essential finance systems, such as the Johannesburg Stock Exchange
  • supermarkets
  • petrol stations
  • healthcare providers
  • companies involved in making or distributing food, basic goods, and medical supplies.
The categories of employees exempted from lockdown include:
health workers, in both the public and private sectors

  • emergency workers
  • security services, including police, soldiers, traffic officers
  • those in the production, supply and distribution of food and other basic goods
  • those in essential banking systems
  • people who maintain water, electricity, and similar systems.
* Different measures apply in different countries - please check with your local government.



This means businesses and organisations will have plan differently, depending on if they are locked down, running on a skeleton staff or staying open business.


What should business leaders be focussed on right now?


This is not a dress rehearsal. Business Risk Management and Business Continuity mode should have kicked in weeks ago.



There is no one-size-fits-all plan for dealing with the current situation. Below is a list of considerations which may, or may not apply to your organisation - please consider the following and determine the extent to which these are relevant for your specific organisation type. If and where relevant, attempt to tick off as many as possible of the objectives below:


Command center dashboard
Photo credit: Zignal Labs Dashboard

1. Set up / Create a Nerve Centre structure, consisting of:



  • Executives
  • Operations, Supply Chain - Procurement
  • Finance, HR, IT, (consider Risk Management, Legal)
  • Communications

The Nerve Centre acts as the command and control unit, from where accurate information is distributed. It maps and manages issues, and aligns other organisation project streams. The Nerve Centre should ideally include scenario planning expertise. For purposes of decision making, it is important to take into consideration various reliable sources of information and to update information daily.

 Free remote team software


  • Define governance requirements, Chain-of-Command, roles and responsibilities (to the extent that these may differ from typical daily responsibilities) as well as decision-making levels (emergency schedule of delegated authority).
  • Establish a meeting schedule whether working from home or with a skeleton team at the office. Define and communicate all relevant operational details, operating hours, venue access, service requirements, daily status meetings, etc.
  • Microsoft Team software
    Photo credit: Microsoft Team software
  • Test all work-from-home / remote access infrastructure and communication 
  • Consider different sources of information and make use of professionals and experts where possible.
  • The sharing of a consistent single source of regularly updated, valid, accurate and concise facts and decisions inside the organisation is invaluable. It will also prevent unnecessary deviations and debate on what the facts are, and prevent incorrect assumptions. For this reason, it is important to speak with one voice.
  • Define and clarify reporting metrics.
  • Develop plans and tactics to deal with the business interruption.
  • Ensure there is both business continuity planning – from a short-term basis (stand-in/acting in the case of illness or unavailability) as well as long term basis.
  • Consult with the necessary in-house Topic Matter Experts and do not make decisions which are outside your domain of expertise or where the decisions impact other business entities, business units or departments with no consultation.
  • Plan for business recovery once lockdown is over.



2. HR team should focus on:



  • Clear policies and procedures, and the communication of these policies and procedures to all affected parties. If in doubt on legal aspects, obtain external legal expertise.
  • Resource planning and availability – management of employees and contractors where resources are required vs non-essential staff working from home.
  • Occupational Health and Safety and the Protection of employees – focusing on both those employees who are required to remain at work during the lockdown period as well as those at home.

Masks and safety kit
  • Where required – the availability of work from infrastructure.


3. Operations and Supply Chain should focus on stabilising the incoming and outgoing Supply Chain:
  • Identifying mission-critical and significant service lines, contracts, clients, projects and products at risk or affected e.g. by supply chain delays or general interruptions – perform supply chain mapping where necessary.
 Mapping your supply chain

  • Conducting business impact analysis, risk assessments, scenario planning (e.g. at varying levels of capacity), and presenting mitigation steps and contingency planning for Nerve Centre / Executive approval.
  • For businesses that remain open during lockdown consider the implications of increased demand and scaling down once lockdown is over on Production planning, Inventory management, Demand management, Planning logistics
  • For business closed during lockdown consider potentially Scaling down and scaling up after lockdown Production planning, Inventory management, Demand management, Planning logistics
  • Regardless of closing or staying open, consider Asset protection.
4. IT should work closely with other workstreams, but also focus on


 IT risk during Coronavirus lockdowns


  • Identifying mission-critical and significant systems.
  • Conducting risk assessments, scenario planning, and presenting mitigation steps and contingency planning for Nerve Centre / Executive approval.
  • Cybersecurity.
  • Data disaster recovery and off-site/cloud storage.
  • System access in case of staff-changes.
  • Testing and ensuring the availability of remote access and support for off-site employees.
 Phishing scams spike during Corona

5. Finance should focus on:

  • Performing financial stress testing - Evaluating liquidity, working capital and cash flow requirements under various scenarios.
  • Review debt exposure and repayments.
  • Review emergency budgets and marketing – while we are in a lockdown (in the short run) the typical marketing expenses might not be.
  • Fraud and risk controls.
  • Reviewing emergency financial support from your government. For South African organisations only - Dep of Trade and Industry and tax measures announced by SARS to identify those applicable.
 Business relief for SA businesses during Corona lockdown
 SARS Corona information for businesses



6. Communication - Nobody likes a surprise, so communication should be with:
  • General - update the website to reflect business hours during lock-down and functioning contact details.
  • Suppliers – For mission-critical and significant suppliers, service lines, contracts, clients, projects and products at risk or affected, communicate on a supplier-by-supplier basis if and how projects, contracts or orders are affected.
  • Clients – For mission-critical and significant clients, service lines, contracts, projects and products at risk or affected, communicate on a client-by-client basis if and how projects, contracts or orders are affected.
  • Employees.
  • Financial service providers.
  • Business Insurance providers.

