There have been a lot of negative stories about supply chains in the news lately. Take, for example, the recent recall by Fiat Chrysler of 1.9 million vehicles around the world due to seat belt and airbag problems. Ocean carrier Hanjin Shipping’s bankruptcy left $14 billion in goods essentially stranded at sea on half a million containers. Meanwhile, GM had to recall 4.3 million cars for defective software. Perhaps the example making the most headlines has been Samsung’s recall of its brand-new Galaxy Note 7 smartphone due to fires.
However, in order to illustrate the fragility of supply chains, the best example is perhaps that of Volkswagen being forced to stop the production of almost 10,000 cars in Europe after one of its suppliers refused to deliver essential components.
Supply Chain Ecosystem Agility Needed
With modern car manufactures getting as much as 75 percent of their parts from suppliers, a complex ecosystem of supply chain partners is needed. If one link is weak – as was the case with VW – the entire system can collapse. Part of the problem is that the carmaker relied on a single source – Prevent Group – and this backfired spectacularly.
Embracing a supply chain ecosystem view can help protect against vulnerabilities. As relationships change, this perspective shift can prove to be vital. If a system is more agile, single-sourcing will be not be quite so risky because manufacturers will be able to adapt to hiccups on short notice.
Modern companies need to make use of cloud platforms that allow for partner diversity, enabling data on shipments, inventory and documents to be shared across the entire ecosystem in real time. This can help boost the agility of the system overall quite significantly. While existing ERP systems don’t necessarily need to be replaced, existing investments can be extended to help ensure future success.
This blog post was based off of an article from Supply Chain Digital. View the original here.