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MANAGING SUPPLY CHAIN RISK AND DISRUPTION: WHAT YOU NEED TO KNOW

BY KEEWEE NG, VICE PRESIDENT, SUPPLY CHAIN MANAGEMENT, JABIL
25 MAY 2020

Lockdowns, border closures, travel restrictions, trade curbs and the stay-at-home notice. Who would have thought that the knock-on effects of COVID-19 would be so overwhelming, contributing to major contractions in international trade flows and consumer demand? Certainly, COVID-19 has exposed not only weaknesses in governments but also the vulnerabilities in the financial, healthcare and supply chains of the world.

The reality is the disruption to the supply chain occurs more often than we think. Component shortages, rising labour costs, geopolitical tensions, climate change, price hikes, financial crises, protests, strikes and natural disasters are just one of the many challenges that supply chain professionals face on a regular basis.

Supply chain professionals who were previously sitting on the fence may now feel the urgent need to accelerate the drive to digitize and automate their supply chain systems to navigate the new normal. But what do you need to know before investing in the next shiny tool?

Let’s start with purpose.

In sharing our experience, when the Tohoku earthquake and tsunami in Japan shook the world in 2011, it took us three weeks before we were able to stitch together a complete picture. During these three weeks, we dealt with disruption such as challenges in transportation and logistics trade lanes, scrambled to find alternate suppliers, faced shortages in critical components, and more. It was then when we realised that we needed a resilient, efficient and long-term solution to manage supply chain risks and disruption.

Anticipating a digital economy, we developed a solution that leverages the cloud, real-time connectivity, and advanced cognitive analytics. Called the Jabil InControl™ Intelligent Digital Supply Chain, the solution offers clear visibility across a customer’s entire supply chain ecosystem. Every facet of their global supply chain—from raw materials sources to end-customer locations—is examined, modelled and analyzed. Dashboards and maps illuminate detailed views of sourcing options, production strategies and cost-saving opportunities, together with up-to-date operational status from our most strategic suppliers across commodities such as passives, semiconductors and the distribution channels.

Today, we manage more than 700,000 active parts, US$15 billion in annual spend and more than 300 customers. Our footprint of more than 100 sites in 26 countries means we are well-positioned to propose new solutions that capitalizes on adjusting manufacturing footprint to manage certain fixed costs. Yet to be a true partner to our customers, we need the right tools, actionable insights and data to have conversations with customers and provide short-term and long-term options.

Given today’s current situation, I would like to put forward three questions that could potentially help you define your strategy:

  1. What are some of the problems you are now being tasked to solve?
  2. Does COVID-19 fundamentally change the problem statement and the role you play in the supply chain eco-system?
  3. Can technology help solve any of these problems?

I think we all pretty much agree that the answers to the questions may be summed up as below:

  • As businesses seek increasingly shortened paths to product commercialisation at reduced costs and risks, we as supply chain professionals need to continuously innovate and transform the way we work to stay ahead of the curve, specifically in linking product development, suppliers and components into the products.
  • We need to evolve from a participant to take on a role as a co-pilot to innovate together with customers, in order to provide more accurate responses to constantly changing market and consumer trends. Certainly, COVID-19 has made the case for diverse sourcing a lot more appealing. Single-sourcing models driven exclusively by cost control is not sustainable in the long run and in an interconnected world like ours, we need more flexibility and options. This will prompt a shift in supplier reliance and sourcing.
  • We are confident that the future will be driven by Big Data, Artificial Intelligence and the Internet of Things for greater actionable insights. On the production floor, 3D or additive manufacturing continues to prove why decentralization might make sense. Despite the current cost disadvantages, additive manufacturing has proven to be an excellent solution for quick turnaround, small-batch prototypes.

They say that companies and individuals who are more prepared will thrive and prosper in a post COVID-19 world better than less prepared competitors. I actually think this is a really exciting time for us in the supply chain as we explore and discover how new technologies can play a critical role in transforming and improving functions along the value chain. But are we ready to make that leap?

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Based in Singapore, KeeWee Ng is Vice President of Supply Chain Management in Jabil, a manufacturing solutions company headquartered in St. Petersburg, Florida. This excerpt is from his virtual session with Supply Chain Management eMBA students at Rutgers Business School on 14 May 2020.

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