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SUPPLY CHAIN

Effectively-Tracking-and-Controlling-Inventory
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Effectively Tracking and Controlling Inventory
Effectively Tracking and Controlling Inventory 700 500 Xcelpros Team

Introduction to effective inventory management

Especially today, manufacturers, wholesalers and retail businesses from several different industries share several standard business practices, with inventory management at the top of the list.

An efficient, capable inventory management system can distinguish between struggle and success. Any boost to the efficiency of managing your inventory can result in a significant return on investment. To drive the effectiveness of your inventory management, especially when if you’re just getting started, it helps to pay attention to 10 popular techniques:

1.Fine-tune your forecasting Accurate forecasting is a must unless you want to either tie up precious capital in product stuck on warehouse shelves or be unable to meet your customers’ orders.

2.Identify low-turn stock Have a flexible ordering approach that, combined with accurate forecasting, lets to adjust inventory based on customer priorities.

3.Regularly audit your inventory Knowing—not guessing—what you have at any given moment lets you adjust ordering to ensure a balanced inventory.

4.Track stock levels You want to track all inventory from the moment you purchase raw materials or components to when you deliver finished goods to your customer’s door.

5.Keep track of your equipment Especially in a production plant – Knowing what you have, how quickly it wears and when to schedule repairs for optimal life ensures uninterrupted production runs.

6.Verify Quality Ensure all items in your inventory meet your quality control standards, ideally from the moment they arrive.

7.Categorize inventory based on customers needs Ensure you have the most sought-after products in stock at all times, working your way down the line to the least popular products.

8.Consider drop shipping This is much quicker especially for any items you don’t make yourself, especially when it becomes part of your product. An example is a Siemens ® controller for industrial machinery.

9.Rotate your stockTurn your stock so the oldest items are sold first This is especially true for pharmaceutical products with comparatively short shelf lives.

10. Use good inventory management software A viable program that meshes with your financial and sales software helps keep everyone informed, making for happier customers.

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Figure 1:Common inventory management challenges

Common inventory management challenges

Common Inventory Management Challenges

Among the most common inventory management challenges that can affect a number of different businesses are the following:

  • Inconsistent tracking Working with older software that relies on manual data entry opens a company to data entry errors. Mistakes are bound to happen when different departments use different spreadsheets to input the same information.
  • Inaccurate data Companies need to know how much of everything they have on hand and in the pipeline. Without accurate information, you won’t be able to track your production. This can be a massive problem if you’re still manually entering data.
  • Order management Manufacturers often live on the edge of logistics, struggling to make sure deliveries are going out just in time – right before their customers need them.
  • Juggling a complex supply chain Manufacturers need alternate ways of obtaining raw materials and shipping finished products. For example, your primary port is running behind because dock workers are sick. How do you get what you need when you need it?
  • Communications and planning Intercompany communication is critical, especially in a world where companies often have business units in different countries, keeping everyone focused on the same task can be difficult.
  • Robust competition In every industry, competition is ready and willing to grab your customers when you make a mistake or find yourself unable to deliver on time and within budget.

These are a few examples of the challenges faced by modern manufacturers. Thankfully, the good news is that modern ERP solutions can be a huge help when it comes to addressing these issues.

Inventory Management Software As a Solution

Several inventory managements programs available on the market today that focus not only on addressing these challenges, but also by identifying potential issues before they can impact your operations. Some of the best solutions available, like Microsoft Dynamics 365 Supply Chain Management, can seamlessly integrate with your existing software, reducing data silos, allowing different departments to share more information. Instead of requiring three departments to input the same information into a database, each group is able to provide material unique to their specialty.

Effective inventory management programs like Microsoft can print barcodes and QR labels. When these codes are scanned with a hand-held reader or cellphone, users can be rewarded with a wealth of information. The most critical data to track are precisely how much of any product you have, where it’s being stored, and what it will be used for.

For example, you need to produce 20,000 doses of a Covid-19 treatment. Your customer needs them yesterday but will settle for next week. Do you have enough raw materials on hand to meet your customer’s deadline? If not, what can you do to obtain what you need?

Using this information wisely lets management develop complex plans, like the ability to track everything from small lots to pallet loads. A company can learn by checking an item’s progress at different points—its arrival at the warehouse, use in production, loading onto a truck or ship, and delivery to the customer. By examining reports, you can identify potential delays or roadblocks and find ways to speed up delivery.

Supply chain management software on a secure cloud computing platform like Microsoft’s Azure let’s you communicate securely and safely with other researchers, salespeople and vendors. With Azure, you’ll know that your intellectual property and contracts are safe from competitors.

Boost Decision Accuracy with Power BI

With today’s supply chains – seemingly constantly in a state of upheaval – effective inventory management that goes beyond tracking stock on hand is critical to operations. Effectively managing your inventory and raw materials ensures you’ll have the materials you need when you need them. It means having more than one source of supplies and materials. It also means constantly checking with vendors to ensure you have the goods to meet your own delivery deadlines. This is where an integrated business intelligence solution comes into play.

Microsoft Power BI let’s you connect to hundreds of data sources, preparing reports you can easily share. You can confidently deliver interactive messages to customers using information from inside and outside your company. Inventory planners can be warned of potential shortages in time to find alternate supplies. Salespeople can be told of possible delivery delays caused by outside forces, giving them time to ask the customer if they want to use a different shipping method.

Accurate business intelligence at your fingertips puts you ahead of competitors stuck using their “tried and true” methods that are becoming increasingly worthless every day.

Final Thoughts

Effective inventory management comes down to data: knowing what you have and where it is.

A modern inventory control system that supports labels and barcodes lets you track raw materials, work-in-progress and finished goods simultaneously, with high accuracy.

An inventory system with business intelligence helps you find faster and alternate ways of obtaining raw materials and pre-made products, mainly when shipping delays occur. That information can help you get your products to your customers when needed, balancing everyone’s inventory.

Ways to Strengthen your Supply Chain Processes
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Ways to Strengthen your Supply Chain Processes
Ways to Strengthen your Supply Chain Processes 700 500 Xcelpros Team

Supply Chain Woes

Over the past two decades, many manufacturing operations have moved offshore to lower operating costs. No one could have foreseen the recent COVID-19 pandemic that brought the world’s economy to a grinding halt. Pandemic-related problems exposed gaps in various supply chains across the globe. Pharmaceutical companies that had pivoted operations found themselves scrambling to get their hands on raw materials and pre-fabricated components when their suppliers worked out how to operate safely.

Transportation problems, safety concerns, government-imposed quarantines and other barriers threaten supply chains worldwide.

While all industries—and most companies—were severely impacted, business sectors considered critical were the hardest hit.

What is a Critical Industry?

“There are 16 critical infrastructure sectors whose assets, systems, and networks, whether physical or virtual, are considered so vital to the United States that their incapacitation or destruction would have a debilitating effect on security, national economic security, national public health or safety, or any combination thereof,” according to the U.S. Cybersecurity & Infrastructure Security Agency.

