As the world slowly opens up again, we are waking up to the realisation that supply chains are not as immutable as they were before. The logical conclusion is that local manufacturing must step up to take up the shortfall. But is this playing out?
In this interview with Kathy Gibson, Doug Hunter, head of professional services at Syspro Africa, spells out how technology is easing the way for manufacturers.
How has digital transformation in manufacturing fast tracked because of Covid-19 and the subsequent supply chain disruptions?
It’s driving different supply. Due the Covid-19 disruption to supply chains, some factors of production have had to change.
To make existing products you may have had to use alternate suppliers for input materials or ingredients similar – but not the same specification or cost – to what you were importing.
In food this leads to other formulation changes and even slightly different production processes.
Companies have had to jack up the use of ERP systems to cope so that bills of material and production stages enable accurate planning of procurement, and production quantities and costs.
Manufacturers have to pivot to address faster response and changed demand. Social distancing and working from home are driving the user of remote communications which has led to changes in consumer behavior.
Demand for main goods and less “just in case” stock, with faster more frequent delivery is now called for.
Add to this the need for safer or sanitised transport and delivery to cope with the explosion in e-commerce and Internet ordering.
ERP system have to be more sophisticated to focus on supplying products that may cost more than before – but with less cash available. Companies are also have to clean up their system data to tell reflect the truth and help you do business effectively.
In the current circumstance, are we seeing a move to more local manufacturing and/or to more agile supply chain management?
Certainly movement to the obvious like facemasks, sanitisers and ventilators has had great response locally. Not only have existing manufacturers upped production but new entrants are moving fast to supply demand. For instance, mainstream industrial clothing manufacturers and collaborative groups of individuals have been making new fashion and cool facemasks as well as other PPE clothing.
There has been a dramatic rise in 3D printing to produce face shield frames; and chemical manufacturers have swopped their production lines to sanitizer.
Meanwhile, the National Ventilator Program is funding new innovations for ventilator production.
If you cannot bring products in to the country you have to bring production and sourcing home. We are experiencing growth in import substitution of “cheap” (but good) products from China and other offshore manufacturers.
This has a cost impact on finished goods, but in a crisis people are prepared to pay a bit more for necessary products.
Because of these pressures of availability and cost, there is pressure to move goods cross border , so supply chain costs will initially increase as a result – although this will level out as volumes rise.
Will we see more agile supply chains? Maybe. But the problem is that not every supply chain participant gets it and can disrupt a potentially rapid change supply chain through sticking to the knitting.
How does technology help to enable these moves?
The first thing manufacturers have to do is stabilise their business IT. They must pay attention, and tidy up current ERP and other systems to get the value they should be. It’s important to stop underutilising good IT enablement for dubious spreadsheets and manual processes.
Companies using ERP systems are unlikely to completely change their vendor or entire business system – but they are definitely checking that the vendor they have can change and grow with them. And not all of them can.
There are moves to really optimise value from IT by working with the vendor to select new innovations or functions that match the company strategic roadmap. Relevance and priority are key.
All of this means that relationships and trust-building need to be stronger than ever.
For instance, companies may need to make flexible commercial arrangements, although the trading value and benefits from systems must still be equitable.