What should business leaders not be doing right now?


  • Do not ignore the elephant in the room.
  • Do not be complacent or tell yourself your business or organisation is safe from the combined effects of the Coronavirus, global supply chain disruption or the financial crisis, or that this too will soon blow over.
  • Do not believe that any strategy, plan, or tactic once prepared and implemented, is flawless or foolproof. Authorities, other role-players and markets will, over the next few weeks, continuously monitor and adjust their response to this crisis. This, in turn, necessitates that business also operates on the basis that economic, financial and operational conditions can and will change. The effectiveness of tactics and steps implemented will have to be monitored continuously, and adjusted on an ongoing basis. This may require back-up plans for your contingency plans.
  • Do not assume that the availability of information equates enlightenment or knowledgeability. Not all personnel or stakeholders have access to the same information or are equally discerning and able to automatically interpret available information in the same manner.
  • Do not be tempted to push up prices excessively or participate in price gouging which increases prices unfairly or unreasonably beyond the reach of the vulnerable. This is illegal in terms of the Consumer Protection Act, and companies found guilty of this could find themselves facing serious repercussions including legal prosecution, in addition to reputational damage. Also do not attempt to exploit fear or shortages – this is highly unethical.
  • As an employer, do not expose staff and employees to unnecessary risk and do not take rash decision affecting staff. Employers have a Duty of Care (legal in terms of Occupational Health and Safety Act 85 of 1993 (‘OHSA’) and common-law, as well as a moral obligation) towards their employees. This applies in the workplace, whether in the office or on the factory or shop floor, or while travelling for work purposes, and are required to take all such reasonably practicable precautions as may be required.

CONCLUSION



Over the last few years, life has become more and more interconnected - technology, economies, societies. The pace of change increased exponentially and with it the rate and impact of disruption. Within the space of a bit less than 3 months, the Coronavirus, or Covid-19, has wreaked havoc on day-to-day human life nearly around the world, as well as on the international economy. Life as we know it will be affected, possibly in the long run.




For business, this is the new normal – things can and will change, faster than ever before and more profoundly than ever before. Business can and will be interrupted and disrupted, and will in all probability occur more frequently. The key to business survival is in our ability to innovate, adapt and regenerate.




“Every success story is a tale of constant adaption, revision and change” – Sir Richard Branson.




As humans over generations, as a society and as business and industry, we have been able to make significant changes and pushed the boundaries of science to get us where we are today. Sometimes by leaps and bounds, and sometimes baby-steps. We will adapt and overcome this present situation too.




Welcome to Business Unusual Version 2020. Please fasten your seatbelts.


** Stay safe **.




If you like this post, please Like, Share and Comment



For more information, visit our website on www.cogniplex.co.za. A copy of this article is also posted on Linkedin.com 

All original artworks remain the property of their respective owners.

Tuesday 24 March 2020

BUSINESS UNUSUAL (PART 2) - HOW WILL CORONAVIRUS AFFECT BUSINESSES?


Business Unusual Banner

Doing business in a time of Coronavirus/Covid-19, Supply Chain disruption and Business interruption - Potential impact on Businesses and Organisations


NOTE:


PART 2 – What is the potential impact on commerce and industry?

The combined effects of Corona and the pretty much simultaneous Oil war is severe for global industry and commerce:
 Apple's production problems
  • The fall-out happened so fast that it simply was not on the radar of most organisations. Even the BCI (Business Continuity Institute) Risk Ranking (based on a survey done at the end of 2019) ranked non-occupational disease (including Coronavirus) at position no 21 out of the top 22 risks on their “2020 Risk and Threat Assessments” for the next 12 months.
  • The global supply chain was destabilised on a previously unanticipated scale. On the manufacturing side, being China, firstly by inability or delays in shipping stock out, and subsequent factory closures, leading to unplanned production stoppages and stock shortages.
  • In China itself, the shutdown had a hugely detrimental effect on the economy, e.g. car sales for Feb 2020 fell by 81.7%. Manufacturers struggle to reopen – Apple’s manufacturer Foxconn anticipated to regain only 50% capacity by the end of February, and an estimated 80% capacity by the end of March. 
  • Large international buyers who import from China usually buy enough stock to carry them through the Chinese New Year’s holidays, but as a result of delays in receiving stock, many factories are running out of stock due to unexpected shortages. This, combined with the Corona-impact on health-and-safety requirements force manufacturers to close temporarily (think e.g. VW, Porsche, BMW, Ford, Chrysler PSA, Airbus), causing further disruptions down the chain.
 VW production to shut down