Critical Infrastructure is identified as functions that are essential for the functioning of a society and economy. Since 2001, the National Infrastructure Protection Plan (NIPP) lists 16 Critical Infrastructure Industries as essential to keep our country and economy moving. These industries are:

  • Chemical
  • Commercial facilities
  • Communications
  • Critical manufacturing
  • Dams
  • Defense industrial bases
  • Emergency services
  • Energy
  • Financial services
  • Food and agriculture
  • Government facilities
  • Healthcare and public health
  • Information technology
  • Nuclear reactors, materials, waste
  • Transportation systems
  • Water and wastewater systems

Understanding your Supply Chain

A robust supply chain is the foundation of any successful company. A supply chain’s importance is magnified when critical operations rely on getting raw materials in the door and finished products to customers on time. An efficient supply chain is essential for daily operations.

The impact that COVID has had on supply chains around the world has taught businesses that:

  • Raw material supplier relationships are essential
  • There are still massive transportation industry constraints
  • Security issues in the supply chain can lead to unexpected challenges

According to the Information and Communications Technology’s (ICT) Supply Chain Risk Management program, knowing your immediate supply chain and an extended one that may not have direct access to third-party suppliers is essential.

Materials once considered abundant can quickly become scarce when multiple businesses compete for them. This is where a good supplier relationship makes a difference between getting access to a product or waiting until more materials are produced.

Another part of existing supply chain woes is that while companies focus on getting goods flowing, data breaches and other security problems are rising. According to the Risk Ledger Report, third-party app developers, payment processors and remote worker infrastructure are among the top security threats.

Figure: 1Functions enabling modern supply chain management

Functions enabling modern supply chain management

Ways to Stay Ahead

Thankfully, there are a number of solutions out there to help companies stay competitive. The latest version of Microsoft Dynamics 365 for Supply Chain Management not only includes several features for building strong supplier relationships and minimizing risks, but also retains a familiar look and feel to other Microsoft Office products. This familiar interface helps with change management and reducing training needed to get up and running.

Some of D365 Supply Chain Management’s more powerful features include:

  • A Role-based Vendor Collaboration Portal
    Members of the procurement team can post and respond to Requests for Quotations (RFQ) and edit company information. Companies and suppliers can confirm, maintain, reject and accept purchase orders.
  • Purchase Inquiry Options
    This option is available outside of the portal. It provides an alternative to the RFQ process when immediate material pricing and delivery need to be met with your existing supply base.
  • Vendor Performance Analysis
    Includes a dashboard to real-time Spend Analysis and Vendor Performance insights into on-time delivery.

Talk with us today to learn more about enhancing your supply chain capabilities.

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As a way to further help the manufacturing industry, Microsoft debuted its Dynamics 365 Manufacturing Accelerator on May 14, 2020. The Manufacturing Accelerator is a Power App offering an enhanced Supplier Relationship Management experience. It runs within Dynamics 365 Supply Chain Management.

Primary features include processes to:

  • Qualify new suppliers
  • Onboard a supplier for data integration
  • Manage and track Supplier Relationship Health Data

While the accelerator was being developed before the recent pandemic, it’s become a great asset to procurement teams looking to strengthen their supplier sourcing capabilities.

Final Thoughts

Companies today are still struggling with two competing priorities: maintaining a healthy workforce, and delivering goods to their customers. The latter means having a strong, versatile supply chain. A robust, secure platform like Microsoft Dynamics 365 Supply Chain Management helps businesses make this a reality by enhancing every process, from supplier onboarding to monitoring vendor performance.

Freight Visibility in the Chemical Supply Chain
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The Importance of Freight Visibility in the Chemical Supply Chain
The Importance of Freight Visibility in the Chemical Supply Chain 700 500 Xcelpros Team

Introduction

Having a complete view of inbound shipments is critical for chemical manufacturers. Maintaining accurate product counts, ensuring on-time delivery, monitoring rising transportation costs and complying with the Department of Transportation’s (DOT) regulations are some of the reasons.

As a highly regulated industry, chemical manufacturers are under constant compliance pressure at several levels, not just federal. A clear view of end-to-end supply chain visibility helps mitigate supply chain challenges.

For example, a single federal hazardous materials violation can cost your company anywhere from nearly $80,000 to $500,000.

Failing quality controls and product recalls come with steep costs. Adding competition, transportation, supply chain challenges, and growing customer expectations means chemical manufacturers can’t afford to make any mistakes.

One of the more manageable costs is freight. It can be expensive and daunting to manage when your organization makes hundreds of shipments daily.

Accurate labeling becomes critical in terms of understanding what is in each shipment. Labeling is also vital when planning the classification and storage of the materials, plus determining workforce requirements. Without a straightforward labeling method that all workers can use, ensuring end-to-end supply chain visibility becomes a nightmare.

Consequences of Poor Freight Management

Poor freight management can lead to several different problems, such as:

  • Damaged, lost, or late deliveries
  • Processing delays causing customer complaints
  • Delays in downstream work orders
  • Greater freight costs caused by carrier policies
  • Wasted raw materials and space due to unaccounted inventory
  • Decreased productivity due to poor scheduling

This list doesn’t account for accidents, either. What if hazardous materials get mixed up with another order? How will you know? Mistakes like this can be disastrous and even fatal.

One report states that unreported delays lead to an increase in inventory carrying costs, as high as 30-40% of total inventory costs.

Every stage of the chemical supply chain, from raw materials to end-user delivery, requires a significant amount of planning, tracking and implementation. Companies today need a centralized and secured solution that offers flexibility with the ability to integrate, automate, and be optimized regardless of location.

Enterprise labeling solutions boost efficiency, accuracy, and reliability, plus significant cost savings in these highly regulated environments.

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Managing Hazardous Freight – Responsibility of the Manufacturer and Carrier

Penalties for Violation of Federal Hazardous Materials

It’s the manufacturer’s responsibility for identifying hazardous materials, not the freight carrier’s. Whenever chemicals are being shipped, it’s up to the manufacturer to ensure its documentation, labeling and packaging all meet government standards.

Among the most common items on a hazardous materials manufacturer’s shipping checklist are ensuring all of the following items are current:

Hazardous Materials Manufacturer’s Shipping checklist

  • Contents meet the federal definition of “Hazardous Material”
  • Employees are properly trained
  • Correct packaging is used
  • Blocking and bracing requirements are outlined
  • Shipping manifest is complete and accurate
  • Emergency response information is included
  • Emergency response contact information
  • Certifications are complete
  • Security plans and processes are in place
  • Incident reporting procedures are being used
  • Product Compatibility is accounted for when shipping multiple chemicals together

Among the correct documentation requirements are:

  • Shipping name
  • Classification/ Division
  • Identification Number
  • Hazard warning labels and markings

Freight carriers have their responsibilities, too. These include validating the following:

  • Accuracy of the manufacturer’s packing lists.
  • Products are accurately described and adequately packaged.
  • Vehicle is suitable for shipping chemical products and is in good repair.

Carriers, as well, have additional responsibilities when transporting hazardous materials. These include:

  • Documents and manifests are accurate and complete
  • Proper labels and placards are in all required positions on the vehicle and the shipment
  • Loading and unloading meets safety guidelines
  • Employee training is complete
  • Security plans and processes are up to date
  • Incident reporting procedures are up to date
  • Adequate blocking and bracing meets government guidelines
  • Product compatibility is considered when shipping multiple chemicals together

The Real Cost of Freight

The actual cost of freight can only be realized after a product reaches its final destination. The final cost of deliveries can be influenced by a number of different fees for layovers, oversized cargo, after-hour deliveries, mispacked orders, incomplete manifests and damage incurred during shipping and unloading.

