The Covid-19 pandemic has caused severe disruptions to supply chains across the globe. According to McKinsey & Company, 85% of global supply chains faced a reduction in operations during the pandemic, while 6% shut down all together. Although 60% of respondents expect business to recover within just six months, it’s left us questioning whether or not UK supply chains are resilient enough to overcome any similar challenges in the future.

Covid-19 was already in itself enough of a challenge for supply chain leaders to overcome, but as businesses started to make a slow yet sure recovery, they were suddenly hit with further disruptions as a result of Brexit.

While it has now been over two months since the UK officially left the European Union, post-Brexit challenges are still very much at the fore.

According to a recent Chartered Institute of Procurement & Supply (CIPS) report, delays importing and exporting goods to and from the EU have worsened since Brexit and will result in stock shortages and price rises for consumers. Two out of three supply chain managers stated that they had experienced delays of at least two to three days getting goods into the UK, compared with just 38% who reported delays in January.

These challenges are having a significant impact on several different industries. For example, Wales’ automotive industry is set to face even more challenges over future Brexit trade changes. While the UK government said new trade deals were creating prosperity, the sector is facing a significantly challenging period with the demand for cars falling and customs disruption.

It also raises once again the issues with paperwork requirements that risk the just in time model many manufacturing organisations rely on to reduce waste, storage and delays.

The repercussions of the pandemic and Brexit are only going to continue, which means supply chains are now under continuous threat. If businesses are going to overcome these issues and help ensure future prosperity, building more resilient supply chains that are agile and better prepared for unforeseen circumstances is crucial.

Identifying the weakest link

There are a wide range of different links within a supply chain — from sourcing goods and manufacturing, to distribution, shipping and receiving. If just one of these links are weakened, then it can have a devastating impact across the whole supply chain.

In order to strengthen an organisation’s entire network, it’s of vital importance to be able to identify any weak links or threats, the interconnected role they play within the business, and potential impact if they break. Priority supply links can then be strengthened, and a robust plan can be put in place to minimise any supply chain shocks.

Building resiliency through stress testing

Stress testing — the process of understanding the performance and current resiliency of supply chains and identifying any weak links — is essential.

Once the weakest link or links have been recognised by applying maximum pressure, businesses can run a multitude of specific scenarios that could potentially impact each area of the supply chain they are connected to. This helps to understand where and how their supply chains will be impacted as a result of a major disruption and to prioritise which need to be strengthened.

While the process of stress testing will be different for each organisation, they should all be built on the following:

Preparation — ahead of the stress testing process, companies need to help ensure they have a robust testing framework in place, defining user roles, types of transactions and equipment so that everyone understands the process and outcomes.

Open communication — those involved in the process need an open line of communication so the stress test manager can log questions from those involved throughout the process.

Recreate the production server — a network environment set up to recreate the company’s own production server to help ensure the scenarios taking place are as life-like as possible. This includes third-party systems if any elements of production are outsourced.

Consistency is key

While stress testing supply chains can help to mitigate any potential risks ahead of time, this should not be a tick-box exercise that is carried out only once. Stress testing should be a continuous process.

The last year has proven that stress testing is now more important than ever. By continuously identifying new priority supply chain links for development, organisations can consistently increase the quality of processes across every business area.

This resiliency will then result in the agility to react immediately to balance the impact of any unprecedented events or periods of uncertainty.

The transformation boom

Stress testing is also critical when businesses are implementing any new technologies, as a thorough auditing process is required before anything significant is introduced.

A good example is the significant increase in smart technologies as a result of Industry 4.0. IoT equipment is required to seamlessly connect across the entire factory floor in order to provide manufacturers with the data-driven insights they need to understand the overall performance of the business and it’s paramount that it all ‘speaks’ to one another precisely. 

The adoption of these technologies is only set to increase, with Covid-19 becoming another catalyst for digital transformation. Before 2020, only 27% of manufacturing leaders believed digitalisation was a priority, but that has almost doubled to 46% since the pandemic began last year. Industrial transformation will take time but it’s already upon us.

Stress testing can help manufacturers to achieve higher quality standards. In turn, it will enable them to quickly integrate the technologies that will improve operational efficiency and drive an increase in ROI — all while recognising and removing any threats that could potentially damage the business.

About Epicor

Epicor Software Corporation equips hard-working businesses with enterprise solutions that keep the world turning. For nearly 50 years, Epicor customers in the automotive, building supply, distribution, manufacturing, and retail industries have trusted Epicor to help them do business better. Epicor’s innovative solution sets are carefully curated to fit customer needs and built to respond flexibly to their fast-changing reality. With deep industry knowledge and experience, Epicor accelerates every customer’s ambitions, whether to grow and transform, or simply become more productive and effective. Visit www.epicor.com for more information.

The contents of this document are for informational purposes only and are subject to change without notice. Epicor Software Corporation makes no guarantee, representations, or warranties with regard to the enclosed information and specifically disclaims, to the full extent of the law, any applicable implied warranties, such as fitness for a particular purpose, merchantability, satisfactory quality, or reasonable skill and care. This document and its contents, including the viewpoints, testimonials, dates, and functional content expressed herein are believed to be accurate as of its date of publication, April 2nd, 2021. Use of Epicor products and services are subject to a master customer or similar agreement. Usage of the solution(s) described in this document with other Epicor software or third-party products may require the purchase of licenses for such other products. Epicor and the Epicor logo are trademarks or registered trademarks of Epicor Software Corporation in the United States, and in certain other countries and/or the EU. Copyright © 2021 Epicor Software Corporation. All rights reserved.

 

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