The reality of Covid-19 has settled into the electronics supply chain as shipment delays, labor shortages and flight cancellations have upended global logistics. Although the tech industry has improved supply chain resilience, new technologies are gaining traction as the coronavirus spreads.
The previous weeks have focused on Chinese supply as manufacturing slowly recovered across the country, logistics expert Freightos reported March 18. But as the outbreak spreads and the U.S. and Europe struggle to respond, disruptions to western logistics to receive those goods in the near-term and the possible collapse of global demand is the new concern.
Supply chain visibility remains a significant problem for OEMs and EMS providers trying to anticipate component shortages. Manufacturers may be closely linked with their suppliers, but not their suppliers’ suppliers. Original component manufacturers (OCMs) rely on silicon, chemicals, metals and other raw materials to manage their production. The inability to gather materials information from OCMs has hindered OEM conflict-minerals compliance efforts.
Artificial intelligence and workflow automation are assisting manufacturers in Covid-19 management. Overall, though, the industry isn’t as well prepared as it could be.
In the 10 years since H1N1, said Resilinc Founder and CEO Bindiya Vakil, most organizations have not updated pandemic plans; many organizations are completely unprepared and have no plan; or people have moved on and no one is aware of what the plan is.
The Harvard Business Review came to a similar conclusion in a Basware-sponsored study. More than 60 percent of respondents say that a lack of visibility into their suppliers’ practices is a significant risk management issue. And many say they lack the tools to evaluate or monitor those vendors.
As a result, nearly a quarter of HBR respondents said their organization is not accurately evaluating their suppliers’ business practices. At a time when raw materials and components, manufacturers, and consumers are increasingly geographically dispersed, maintaining visibility throughout the supply chain is more important than ever—and more difficult.
AI and automation to the rescue
Artificial intelligence and automation have already gained traction in the manufacturing sector and have become more relevant during the Covid-19 pandemic. Automated manufacturing lines require few or no workers, for example. Automated workflow platforms can enhance employee safety, according to Catalytic founder and CEO Sean Chou. Catalytic has developed a platform of AI-enabled workflow solutions.
“A safe work environment is produced as a result of consistent application of safety standards,” Chou told EPSNews. “By automating workflows, companies accomplish three things: provide employees with checklists and guidance to complete tasks in a safe manner; automate tasks to reduce risks, quality issues, and unsafe practices; and reduce employee workloads to avoid rushed, unsafe behaviors.”
Catalytic has used its own platform to build an actionable business continuity plan.
“While this has been in place well before Covid-19 and tested every year, the dynamic nature of automation allows us to enact our plan with the touch of a button to respond to anything in real-time—a unique case like the novel Coronavirus included,” Chou said. “Catalytic’s technology automatically carries out steps in a multi-phase plan, like communicating instructions to our employees via text, email and Slack, so that no time is lost in making sure our people are safe and that they have what they need to deliver uninterrupted service to our customers.”
Manufacturers of medical equipment and safety gear have been asked to ramp up manufacturing in response to the outbreak. Automation greatly expands the capacity of an organization, particularly during spikes in volume of work, said Chou. “Each employee is only able to increase throughput by a small percentage when processes are manual, but automated workflows can scale exponentially to handle massive upticks during emergencies.”
Companies that already have automation software may be able to ramp up based on their vendor, he added. “If their vendor has a SaaS platform, they will be able to keep track of the different automation efforts. If they don’t, they may run the risk of silent failures or losing track of work effort from employees that are suddenly unable to continue the work because bots are running independently on different desktops.”
Generally, companies are better off focusing automation efforts in a way to free up their existing resources to focus on more critical issues -- such as data triage, information distribution, and other administrative processes, Chou said.
Procurement as change agents
Procurement departments have a particularly hard time during supply chian disruptions. Forecasting, ordering and even payment is more difficult than usual, which in turn disrupts multiple business departments.
Catalytic solutions work with systems procurement pros often work with (financial, procurement, sales and order management) and have built-in connectors to a number of common business systems used within procurement processes.
“Since procurement often needs to work across the corporate boundary to engage suppliers, Catalytic is designed to work seamlessly within and outside corporate firewalls,” Chou said. “Catalytic makes it easy for procurement to incorporate people into workflows, so completing judgement requirements, approvals and quality checks are simple.”
HBR found procurement departments are actively promoting supply chain visibility efforts. “Finance and procurement departments, which are pioneering the tools and tactics to heighten visibility into business relationships and are modeling a culture of openness for the rest of the organization,” said Guillaume Roels, Timken Chaired Professor of Global Technology and Innovation at INSEAD. Fifty-nine percent of HBR respondents say that they expect their organizations’ finance and procurement arms to drive their culture of transparency.
Roels says the technical challenges have largely been overcome, but cultural and organizational issues remain: “The main constraint is aligning organizations,” he told HBR. “The question is to get buy-in. We have to move beyond the mentality of silos. Many organizations try to optimize just for their business, but they don’t see the whole value chain.”
Leaders who adopt quickly stand to widen the impact of finance and procurement. In fact, nearly 60 percent of HBR survey respondents said that their procurement and finance teams are expected to identify and drive a business culture of transparency throughout the organization.
And while every organization cannot immediately reach full transparency, experts agree that all organizations can —and should—start on the path.
Catalytic’s cloud-based platform can be instantly provisioned and quickly deployed, according to Chou. Digital workflows can be designed, built, and deployed by business users in a matter of days (or even hours). With built-in process monitoring and optimization, workflows can continue to quickly evolve.
There seems little can be done to accelerate shipments by air or sea. With much of northern California already sheltering in place, Freightos said, some factories are already limiting their workforce, and many other industries working from home. It could be only a matter of time until the U.S. economy shuts down nearly completely.
“For logistics, the impact of a shutdown could be felt not only in terms of ports not able to handle the expected surge in shipments arriving from China, but also in dropping U.S. demand for imports, once again sending ripples through the supply chain, this time toward the east,” said Eytan Buchman, Freightos CMO.