Large businesses making hundreds of shipments a day are often able to absorb shipping cost fluctuations that might severely hurt small and medium businesses. Unfortunately, manufacturers shipping products don’t always know what will trigger additional fees. These issues with inbound shipments can affect all departments in a supply chain: Sales, Planning, Purchasing, Production, Accounting, and possibly more.

Understanding your transportation process inside and out is the most effective solution to address supply chain challenges in the chemical industry. Staying on top of every process, every step of the way lets you track and monitor the movement and condition of products from start to finish. Lack of visibility into shipping is the most challenging thing to correct and can significantly impact both manufacturers and shipping companies.

55%

of Third Party Logistics suppliers (3PLs) said they either lost business or didn’t know if they lost business due to lack of visibility of their offerings.

Source: American Shipper

Outdated Systems

Even today, a surprisingly large number of companies continue to run their operations on antiquated inventory tracking systems designed to manage local-only supply chains. Successful supply chains operate globally, connecting production and procurement to sales and customer service. This way, everyone knows what’s in transit and when it’s due to arrive.

Maintaining freight visibility, especially for a company spread thin, is not an easy task. Obsolete, “legacy” systems make it an even more challenging objective.

A modern, cloud-based solution provides a complete end-to-end view of a supply chain network.

Switching operations to an integrated, multifunctional transportation management system (TMS) platform brings agility to your transportation network. This kind of switch offers better support for seamless communication, allowing companies to respond proactively to unexpected issues and customer demands.

Disparate Systems

Effective coordination and collaboration should be needed across multiple sites and warehouses to manage a supply chain effectively. Running a business on many different applications is one of the biggest roadblocks to total freight visibility. If your organization’s systems can’t connect with your vendors, there’s a good chance you’re missing something.

Having an inventory control system that communicates with your suppliers’ improves inventory management, communication and freight visibility. Connecting a Transportation Management System (TMS) with warehouse operations allows shippers to find detailed insights from inbound and outbound logistics within a single unified platform.

Lack of collaboration

Tracking shipments in real-time is the core of transportation management. When loads are distributed across different carriers, getting reliable data from the entire carrier network can be a real challenge. Trying to track shipping information manually leads to inaccurate quotes and customer complaints.

Combining  business intelligence and advanced analytics offers real-time shipping and location data visibility. The data delivers accurate tracking information directly from the supplier’s carrier to the shipper. Your customer will always know when their products are due to arrive.

Finding the Right Solution

Most logistics solutions are unable to display “right now” data on incoming shipments and outgoing orders. If you’re in the process of figuring out what solution will be best for your business,there are a few questions you’ll want to be sure you ask:

  • Does their system have AI-enabled software that automatically records vehicle movement, be it truck, ship or plane?
  • Can their system generate automated email alerts in real-time?
  • Does their solution connect the vehicle and the driver, letting you know when unexpected hurdles or opportunities occur?
  • Is their system integrated with other essential business systems your company uses?
  • Are they using software as a service technology providing your company access to your data any time, any where?
  • Are upgrades done automatically through cloud computing, eliminating the need for on-premise upgrades?
  • Is their software a complete package or just a part of the delivery ecosystem?
  • Can their system communicate data easily with other TMS systems, electronic logging devices or enterprise resource planning systems?

Final Thoughts

With the anticipation of continued, long-term shipping challenges, more chemical manufacturers see the need to take a close look at their supply chain management software. Knowing exactly where incoming shipments of raw materials and pre-assemblies are and when they’ll arrive, along with the ability to track products from your facility to your customer’s door, every step of the way, is becoming more and more critical to customer retention.

Best-in-class organizations are embracing newer technology to help spot and correct problem points before they become a roadblock. The goal is to reduce expenses by lowering total shipping costs.

Reach out to us to learn more about Microsoft Business Applications that can help enhance freight visibility.

How To Enhance Your Chemical Supply Chain
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How To Enhance Your Chemical Supply Chain
How To Enhance Your Chemical Supply Chain 700 500 Xcelpros Team

At a Glance

  • Today’s chemical industry is all about enhanced visibility and accountability.
  • Dealing with varying laws and regulations for different regions, fluctuating and lack of visibility across the board requires advanced solutions.
  • Integrating advanced technologies can reduce waste, unearth new products, find new markets and enhance a company’s status.

Change in Operations

Chemical companies, especially pharmaceutical companies, are seeing an increase in the need for global reach.

Since its first discovery, the effect Covid-19 has had on supply chains has been severe, regardless of product. As with many problems, this disease has also created numerous opportunities, especially for the chemical industry. Major companies continue to expand operations, delivering their products worldwide, including former “third world” countries with a growing thirst for everything from antiviral medications and cleaning products to beauty supplies.

“The chemical industry touches nearly every good-producing sector, making an estimated $5.7 trillion contribution to world Gross Domestic Product (GDP) through direct, indirect and induced impacts, equivalent to seven percent of the world’s GDP, and supporting 120 million jobs worldwide.” Source: The Global Chemical Industry

This data from the ICCA shows a considerable market share, making it safe to say that the chemical industry is looking at a secure future. Globalization, however, requires dealing with unique challenges and roadblocks, especially regarding the movement of chemicals from supplier to producer and consumer. Today’s supply chain management won’t work in silos. That idea is no longer sustainable or feasible. Today’s global marketplace requires expanded thinking, and that means going digital.

Today, planning a chemical supply chain means using effective, profitable methods where customers, suppliers, parts vendors, shippers, sales and production facilities are connected, regardless of their physical locations. Modern software like Microsoft Dynamics 365’s suite of modular programs can help chemical companies use modern digital methods and enhance the operational efficiency of their supply chain.

In this article, we will look at some of the key supply chain challenges in the chemical industry today and how technology is playing a key role in enabling forward-thinking companies prosper.

Top Challenges in Chemical Supply Chain

Every company has its own set of challenges, such as the size of the company, the locations of its manufacturing units and the structure of its supply chain. Regardless of an individual firm’s situation, all chemical manufacturing companies face common supply chain issues.

Typical chemical industry supply chain challenges include:

  • Distributing chemicals and related raw material in different countries. Companies struggle to keep up with the laws and regulations of varying regions. What’s safe and acceptable in one country may violate worker safety laws in another. This is especially true when it comes to hazardous chemicals.
  • Existing chemical supply chain management can fall prey to manual errors and miscommunications, causing potential safety hazards and monetary loss.
  • The bottom line often depends on a company’s ability to source raw materials. When prices for essential materials fluctuate, the entire supply chain can be affected.
  • Tracking material pricing and delivery details create a lot of data. This includes information regarding the chemicals, their compositions, material pricing, safety precautions, distribution lists, and more. Managing this information is a top concern for chemical supply chain managers.

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Figure: 1 Supply Chain Challenges in Chemical Industry

Supply Chain Challenges in Chemical Industry

3 Ways Technology is Reshaping the Chemical Supply Chain

01.Technology Enables Creating a Connected System

Today’s world is much more connected than it used to be. Systems are linked with smart devices, modern sensors and powerful software running it all. With these sophisticated enterprise resource planning systems in place, it becomes much easier to organize your chemical company’s supply chain. Modern systems can generate an alert when a violation occurs. These automatic alerts reduce manual errors or oversights.

A connected ecosystem provides top-to-bottom visibility in the supply chain, giving top-level decision-makers a clear picture and greater transparency across the board. This enables better accountability and the ability to find solutions to common problems and bottlenecks.

