The Pandemic Challenge: Pivoting Supply Chain Requirements to Deep Insights and Resilience
The COVID-19 pandemic is the most serious challenge the world has faced for decades, affecting almost every aspect of our lives in every corner of the globe. One of the biggest challenges, beyond public health, has been to keep global supply chains flowing – ensuring factories can secure goods and services including raw material to logistics in order to meet customer demand and expectations, despite unprecedented pandemic disruptions.
Supply strategies and supply chain operating models have been challenged like never before. One example is Just in Time (JIT) supply-management. The JIT approach helps manufacturers optimize their supply chain, production lines and manufacturing footprint while tying up the minimum amount of capital. Organizations often implement JIT strategies by supporting their factories with an ecosystem of suppliers that can deliver parts on-demand from locations based just hundreds of meters away. These local ecosystems often work well, once connectivity has been established and information can flow freely between customer and supplier. However the benefits of “optimized” inventory supply chain models supporting manufacturing can break down once local supply lines start having supply-chain issues of their own, as has happened during the pandemic. This has prioritized the need to de-risk the supply chain, focusing on end-to-end supply chain strategies while highlighting the value of data connectivity and analytics to enable actionable insights across the network.
Global supply chains are complex and often have dependencies that are only revealed in a crisis. There are many examples with most triggered by natural disasters, economic events, and market imbalances. These can be as varied as the fire at a chemicals factory in 1993, which impacted the semiconductor resin supply chain; to the global pandemic that took hold last year triggering many companies to cancel their semiconductor orders. Who would have predicted that the manufacturing capacity released by those cancellations would quickly be completely absorbed to produce parts for phones, tablets, laptops, datacenters and consumer goods to the point that many automotive production lines now stand idle waiting for semiconductors? Once again, this highlights the need for insights and intelligence to manage today’s interdependent supply chains.
Another complex challenge to global supply chains has come from the logistics network. The global pandemic has exposed gaps in capacity planning, predictive ETA and end-to-end visibility across multiple modes of transportation, air, ocean, rail, ground. Point-to-Point visibility is not good enough. Historically, the business of moving goods from origin to destination within a set timeframe was fairly predictable. The digital economy combined with changes in customer behavior and expectations during the global lockdown has accelerated the need for a digital supply chain. Matching information, visibility and goods across the ecosystem from start to finish while sharing intelligence, insights and optionality in order to respond to unexpected changes is more critical than ever.
Recent examples include:
- Air freight capacity plummeting as commercial flights which carry up to 70% of global air cargo were cancelled as a result of country travel restrictions
- Ground transportation becoming less reliable as truck and train drivers stopped work
- Ocean container shipping being less predictable as COVID protocols and port quarantine rules were implemented, all with docks handling 50% more cargo than normal
Indeed, at one point there was such demand for capacity to move goods from Asia to the US and Europe that ships were being sent back to Asia empty, rather than waiting for them to take on return cargoes.
Importantly, Molex is focused on responding to these complex supply chain challenges and opportunities to ensure that we can access the raw materials, components and services needed to meet our commitments and customer expectations. The pandemic continues to highlight and prioritize key capabilities needed for a resilient end-to-end supply chain.
Molex is deep in the throes of its Intelligent Digital Supply Chain transformation.
Building industry leading capabilities focused on providing a customer advantage while delivering speed and agility across the supply chain. Key to our success is working with our customers, suppliers and partners, connecting and sharing value, and creating data sets, intelligence and insights to drive transparency and performance.
This is allowing Molex to respond quickly to market dynamics. As we learned from the automotive industry example, it is no longer enough to respond at the orderly pace of business-to-business (B2B) transactions. We need our end-to-end supply chains to respond on the order of business-to-consumer (B2C) capabilities.
Building trust and mutual benefit with our suppliers and partners is helping us gain greater comprehensive insights into the supply chain. And, by leveraging those insights, we are better able to create a comparative advantage for our customers, suppliers, partners and Molex.
The pandemic has both profoundly disrupted and accelerated the digital economy and is redefining what good looks like for B2B and B2C supply chain performance. Through our laser focus on the customer experience and comparative advantage created by delivering an industry leading end-to-end Intelligent Digital Supply Chain, Molex is creating a supply chain that aligns to all of the opportunities and challenges that lie ahead – for us and for our suppliers and customers.