How the Executive-Ordered Review Could Empower Supply Chain Resilience

By now, you’ve heard about President Biden’s recent executive order calling for a 100-day review of U.S. supply chains. By assessing the risks across all areas, manufacturers can address them strategically and build long-term resiliency into production processes.

We’ve all seen how individual disruptions can upend entire supply chains—from the COVID-19 pandemic, to the grounding of a cargo ship in the Suez canal, to the semiconductor shortage that’s reverberating throughout the electronics and automotive manufacturing sectors. I see this supply chain review as a good thing. It’s a call to action for manufacturers across all industries to manage risk more proactively, adapt to new complexities, move out of firefighting mode—and ultimately bring stability to our supply chains.

Let’s dig deeper into what the review means for supply chain and operations leaders now and into the future.

A time of reckoning for inventory management

COVID-19 brought inventory control issues into stark focus. But this meant different challenges for different manufacturers. Some have seen severe demand spikes, supplier limitations, or site shutdowns, culminating in shortages, contract penalties, and missed customer deliveries. Others saw demand plummet, leading to excess inventory buildup and working capital concerns.

Often at the heart of these risks is a lack of visibility into inventory because data resides within too many different, disconnected systems. Without a complete, global view of supply and demand data, you can’t optimize inventory, work with suppliers to resolve issues, re-size order policies, or quickly pivot procurement actions to adjust for changes in demand.

The pandemic shined a light on these risks, but it’s not unique in the broader scheme. Unforeseen events like economic shocks, natural disasters, geopolitical issues, and more will increase as our markets become more complex and globalized. They’ll create new disruptions like we’ve seen in the past year, with the potential to hurt customer relationships and your bottom line.

To establish business continuity and true supply chain resiliency, you need a new inventory optimization model that emphasizes visibility, accountability, and actionability at the factory level—which is where these disruptions play out in real time each day.

Why the supply chain review is so important for medical device manufacturing

This comprehensive review will lay the groundwork for manufacturers across all industries to better balance real-time responses to inventory issues with proactive planning. But particularly in medical device manufacturing, shortages and supplier delivery issues can have a direct impact on patient outcomes. Medical device factories need upstream visibility and the ability to prioritize what buyers need most at any given time more than others. 

The supply chain review will nudge manufacturers to create a real-time, harmonized view of inventory levels. This leaves them better-positioned to optimize inventory across the complex, multisource supply chain, and ramp production up and down more easily.

What manufacturers can do now to mitigate risk

Long-term planning and complex risk management strategies only get you so far when fast-changing situations call for real-time, day-to-day agility. The factory is where the rubber hits the road, and any supply chain risk mitigation plan worth its salt has to have built-in execution-level resilience. 

In my mind, managing supply chain risk in 2021 and beyond requires centralizing inventory data, standardizing metrics, prioritizing the most critical tasks each day, and leveraging advanced analytics for efficient decision-making.

Centralize | Boosting visibility starts with creating a single source of truth for inventory information. Consolidate inventory, demand, and shortage data from ERP systems, spreadsheets, and anywhere else it lives across the organization, and centralize it in a single hub. 

Standardize | Centralizing all this data requires harmonizing disparate metrics. Standardize how you define inventory metrics and ERP order policies across all sites and systems. This enables visibility into the whole picture of inventory—trends, root causes, and actions being taken.

Prioritize | Now teams can align on which parts and orders are most critical to address first, which suppliers are most vulnerable, and how to allocate supply and other resources to mitigate risk.

Automate | Advanced analytics and automated workflows can equip teams to act quickly on shortages and other issues to avoid production stoppages. By flagging the most critical tasks and holding people accountable, new technology tools can help teams solve issues faster, freeing up their time to stay attuned to future risks and prepare to respond adeptly.

Why the review could bring lasting resiliency to U.S. supply chains

The pandemic impacted organizations’ supply chains at all levels, but for many manufacturers, inventory optimization was the biggest issue. Deloitte reports 80% of leaders weren’t confident in their levels of visibility to take action. If this executive order achieves its stated goals, resiliency could very well become a critical component in supply chain design and strategy—with inventory optimization front and center—instead of being an afterthought or nice-to-have. 

This review will spur manufacturers to take a close look at their supply chain risks and gaps, especially when it comes to inventory optimization in the factory, and put measures in place that give them back control over operations. 

This might mean finally moving away from using Excel for inventory optimization and shortage management. It might be the realization that digital transformation can no longer wait. Once you start investing to equip your teams for greater visibility, actionability, and standardized processes, they can cut through complexity, tackle urgent issues before they hold up production, and ultimately get more satisfaction from their jobs.

Resiliency goes hand-in-hand with building sustainable supply chain practices. Read the 5 ways manufacturers can go green and prioritize inventory efficiency in their organization.