Figure: 2 New Technologies in Supply Chain

New Technologies in Supply Chain

02.AI Helps Create a Failsafe Supply Chain

Chemical supply chain management is highly susceptible to changes in prices of raw materials. To stay ahead of the curve, companies need to stay up to date on global, as well as regional changes to predict how these changes will impact their supply chains.

Artificial intelligence(AI) enabled solutions can analyze data in real-time, letting decision makers know what is likely to happen, how it will affect them and most importantly, what they can do to avoid or reduce any impact. This software can help these companies make necessary modifications to their supply chain strategy on the fly.

03.Using Cloud Computing to Manage Supply Chain Data

Data collation, cataloging and analysis, are intricate tasks. When performed by people, they can be prone to manual errors. However, with progressive technological tools like Microsoft Dynamics 365 Supply Chain Management, companies can store unlimited data and analyze it much more efficiently. This categorized and analyzed data can be leveraged to generate insights that help fortify the company’s supply chain for smooth transitions and better efficiency.

Supply chains are the backbone of many industries. The chemical industry needs to adapt to changing times, and make use of the right technologies to harness maximum benefits.

Key Takeaways

Like any industry, the chemical industry is witnessing the need for change in its supply chain model. With the help of cutting-edge technological tools and applications, chemical supply chain management can be overhauled and optimized for enhanced efficiency. Is your supply chain ready for a change?

References: Chemical Supply Chain: Challenges and Opportunities in the Era of AI

Time to Explore Pharmerging markets
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It’s Time to Explore Pharmerging Markets
It’s Time to Explore Pharmerging Markets 700 500 Xcelpros Team

Introduction

A relatively new term making waves in business is “pharmerging markets.” What does the term mean and why should pharmaceutical manufacturers care? The short version is these markets are expected to grow at a faster rate than the rest of the world.

Add in potentially catastrophic supply chain issues and it’s now a great time to invest in markets closer to where active pharmaceutical ingredients are produced. This includes China, India and those in Southeast Asia.

One definition is, “a group of countries having a low position on the pharmaceutical market, but having a fast pace of growth. Those are China and India and to a lesser extent, Brazil, South Africa and other countries,” IGI Global states.

Imarc adds Russia, Mexico, Indonesia, Turkey and others, placing them into three tiers. China is the lone Tier 1 entry.

Tier II contains:

  • India
  • Brazil
  • Russia
  • South Africa

Tier III pharmerging countries include:

  • Argentina
  • Mexico
  • Poland
  • Ukraine
  • Turkey
  • Saudi Arabia
  • Egypt
  • Algeria
  • Nigeria
  • Thailand
  • Indonesia
  • Pakistan

All of these countries share two important characteristics:

  • They have a per capita gross domestic product (GDP) threshold of $25,000.
  • They saw a spending increase of at least $1 billion from 2012 – 2016, though only part of that was in medicines.

Growth Rates

Figure: 1 Expected Growth Rate of Pharmerging Markets by 2025

Integrating the Purchase Order Process

Key Changes in the Outlook

  1. 1.2020: -1.8% (-$23Billion)
  2. 2.2021: +0.6% above pre-COVID-19 growth; +2.3% above 2020 growth
  3. 3.Current outlook including vaccines +4% over outlook that excludes vaccines due to ~$50-55billion vaccine spending in both 2021 and 2022, later reduced as volume shifts to biennial boosters and price drops over time
  4. 4.Expected budget pressures will emerge from longer-term pressures of sustained pandemic
  5. 5.Vaccine spending declines as biennial boosters and costs decline in endemic phase, followed by overall growth returning to expected levels

The 6-year cumulative delta on 2020-2025 spending excluding Covid-19 vaccines is -$4 billion globally.

Sources: IQVIA Market Prognosis, Sep 2020; IQVIA Institute, Mar 2021

Pharmerging markets are expected to have a combined annual growth rate (CAGR) from 6% -9% through 2025, reaching $1.4 billion by 2024. By comparison:

  • Developed nations will grow at no more than 3%
  • The rest of the world will grow 2% to 5%
  • The overall global growth rate is anticipated to be 3% – 6%
  • The U.S. market will grow no more than 3%, possibly less

Pushing the need for prescription drugs and targeted medical therapies in these countries are aging populations, more public hospitals and a heavier burden caused by chronic disease, Pharmaceutical Processing World states. The result is increased pharmaceutical spending since 2016.

A key note, industry research firm IQVIA states, is this growth excludes spending on Covid-19 vaccines. The cumulative spending on Covid-related vaccines, treatments and related products should hit $154 billion.

Get a consultation to learn more about the essential factors to consider when exploring pharmerging markets.

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Fueling Pharmerging Growth

Access to healthcare has historically been a driving force in the use of medicines within the Tier II and Tier III countries. However, IQVIA sees a slowing trend with volume decline across many markets.

However, China’s use of non-Covid pharmaceuticals is expected to accelerate, especially once the pandemic dies down. Changes in the use of medicines, with demands for new vaccines plus shifts in demand for existing therapies and patient behaviors, will also have an impact on the global pharmaceutical market.

These same countries with lower incomes also have dramatically lower access to medicines. The result is an increased demand, especially in those countries where access to quality healthcare is improving.

Highlights of IQVIA’s report include:

  • The largest aggregate contributors to growth in the next five years are immunology, oncology and neurology.
  • Oncology and immunology are forecast to grow at 9-12% CAGR through 2025.
  • Oncology is expected to add 100 new therapies for migraines and possibly Alzheimer’s and Parkinson’s along with other, rare neurological diseases.

Selling in pharmerging markets may sound like a “no brainer” to some corporations but it comes with a critical catch right now: Covid-related issues have the world’s supply chains on the brink of collapse.

Supply Chain Failure?

In areas that pre-Covid rarely saw more than one or two ships waiting to dock, the Ports of Los Angeles and Long Beach had 72 ships at sea on Oct. 4, 2021, an Oct. 6, 2021 story on CNN.com states.

Before Covid, most ships went straight to a berth. Now? There’s an average 10-day wait to get in, unload and reload.

“It’s like taking 10 lanes of freeway traffic and moving them into five when the cargo gets here to the port,” Gene Seroka, executive director of the Port of Los Angeles, told CNN International on Oct. 5. “We’re having difficulty absorbing all of that cargo into the American supply chain,” CNN states.

Adding to port woes are a lack of truck drivers to move containers along the supply chain into warehouses. Delays in unloading also cause problems with getting empty containers where they are needed. Manufacturer’s can’t send large volumes of goods overseas when they don’t have containers to ship them. It’s either not enough empties or having empties in one port when they are desperately needed in another.

The effects of these supply chain issues are quickly reverberating back to consumers.

“Say hello to your pandemic price increase,” the headline of an Aug. 12, 201 column in SupplyChainDive states.

Gaps in the supply chain cause buyers to look at smaller suppliers to meet raw and unfinished materials demands. The result is procurement professionals are finding new suppliers, sometimes at a better price than their old standbys, the article states.

Now comes the question many pharmaceutical companies need to ask: Can they keep production on schedule even with a uncertain supply chain?

Technology is Part of the Solution

Enterprise Resource Planning products like Microsoft Dynamics 365 and its Supply Chain Management module can help. It makes tracking essential precursor materials pharmaceutical companies much easier. It can track APIs from the time they leave a factory in India to the moment they land in a production warehouse. From there, accurate labeling using barcodes and QR codes lets these companies know where every item, batch, lot and pallet goes.

