How to Economically Increase Supply Chain Resiliency

Industrial maintenance company ATS has adopted three transformational initiatives to advance supply chain visibility and optimization without excessive system investments.

All eyes are on supply chain digitalization these days as the answer to procurement agility and resilience. It is the natural extension of Manufacturing 4.0 (M4.0) initiatives already underway in industry.

But less widely understood is how an early phase of the long-term digitalization roadmap can circumvent large, upfront investment hurdles. ATS took this approach when pursuing indirect procurement optimization and not only avoided unnecessary costs and complexities, but also achieved higher ROI than originally conceived.

Compared to direct materials, which are built into the manufactured product, the processes and systems used to manage maintenance, repair, and operations (MRO) consumables tend to be far less mature. Most industrial organizations have quite sophisticated enterprise resource planning (ERP) systems supporting their production supply chain but lack comparable capabilities for their indirect materials, such as oil, adhesives, cleaning supplies, and disposable gloves. This seems counterintuitive considering the absence of such items can potentially put operations and maintenance continuity at risk.

ATS recognized this risk well before the pandemic made it worse, and in 2018 set out to correct it. Initially, it was assumed that a several-million-dollar system investment was the path forward to drive much-needed visibility and transparency into the indirect supply chain. But after some study, a simplified, three-pronged approach was chosen that enabled immediate improvements without any upfront capital investment.

Chances are that the existing system data already has the insights needed to enable adaptive strategies for demand planning, warehousing, and fulfillment in a highly volatile environment. It is also likely that this system data is underutilized. Understanding the data hierarchy, KPIs, and resulting actions that come from best practices can help ensure existing systems achieve the full extent of their usefulness.

First and foremost, think about what you want the data to tell you and the decisions you want to make based off that data—not just now, but 5-10 years from now. Do you want to know who the primary supplier is and their product price and lead time? Do you want the same for secondary and tertiary suppliers? Do you want to know more about their parts so you can build out part descriptions that can be better leveraged across the organization?

By amassing data like this and learning from it, users can set up different sources of supply that meet cost and production planning requirements, both domestically or globally, and adjust as needed based on real, accurate information. This improves the ability to respond to any crisis by automating workflows that alleviate the dependency on individuals with specific product expertise, while ensuring items are purchased efficiently and at the best cost.