4 Ways to Build Risk Resilience through Supply Chain Collaboration in the Hard Goods Industry
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Key takeaways:
The complexity of hard goods’ supply chains makes them more vulnerable to disruptions and compliance issues. The risk results from having disconnected supply chain processes and information.
Poor supplier performance, disruptions, and compliance challenges can have a major impact on brand reputation.
To reduce risk, companies are shifting away from quality and compliance siloes to focus on product integrity holistically, improving transparency, supply chain collaboration, and empowerment.
It’s only recently that technology has made true supply chain collaboration possible. Imagine a world where all of the different participants in your global supply chain are working together in real time to accomplish shared goals. That’s a reality today.
For those manufacturing or selling hard goods, the benefits of bringing the supply chain together to improve collaboration are significant. Your business becomes more resilient, your supply chain is suddenly agile in the face of changing demands, and the quality of your products improve as well.
This shift is happening now. More and more companies are moving away from siloed quality and compliance departments, and instead creating product integrity teams that are cross-functional and focused on delivering the highest quality good, both in terms of manufacturing standards and its compliance with global market regulations.
The transition is powered both by technology and the change in mindset around hard goods, where a products safety and usability is just as important as the quality of the materials it was made with. To achieve this, brands, retailers and their suppliers are collaborated within platform tools that allow for access and sharing of data across functions to create one holistic picture of integrity of a product.
So, let’s start with an important question: what are the risks of not building supply chain collaboration?
The risks of a disconnected supply chain
When you are not effectively collaborating and empowering your suppliers, you lose visibility into their performance and open the door to a number of risks:
Poor supplier performance
When a supplier fails to deliver on an order, having a disconnected supply chain means you can’t manage the problem effectively. You risk receiving orders that are:
Late
Defective
Incomplete
Misaligned with your requirements
This type of underperformance costs significant resources, and since you can’t sell defective products, you ultimately have to pay for your suppliers’ mistakes.
This type of underperformance can damage your brand’s hardest-earned asset: its reputation.
Without a system in place to quickly remedy the issue, your brand is assuming significant risk.
Lack of resilience to disruptions
Supply chain disruptions are increasingly common and aren’t going away. A recent study by Deloitte revealed that 85% of surveyed global supply chains had experienced at least one disruption in the past year. Disruptions can spring from both internal and external sources:
Natural and man-made disasters
Financial problems
Cybersecurity threats
Compliance issues
Geopolitical instability
Supply chain collaboration and connectivity helps supply chains weather even the most major disruptions without breaking.
With modern technology, you can connect your supply chain to have more visibility over critical events, communicate in real-time with your suppliers around the globe, and build trust with suppliers to overcome challenges together.
A lack of risk resilience stems from not knowing where suppliers are located, what their capacities are, how they perform, and where they’re vulnerable — each area of product integrity plays a key role in capturing and monitoring this information.
Inefficient resource allocation
Siloed teams are often duplicating their efforts, leading to supplier fatigue and wasting valuable time. What product integrity teams do so well is leverage existing processes to capture vital information without adding to the supplier’s burden. This improvement in collaboration pays off as suppliers become more responsive, and your teams are able to get the information they need more quickly.
This is important to combat the prevalence of time-consuming manual practices. Employees in your supply chain, from facility managers to those inspecting the quality of hard goods, are likely spending time on inefficient, outdated activities such as:
Using emails and calls to communicate
Sending reports via Excel and PDF files
Pen-and-paper or half-manual analytics and assessment
Having the right infrastructure in place leads to higher ROI across the supply chain, with time savings ranging from 31% to 100%. By sticking with manual and repetitive tasks, your company cannot access these savings.
How to reduce risks and build supply chain collaboration
It’s worth restating: in order to proactively manage risk, you must know where that risk lies.
That means having visibility over your supply chain structure. It means knowing where your suppliers are. And finally, it means building interconnectivity across all tiers of suppliers.
Here’s how to do it:
1. Use data analytics to build transparency and improve performance.
Your supply chain network analytics hold all the performance and profile data you need to make choices to improve the quality and compliance of your products. Product integrity teams are leaning into this data source heavily in order gain the holistic insights they need to be successful.
“Network analytics can be used to quantitatively diagnose the relative fragility of the supply chain, and draw meaningful comparisons with peers and industry benchmarks.”
The challenge for many companies is that this data may not exist for them, or at least, not in a way that is easily accessible. The first step to acquiring supply chain network analytics is digitizing your supply chain. This allows you to:
Objectively evaluate risk at the facility and product levels
Obtain actionable data on supplier performance
Establish strategic relationships and accountability with your suppliers
With digitization and centralization, data is captured from every action withing your production chain. This not only provides real-time visibility over all levels of supplier performance, but as time goes on, it strengthens the accuracy of predictive insights using tools like AI.
2. Build risk resilience with full supply chain collaboration.
Supply chains are complex entities. Complicating matters further is that buyers typically only interact with Tier 1 suppliers, which excludes communication with the vast network of other suppliers below. And when they do communicate, it’s often with a narrow view to their specific function.
Full collaboration starts with mapping out your entire supply chain and assessing the capacity of each supplier. With this information, you can invest in the right infrastructure and personnel to manage performance together in the long term.
Building collaboration in your supply chain won’t happen over night, but it’s worth the effort. Successful collaborations involving 2-3 separate initiatives can increase profits by 5-11% in that category through reduced costs and increased sales, according to McKinsey & Co.
3. Invest resources in high value-added activities.
One of the most revolutionary benefits of automation and digitization is that they allow your company to allocate resources directly to areas of high risk.
Data analytics allow you to objectively manage risk by receiving actionable data on supplier performance.
Furthermore, new learnings are incorporated into each subsequent round of production by AI (if it’s available to you) so your supply chain will continuously improve. And because digitization frees up people’s time across the supply chain by automating previously manual tasks, it allows employees to spend their working hours on higher value-added activities.
4. Put a production monitoring control tower in place.
In the production of your company’s goods, think of a control tower as a system that alerts you to risks and critical events in your supply chain. This allows you to respond and pivot quickly.
By zeroing in on ongoing and potential risks in real-time, you can fix them with precision by effectively allocating resources. This requires end-to-end visibility across functions, which along with supply chain collaboration is only possible with digitization.
Technology, like Inspectorio’s AI-driven supply chain management platform, can be used by product integrity teams to centralize performance, compliance, and capacity data to ensure goods make it to market on time.
Read more about what Quality 4.0 is and how to modernize your quality control to build risk resilience and connect your supply chain.
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