Other software equipped with artificial intelligence can quickly produce usable supply chain information. When did we order this? Was it delivered in time to meet our needs? Is there someone else closer, either to our production facilities or our customers, that can ensure we meet our contractual obligations?

ERP software can also help forecast not only supply but demand and where that demand might be the greatest. If demand is in a pharmerging market close to where a company gets its raw materials, there might be a justification to build a new facility. Not having to cross oceans will reduce shipping costs and extensive delays.

Final Thoughts

Businesses don’t run in a vacuum. Supply chains that affect cars and consumer goods also impact pharmaceutical companies. Keeping very close track of where raw materials are produced, how long it takes for them to arrive are just as important as the time spent producing finished goods and then shipping them to the customers.

Implementing a solution like Microsoft Dynamics 365 Supply Chain Management goes a long way to removing the guesswork.

supply chain disruption management
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How to Manage Operations During Supply Chain Disruptions
How to Manage Operations During Supply Chain Disruptions 700 500 Xcelpros Team

Introduction

Even today, Covid-19 continues to disrupt every level in supply chains, across every industry around the world. The lasting effects on supply chains was unanticipated, especially concerning food and cleaning supplies. Manufacturers in those areas had an unexpected spike in demand that couldn’t be managed quickly.

The overall supply chain disruption caused many companies to start re-evaluating action plans. Areas being closely examined today include production capacity, cash flow and overall employee morale.

Let’s look at how businesses can leverage existing practices while pivoting to newer methods and meeting evolving customer needs.

Figure: 1Surviving the Supply Chain with a Digital and Analytical Backbone

Surviving the Supply Chain with a Digital and Analytical Backbone

Communication and Collaboration

The first quarter of 2020 brought new dynamics to manufacturers and distributors everywhere, faced with a challenge the likes of which have never been seen before. As market dynamics changed, internal communication became critical at every stakeholder level: management, employees, customers, suppliers and vendors. Creating a communication strategy that could work when people stopped meeting face to face became vital to avoid business breakdowns and shutdowns.

That was 2020. The lingering effects of Covid-19 are still impacting some companies’ technology roadmap plans. However, there are ways to drive innovation and growth. Regardless of industry, many organizations realize the importance of doing business from anywhere. That flexibility to work on the move is no longer a luxury: it is a necessity. Unconventional work schedules are becoming more common as companies adjust to meet customer expectations. Companies are engaging them with messaging and video call software such as Microsoft Teams. They use software such as Power Automate to deploy safety alert messages whenever the need arises.

Customer and vendor portals equipped with Microsoft Dynamics 365 Supply Chain Management let companies collaborate, determine product access and make accurate forecasts without having to pick up the phone. Instead of days or weeks of delays, modern software helps firms resolve supply chain disruptions at a moment’s notice.

Manufacturers using Microsoft Dynamics 365 Supply Chain Management can integrate Internet of Things (IoT)-enabled devices and robots into their current operations. Using machine learning adds even more automation.

Connecting data and processes with Microsoft’s wide selection of products allows production and maintenance teams to schedule downtime when it has the least impact on production. Outlook messages and alerts let production staff stay on top of any possible repair issues.

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Agile decision making

Manufacturers must respond to the rapid changes in customer demands and delivery expectations. Having a robust system lets that happen.

Changes to your customers’ business demands can affect your supply chain. Having the ability to act quickly while still providing exceptional customer service is critical to future business success.

One way to prepare for these changes is by having internal cross-functional teams practice scenario planning. For example, they can plan what to do if a new Covid-19 variant appears and governments reinstate drastic safety measures.

Scenario planning lets your staff learn what to do when normal deliveries are delayed or rerouted, such as what happened when the Suez Canal was blocked for a week. It lets your staff examine past customer and supplier behaviors and come up with plans to minimize disruptions using what they learned.

Microsoft Dynamics 365 Supply Chain Management includes tools designed specifically for scenario planning. It helps companies adjust to unexpected changes in their supply chains. These tools include:

  • Drag and drop Gantt charts for production scheduling
  • 360 degree view into capacity, identifying bottlenecks in terms of people and resources
  • Adjusting safety stock to reflect real-time demands instead of fixed quantities
  • A vendor portal with approved suppliers listed in a supplier resource management database that includes purchase order controls
  • Visibility into warehouse operations for single and multi-site facilities
  • Transportation management
  • A customer portal with sales order management

Incorporating Data

Data in today’s operations is a moving target. Making decisions and providing insights with real-time information helps companies operate efficiently, letting them grow and scale at the right times. Identifying organizational segments that require optimizing, like the handoffs between operations and finance, can only occur when accurate information is available.

For example, the only way to truly analyze cash flow—to get a 360-degree view—is by looking at data within each division.

This is where a business analysis tool like Power BI becomes an essential part of the process. Power BI dashboards using predictive analytics in the Dynamics 365 environment automatically update with the latest data. These dashboards let companies monitor the status of multiple locations at once, saving time.

Tools such as Power BI let management share data, communicate and respond to changes in the market within minutes, not days.

Final thoughts

The coronavirus is the first disruption of its kind faced by this generation. Companies were caught unprepared, being forced to adjust almost instantly to upheavals in their supply chains. Having the right tools in place to deal with Reduced workforces internally and within the supply chain, pivoting production to new products and unprecedented customer product demand helps determine who flourishes and who fails.

With that in mind, it’s critical to consider implementing products from Microsoft’s family of partner solutions. Dynamics 365 and related products help companies predict and manage their operations transparently.

References: Why the Pandemic Has Disrupted Supply Chains

Agility in daily operations using the Power Platform
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Agility in daily operations using the Power Platform
Agility in daily operations using the Power Platform 700 500 Xcelpros Team

Introduction

COVID-19 continues to test supply chain and manufacturing operations around the world. More than 18 months after exploding onto the scene, companies still have their hands full dealing with ill workers, limited working hours and uncertain supply chains. Businesses are evaluating how to improve efficiency, lower costs and increase operational performance. The immediate question on everyone’s mind is, “how are we coming out of this crisis?”

While employee safety is a top priority during this pandemic, mitigating the impact on the day-to-day operations is crucial to business leaders. CEOs and CFOs are facing the unprecedented challenge of pivoting product demands and preserving growing cash flow. Implementing a “do more with less” attitude while gaining a few quick wins in the process can build the momentum needed to keep companies moving forward.

Figure: 1 The Ecosystem of an Integrated Supply Chain

The Ecosystem of an Integrated Supply Chain

Pivoting the Plan

The role of the chief information officer (CIO) is critical in risk mitigation strategies. They can draft a plan to determine how the COVID crisis is affecting the company infrastructure short term. The plan must keep operations running smoothly while acknowledging that long term projects and roadmap budgets are affected.

One example is switching employees to remote work while maintaining operations. Software tools like Microsoft Teams and Skype let companies communicate with far-flung workers and managers while the interfaces similar to those in Office 365 programs eases the transition.

Keeping the Lines Open

Not all production and distribution employees work from home even when social distancing and masking restrictions limit face-to-face contact. Many workers are considered essential, causing some factories to switch from a single shift to running 24/7. These facilities are adding shifts and ramping up capacity, working hard to keep warehouses stocked with raw materials and finished products.

