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How Digitalization Helps Manufacturers Become More Agile

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While the coronavirus pandemic has caused worldwide devastation, it has also revealed the global manufacturing sector's selflessness. As the outbreak created shortages of critical medical equipment, companies retrofitted their production lines to make breathing machines and protective gear.

That development highlighted two things: the worldwide manufacturing industry’s willingness to set aside profitability when the need arises and the importance of operational flexibility.

Large corporations could execute operational pivots because their digitalized supply chains gave them the latitude to adapt quickly. But small and medium-sized enterprises (SMEs) had a more difficult time with this during the pandemic's onset. In fact, what the pandemic highlighted is just how important it is to be able to pivot and function in an agile manner when the unexpected occurs.

With that said, here's how digitalization can help with this endeavor.

How Digitalization Increases Sourcing Flexibility

In April, Ford re-tasked some of its factories to make ventilators in response to a coronavirus-caused device shortage. The automaker could adjust rapidly because it uses a digitalized global network to maintain its supply chain. The corporation’s investments in modernizing its production and logistics apparatus gave it visibility despite widespread coronavirus related disruption.

Because it had this organizational flexibility, Ford’s supply chain managers could work with ventilator suppliers to source the appropriate materials.

If the automaker depended upon an analog supply chain, it could not have responded to the crisis so effectively.

Similarly, chipmaker Intel maintained an over 90 percent on-time delivery rate in March because of its digitalized supply chain management. When the coronavirus began causing disruption globally, the firm coordinated a response with its suppliers and logistics providers. Consequently, the corporation arranged for short-burst shipments to keep its production lines moving.

Intel’s flexibility amid global calamity also gave it the space to put together a $50 million COVID-19 reaction package.

So what should professional buyers take away from all this information? That digitalization is a powerful defense against unexpected and massively disruptive events.

How Procurement Specialists Can Digitalize Operations

Understandably, procurement specialists might assume Ford and Intel had strong coronavirus pandemic responses because they possess vast financial resources. But the truth is that money alone did not empower them to deal with the crisis. The two firms coped with the unforeseeable because they had the flexibility provided by digital supply chain management.

Thanks to recent technological innovations, purchasing managers can digitalize their operations at the SME level.

For example, a crucial electronic component supplier would likely shut down production temporarily if a natural disaster hit their region. Purchasing managers that utilize analog sourcing methods would have to scramble to find an alternate vendor. But professional buyers that have digitalized their operations can resolve the problem more effectively.

Purchasers can utilize component e-commerce marketplaces to search listings from thousands of traceable suppliers to find the parts they need. They can also upload their BOMs directly to an online portal to source material for an entire project in just a few clicks. Moreover, leading online retailers enable procurement specialists to send shipments to multiple sites around the world.

Buyers can also utilize digital part marketplaces to quickly source supplies for a disaster response project.

No organization, regardless of size, can avoid being impacted when something like the coronavirus pandemic happens. But by digitalizing their operations, firms make themselves flexible to step up when employees, customers, and communities need them most.

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