  • International Travel is severely being curtailed, and big passenger aeroplanes are grounded. Airports typically were not built to offer long term storage as airport space is typically at a premium. As a result, airlines are desperately seeking affordable and safe long-term storage as thousands of trips are being cancelled.
 Corona grounded airplanes - now they need parking space

  • Lastly, on the consumer side, panic buying is putting further pressure on the system due to unexpected volumes.
  • This all leading to hitherto unseen levels of interruption in the global supply chain (Bullwhip effect + the Reverse Bullwhip effect) which may continue for months to come before supply and demand stabilise again.
  • Financial markets around the world were hit hard in the fall-out, e.g. Nasdaq experienced the biggest single-week drop since the 2008 financial crisis, and US equities suffered their worst fall since Black Monday in 1987
The disruption of day-to-day life and the very tragic human cost of the Corona/Covid-19 virus on families and communities is severe. The combined effect of the aforementioned factors is causing havoc on international financial markets on a global scale, and more so in emerging economies such as South Africa. This impact may continue for the foreseeable future. The World Economic Forum calls it an "economic earthquake", what some would say is a perfect storm, and what others refer to as a Black Swan event - an extremely rare event with severe consequences.
Consider the following cases:
  • The public education system in SA feeds more than 9 million disadvantaged school children daily. Extended school closures mean no food for many children – a sad but direct impact on the most vulnerable in our society.
 School feeding scheme

  • SASOL – the SA petrochemical giant caught up in the Oil war as collateral damage. Dropping international oil prices as well as overspend on their Lake Charles project resulted in an initial one day drop of 46.5% in the share price. Followed by subsequent movements over the following days, this cumulated in a +- 95 % drop since last year and loss of shareholder value down from R450 billion to ± R23 billion.
  • A South African wholesaler/distributor (who shall remain nameless), who identified early 2020 (or thereabouts) as the perfect time for migrating to a new operational IT system, as well as moving into new facilities. Both activities at more or less the same time - What could go wrong, right? Unforeseen issues with the system appear to have resulted in system driving picking glitches and order backlogs. This, in turn, caused significant business interruption, missed deadlines and furious customers, culminating in certain reputational damage. All this before Corona kicked in.

Potential Business Impacts 


These are but three real-life case-studies of what has happened is happening and may continue to happen to businesses, organisations and society in general in the foreseeable short-term. Effects (specifically on commerce and industry) could include the following (in no specific order):

 Panic buying in South African shops
  • Panic buying
  • Capacity constraints
  • Inability to service clients
  • Suppliers out of stock
  • Unplanned delays in receiving stock
  • The increased cost of operations
  • Inability to project demand accurately
  • Inability to project stock requirements
  • Increased working capital requirements
  • Delayed cashflow
  • Increases in debt repayment
  • Unavailability of spares
  • 3rd party credit risk
  • Production or service interruptions
  • Customer complaints
  • SLA breaches
  • Contract breaches
  • Missed deadlines
  • Lost customers
  • Reputational damage
  • Inventory previously considered as low-risk now being targeted by criminals (e.g. Face masks) due to increased demand
  • Security of assets and IT systems/stock shrinkage
  • Unusual spikes in demand
  • Stock-outs resulting in missed sales
  • Short or incomplete deliveries
  • Stock stuck in transit or ports
  • Production stoppages
  • Factory shutdowns
  • Store closures
  • Forced changes in suppliers
  • Forced changes in raw materials
  • Loss of productivity
  • Loss of revenue
  • Ineffective crisis management
  • Inability to make executive decisions
  • Inability to process transactions
  • Loss of key staff
  • Succession plan gaps
  • Absence/illness/quarantine of Key Decision-Makers, Topic Matter Experts, General workforce, Contractors, Service providers, Supplier reps / Key Contact Persons
  • Inaccessibility of facilities (e.g. Due to temporary area quarantine requirements)
While the business impacts vary from one company to the next and between industries, business and industry will generally feel in the impact of greater variability, increased uncertainty and more risk.

Potential Industries Affected 


Industries affected off the top of my head include (but are not necessarily limited to): Arts & Culture, Education, Entertainment, Events, Food & Beverage, Gambling and Casinos, Healthcare, Hospitality, Manufacturing, Retail, Finance, Banking, Transport, Logistics & Supply Chain, Health, Safety & Security, Sports, Tourism. And further sectors may be indirectly affected by a fall in consumer confidence or changing consumption patterns such as Building & Construction, Energy, Property, Investment, and Insurance. And possibly a couple of others too.

CONCLUSION


The fallout and contagion (both medically and financially speaking) is material and pervasive. Very few businesses or organisation will not be affected in some shape or form.

In the next post, we will consider potential steps management can take in order to limit the effect on business or organisations.


If you like this post, please Like, Share and Comment



For more information, visit our website on www.cogniplex.co.za. A copy of this article is also posted on Linkedin.com 

All original artworks remain the property of their respective owners.


  

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