Since computer software and machines are now working longer hours, the companies that support them must do the same or risk losing clients.

Figue: 2 Microsoft Power Platform: An Integrated Solution

Microsoft Power Platform: An Integrated Solution

As companies move back and forth between remote and in-person workers, having the right tools in place can help boost communication between production plants and supporting vendors. One example of an effective toolbox is the Microsoft Power Platform. This “low-code, no-code” platform can be installed and running in a matter of hours to generate a quick win. A no-code solution is valuable when needing to make quick decisions while maintaining critical operations.

65%

of all app development will be low code by 2024

Source: Gartner

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PowerApps are a suite of apps, services, connectors and data platforms providing a rapid application development environment, Microsoft states. “Using Power Apps, you can quickly build custom business apps that connect to your business data stored either in the underlying platform or in various online and on-premises data sources, such as SharePoint, Dynamics 365, Microsoft 365, SQL Server, etc.”

Using custom-built apps connected to internet of things (IoT)-enabled devices, workers gain access and insights into machines that may be headed for trouble. Staff is alerted before shutdowns are required. This lets technicians replace worn parts before production unexpectedly stops.

Power Apps can connect to hundreds of business systems and databases. They make it easy to connect workers with the existing processes and data while working through Microsoft Outlook to keep key staff informed.

Power App benefits include:

1.Greater development agility Automate and simplify repetitive, time-consuming processes to launch faster while reducing errors.

2.Speed and savings Reduce time and cost building web and mobile applications, enabling companies to work through their development project list.

3.Achieve more while doing less Some Power Apps are fully functional out of the box. They have data presets using standard business logic and rules making them fully customizable to individual business needs.

Meeting the Demand

Before the coronavirus, businesses made supply chain forecasts based on the then normal business operations. Now, though, many firms are switching to a demand planning model.

Executives are continually evaluating sales and budget plans. Power Apps let them do it faster. For example, the sales and operations teams can hold “what-if analysis” scenario planning sessions. Using a consumption-driven model boosted by industry and customer knowledge, companies can lower their risk. Similar methods let major carmakers quickly switch their production lines from automotive parts to building ventilators for critical hospital patients and then move back to normal operations when the situation changed.

One such app is Microsoft Power Automate. It automates tedious manual analytic processes when quick decisions are required. Automate provides a creative, cost-effective strategy for businesses to connect their existing legacy systems.

An example is activating workflows for approvals in a matter of hours instead of days.

As workforces become a hybrid of remote and on-site team members, Power Automate can reduce the time spent tracking down approvals and keep things moving.

When companies combine a smaller, leaner workforce with greater demands and less time and then add more government regulations, they increase pressure on managers to make the right decisions quickly or risk falling out of compliance.

Another essential Microsoft Power Platform app is Power Bi, which “bridges the gap between data and decision making.”

The business analytics service delivers insights helping business leaders make fast, informed decisions now and when developing future emergency response plans.

Power Bi:

  • Transforms data into stunning visuals for sharing to any device
  • Exploring and analyzing data in one view
  • Permits sharing customized dashboards and interactive reports

Staying Ahead

In addition to machine maintenance, following federal and state coronavirus guidelines is critical to keeping operations running and employees safe. The Power Platform has several new tools with the pandemic and other emergencies in mind.

  • Crisis Communication- A sample Microsoft Power App taking 20-25 minutes to set up, Crisis Communications combines Microsoft Power Automate, Microsoft Teams and SharePoint. It lets companies coordinate information sharing and team collaboration under evolving conditions. Employees can report work status and make requests. System administrators can use the app to push updates and news including web-based really simple syndication (RSS) feeds from the World Health Organization (WHO), The Centers for Disease Control and Prevention (CDC), local authorities or emergency contacts. The information can go to different locations that are accessible on the web, mobile or in Teams.
  • Power Virtual Agents Crisis Response Bot- The Power Virtual Agents team released instructions to build a Virtual Agent Crisis Response FAQ Bot. The no-code program helps staff get company-specific information they need quickly using a question and answer interface you can embed on your company website.

Power Apps Drives Business Transformation

A recent Forrester Consulting study shows how businesses reduced development costs and increased overall efficiency using Power Apps. Results are for a composite organization based on interviewed customers.

The Total Economic Impact of Power Apps study, March 2020 states:

  • 188% return on investment over three years
  • 74% reduction in app development costs
  • A savings of $4.9 million in application development and management cots
  • Replacing two external applications with a single Power App saved $742,449

Summary

No one knows how long the coronavirus crisis will last. Taking the time to plan how to function in these uncertain times is essential. Using software tools like the Microsoft Power Platform and its many apps will help companies continue to operate in rapidly changing conditions.

The Power of Integrated Material Requirements Planning (MRP)
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The Power of Integrated Material Requirements Planning (MRP)
The Power of Integrated Material Requirements Planning (MRP) 700 500 Xcelpros Team

At a Glance

Today, growing companies need to keep tighter reins over their inventories. Having too much on hand means capital outlays will suffer. Too little could mean trouble meeting unexpected demands. Materials requirements planning (MRP) allows companies to better plan their production, ensuring needed supplies are available without hampering other business functions. The benefits of using MRP software, like that found in Microsoft Dynamics 365 Supply Chain Management, include:

  • Proper MRP and supply chain planning acts as a catalyst for growth
  • Ability to better manage customer expectations and reality behind the scenes
  • Addressing real-life pain points becomes easier
  • Ability to plan production campaigns in advance
  • Easier to overcome resistance to change while adapting to newer, more efficient planning methods

Supply Chain Planning Methods Benefit All Companies

Whether you’re a bakery or a pharmaceutical manufacturing company, planning your inventory is an essential part of daily operations. If a bakery does not order enough flour, yeast, or eggs, it can’t meet customer demands. Order too much and the company loses money from spoiled or wasted materials.

When it comes to chemical companies, managing waste is not as simple as throwing away a loaf of bread. The repercussions to unplanned operations in highly regulated industries can be significantly worse: Creating bad batches of hazardous or volatile chemicals, along with continuously yielding unplanned co-products or by-products will require additional storage or disposal based on quality tests.

For another example, consider a pharmaceutical company. The production of batches with a lower than planned potency can easily result in an over-extended campaign, the over-consumption of raw materials and lower production yields. If a batch is planned for a certain potency, the production process can’t be considered complete until the quality department confirms it meets the required specifications. Then, after reworking the batch a few times, it may even be reclassified to a lower potency when it does not yield the desired results.

While the concept of MRP was originally intended for manufacturing companies, it now extends itself into all industries, including those whose products are services.

MRP can be even more critical in small-to-medium manufacturing companies: the smaller a company is, the more precise the allocation materials and resources needs to be. These planners and buyers need clear and precise signals allowing them to make informed decisions on when to buy, and when to produce. The availability of materials and capacity of resources is everything in optimizing and streamlining a plant’s supply chain.

Especially today, MRP should be included as part of optimizing a company’s overall supply chain. This is one of the reasons were seeing MRP integrated into Enterprise Resource Planning (ERP) software more and more. Combined with other parts of supply chain management, MRP lets companies offer their customers a better experience along with the added benefit of lower inventory costs.

A Real-Life Example

Customer A requests a quote for a specific product they need quickly. This customer has already reached out to secondary vendors for quotes.

In order to please this customer, especially with added competition, may require a thorough inventory evaluation to know if you can meet their deadline.

Without a proper MRP system in place, it’s likely you’ve had to develop and manage dozens of complex spreadsheets with sales orders, supply and demand forecasts, production schedules and more. After that, you’ll probably have to superimpose inventory availability and resource capacities into the same spreadsheet. Does this sound familiar?

This method can take 2-3 days just to determine if you can meet their deadline. The work and precision required puts tremendous pressure on planners, alienates customers and impairs organizational growth. Competitors with an MRP system integrated into their ERP platform can provide a realistic promise date significantly quicker than companies still relying on manual methods.

Without the ability to provide reliable available-to-promise (ATP) dates, you can easily lose customers to suppliers able to commit and deliver on time.

Meeting customer demands by a certain date requires at least three inputs:

  1. 1.Planned supply
  2. 2.On-hand availability after all allocations and reservations are considered
  3. 3.Resource capacity

Meeting customer demands

What Happens on the Ground?

Preparing a production schedule can be a challenge if you don’t have a complete understanding of inventory levels, labor and resource availability. Even with a forecast in place, it’s hard to efficiently schedule production if you’re facing capacity issues. This Standard Costing in Pharmaceutical Manufacturing – Industry Challenges and Solutions offers an example of the batch manufacturing processes and the data inaccuracies that can occur while consuming inventory. Add these data inaccuracies on top of lack of resource capacity and the challenge should be clear.

These problems illustrate the need for accurate production planning and scheduling, which are critical in any manufacturing or distribution company, especially if youre trying to streamline operations.

Not only do customers often expect 99 percent-plus service levels within 24 to 48 hours, but supply reliability is also becoming more tenuous as once local supply chains now extend around the world. Source – McKinsey and Company

Being able to boost production efficiency with accurate inventory plans is becoming critical in today’s business environment. Companies face constant pressure to perform at a higher level, especially with growing competition and customer loyalty seen as directly connected to a company’s perceived value.

Meeting Customer Demands

It’s important to know your planner is able to meet the demand of your customers, along with being able to relay and provide important information, including things like:

  • Resource availability
  • Production capacity
  • Overall demand
  • Quality requirements
  • Batch potency requirements

Without even basic planning, a company operating reactively will lose inventory and suffocate resource availability, resulting in a considerable waste of time and money. Systems that can take advantage of modern technologies like AI an ML can generate needed results in minutes much more efficiently. That’s where a system like Microsoft Dynamics 365 Supply Chain Management comes in.

Cost of inaccurate inventory

Not being able to track capacity means waiting for one machine operation to finish before the next job starts. Knowing how long each process takes is crucial in providing a reliable promise date. Companies who aren’t able to meet customer deadlines can easily lose any edge they may have over their peers. Continuing to operate without proper supply chain planning, companies stunt their own growth.

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Benefits of an Integrated MRP and Forecasting System

An integrated materials requirement planning and forecasting system offers much better control over production. These systems can take advantage of different coverage settings like lead times and time fences for upcoming projects, and creates production signals based on material availability plus resource capacity and capability.

The system’s built-in algorithms take into account all products that require planning while sharing the same raw materials and resources. It shows the planner schedules for all material requirements to meet supply and demand based on the calendar with working time.

The planner is able to access a similar visual schedule to what they would create manually on a spreadsheet but with much more functionality and the ability to make informed decisions. The planner can then decide how and where reprioritization needs to happen and then which lot production runs to schedule first.

A good MRP algorithm empowers users to be able to proactively plan, letting them keep better tabs on raw materials and resource allocations. On top of that, being able to add stringent production floor operating procedures with stop gaps can help reduce or eliminate uncontrolled activities that can alter inventory projections.

Role of People

Having a well-trained, experienced workforce is invaluable. It’s undoubtedly your biggest strength. But because some people are comfortable performing tasks a specific way, they may find it challenging to adapt to changes designed to streamline your supply chain. How do you convert workers who are unwilling to change?

Some proven ways are:

  • Educating your workforce on how adapting to newer methods and tools to increase supply chain optimization benefits them
  • Explaining and showing them how the modern tools are actually simpler to use and follow standard execution methods
  • Creating a change management process
  • Involving them in the overall transformation from no planning or manual planning to a systematized planning and scheduling tool
  • Teaming your workforce with newer team members who act as change agents during the software implementation process

40%

More than 40% of financial services executives feel cultural or behavioral change is the biggest challenge they face in pursuing their technology transformation.

Source: Inference from McKinsey

Key Takeaways

There are several steps any company can take to proactively plan its supply chain. These include:

  • Looking at current cycle count procedures and then re-categorizing the top items for better visibility
  • Using better time and management procedures to better allocate resources to the right jobs
  • Providing proper handoffs for machines and operators from one step in the production process to the next
  • Proactively scheduling jobs and finding more efficient operating methods

Finally, ask yourself this question: Is your company on pace to beat your competition right now or are you lagging behind? Could MRP help you capture more sales and improve the customer experience by letting you deliver quotes faster and meet, or beat existing production deadlines?

If you aren’t getting ahead maybe it’s time to take a closer look at how Microsoft Dynamics 365 Supply Chain Management can help.

Streamline Your Supply Chain with Advanced Warehouse Management and MD365
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Achieving Growth with Multi-tier Supplier Collaboration
Achieving Growth with Multi-tier Supplier Collaboration 700 500 Xcelpros Team

Achieving Growth with Multi-tier Supplier Collaboration

Chiefly based on a wonderful piece from our friends over at McKinsey about uncertain delivery times and critical shortages due to COVID-19. Certainly the crisis wreaked havoc on production and logistics worldwide, causing chaos for organizations all over. Consequently, in reflecting on the shortages of semiconductors, lumber, and steel, it was a wake-up call which highlighted just how fragile our globally integrated supply chains can be. Despite it all, crisis can be turned into opportunity. Technology unveiled potential disruptions along supply chains, enabling new strategies to prevent future headaches. Embrace the power of tech and turn crisis into triumph by building strong partnerships with multi-tier suppliers today.

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The pandemic propelled supply chains to the forefront of corporate priorities, although the focus was already gaining momentum. Dive into the world of ambitious ESG goals that demand OEMs and suppliers to monitor, control, and share information on carbon emissions and labor practices throughout their supplier networks. Uncover the vital role suppliers play in industries like automotive, where they are responsible for a staggering 80 percent of product value. Learn how supplier cost, quality, innovation, and delivery performance are pivotal to achieving business triumph.

In the pursuit of excellence, companies have discovered the key to success lies in forging stronger bonds with their trusted suppliers. By fostering a deep connection, they can unlock immense potential for growth and improvement. However, the path to achieving a fully integrated supply chain has been littered with challenges.

The journey towards seamless collaboration has been hindered by three major hurdles. Original Equipment Manufacturers (OEMs) and suppliers alike have grappled with the struggle of increasing data sharing and building effective collaboration networks within their supply chains.

Technology

Outdated technology hinders efficient data exchange in supply chains. For instance, the automotive industry relies on the limited electronic data interchange (EDI) standard, which restricts sharing of crucial information on forecasts, orders, and delivery schedules. It’s time for a modern solution that enhances collaboration and streamlines operations.

Processes

Imagine a world where we can effortlessly exchange complex data about everything from the environmental impact of products to their exact location in real-time. Unfortunately, we haven’t reached that point yet. Standards of processes for this kind of data exchange are yet to be developed. But, the potential for transforming our logistics networks and making more informed decisions is huge.

Confidence

Building confidence in each other is crucial for participants in data sharing projects. They face two major challenges. The first is protecting sensitive information. The second is establishing a common understanding of the value and accuracy of each other’s data. These hurdles make it hard for organizations to agree on terms and incentives. It can make them hesitant to incorporate external data into their systems. Perhaps, however, we can create a stronger foundation for collaboration with confidence in each other.

Final Thoughts on Supplier Collaboration

Broken down barriers, money saved, and boosted resilience. That’s what happens when participants come together, embrace common standards, trust each other, and share the gains. But it doesn’t stop there. This greater integration sets the stage for a sustainable and efficient supply chain, with a laser focus on end-to-end success. Don’t miss out on this key enabler for the fast and flexible future we’re all striving for.

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Supply Chain Disruptors
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Major Supply Chain Disruptors
Major Supply Chain Disruptors 700 500 Xcelpros Team

Introduction

Parts of the global supply chain saw major disruptions in 2019 and more in 2020. Companies looking to ensure their supply chains remain intact have two choices: They can plan, prepare and be ahead of the trends, or stay in a wait-and-see mode.

Forward thinking companies are using analytics found in today’s enterprise resource planning (ERP) software to anticipate changes in customer behavior and balance their supply chain. They are closely watching fuel prices for changes that might make obtaining raw materials and shipping finished products more expensive. They are verifying that the quantity of product leaving their facilities meets demand while avoiding compromising quality.

Three supply chain disruptors in 2021 include:

  • Transportation costs
  • Covid-19 fallout
  • Increasing visibility into product compliance

Figure: 1Major supply chain disruptors in 2021

Major supply chain disruptors in 2021

Transportation Costs

US logistics costs dropped 4% to reach $1.56 trillion, or 7.4% of 2020’s $20.94 trillion gross domestic product (GDP). The pandemic forced many global supply chains to screech to a halt and then start back up. Again and again.-CSCMP’s State of Logistics Report 2020

Let’s take a look at the first disruptor: transportation costs. The strong economic growth of 2018 caused commercial transportation costs to rise. 2020’s pandemic made transportation worse as demand continued while the availability of truck drivers and airline flights plummeted. Those were just two of many activities impacting pharmaceutical and chemical companies’ supply chains.

Among the current transportation issues are:

  • 20% – 25%: The national van truckload tender rejection rates (the percentage of electronic requests for capacity declined by carriers) since August 2020
  • 20%: The van truckload spot rate increase in February 2021 affecting 10%-20% of trucking market freight volume
  • 12%: The increase in retail fuel costs in February 2021

Pandemic quarantines meant fewer consumers were making trips to stores. This in turn boosted online orders through companies such as Amazon.com, boosting pressure on the commercial transportation sector.

Figure: 2Current transportation issues

Transportation Costs Effected By Disruption

Truck Driver Availability

Truck driver availability is another major issue plaguing supply chains. Commercial transportation companies are facing major challenges recruiting and keeping drivers, including:

  1. 1.Attracting new talent with 57% of the workforce now 45 or older and 23% 55 or older
  2. 2.Losing 62% of potential workers to warehouse jobs, which are being filled by people under 45
  3. 3.Dealing with workers wanting a work-life balance that requires short trips when demand is for more long haul (over 250 miles) drivers
  4. 4.Posting more jobs than hiring by a 9:1 ratio
  5. 5.Skill and experience gaps between the desired and available drivers
  6. 6.Reducing truck driver job posting activity between 2019 and 2020 by 38%

Adding to this issue are safety regulations limiting drivers to work no more than 14 out of every 24 hours.

Recruiting Drivers

To address the rising shortage of drivers, freight companies are providing incentives to attract more people into the field and increase employee retention. Methods listed by SHRM include:

  • Raising pay so that private fleet drivers now earn an average of $86,000 a year up from $73,000 in 2014
  • Broadening the applicant pool by recruiting women, military veterans and younger drivers
  • Being flexible with time off

Other Transportation Woes

Another growing supply chain transportation issue points to international regulations impacting ocean-freight based shipping. At the start of January 2020, new limits came into play in order to protect the environment and improve air quality. IMO 2020 restricts the amount of sulfur in the fuel oil used by ships. The previous emission limit was 3.5%. Under IMO 2020, this compulsory limit drops to 0.50%.

The emission limit was reduced to 0.10% in four emissions control areas:

  1. 1.the Baltic Sea
  2. 2.the North Sea
  3. 3.the North American area covering parts of the U.S. and Canada and the U.S. Caribbean Sea cover Puerto Rico and
  4. 4.the U.S. Virgin Islands

Reducing the sulfur content of fuel oil helps minimize sulfur oxide emissions that negatively impact human health and contribute to acid rain.

Compliance is expected to boost container shipping fuel costs by $25 billion – $30 billion through 2023, according to a report by BCG.

Covid-19 Fallout

To date, the Covid-19 pandemic has killed more than 4 million people worldwide, more than 606,000 in the U.S. alone.

  • 72% of businesses across trade, finance, plus health and education systems reported a negative effect. 17% of that was a significant negative effect.
  • 3% of firms reported a significantly positive effect
  • 8% of firms reported a mostly positive effect

Firms reporting a positive impact were in the life sciences sector, especially those producing essential products such as vaccines, Ernst & Young’s report noted.

Increasing Visibility into Product Compliance

Compliance in the supply chain is nothing new. Companies in every sector conform to Occupational Health and Safety (OSHA) regulations plus state and local versions. Pharmaceutical companies work on FDA compliance every day.

What is new however, is increased visibility.

Especially when dealing with large, diverse supply chains that might involve hundreds or thousands of suppliers, many companies are switching to integrated networks. Using these networks, though, requires retraining the workforce to adjust to the new digital way of doing business.

“Increased visibility is the TOP priority over the next 12-36 months and a top 3 priority in the next year,” a 2021 report from Ernst & Young states.

Ernst & Young’s survey found that 63% of companies were investing in increasing automation such as using internet of things (IoT) connected devices, machine learning and artificial intelligence (AI) to boost productivity and increase efficiency.

Using enterprise resource planning software lets companies achieve a 360-degree view into supplier performance, customer review and manufacturing outputs while crunching millions of data sets. ERP systems are designed to help companies anticipate potential problems and find solutions before the issues become acute.

For example, a chemical manufacturer installs sensors on reactors that can alert production staff when temperature changes occur. An alert sent from the sensor through SMS messaging directly to maintenance and production crews can let them take action before an expensive batch is ruined.

ERP software such as Microsoft Dynamics 365 Supply Chain Management allows companies to stay on top of issues before they become problems.

Key Takeaways

  1. 1.While a global economic boost is great, we find there’s always a downside that leads to a challenge. A strong economy is great for supply and demand for business, however the shortage of qualified workers to fill those jobs can cause significant issues
  2. 2.There is an increasing concern for disruptions that are beyond human control. Things like the recent COVID pandemic, along with the resulting damages are factors that companies may never have planned for, but we now know the risk exists.
  3. 3.The strong global economy has resulted in a trade war, affecting imports and exports across the globe. The ongoing tariffs between the US and China doesn’t just affect those countries, the entire world will have to deal with the effects of increased import costs.

For more information on implementing Dynamics 365 Supply Chain Management to manage your supply chain disruption in your company, book a consultation with our expert.

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