Supply chain performance declines as shortages increase
E2Open study reveals that the coronavirus disease (COVID-19) pandemic has made it harder than ever to do business. As demand for essential items drove record sales, service levels fell from 99% to an all-time low of 83%, as manufacturers moved away from product innovation to increase the efficiency of production, reduce changes and maximize production.
“It is tempting to view the pandemic as an anomaly and to stay the course in the hope of a quick return to the old pre-pandemic normal,” said Pawan Joshi, executive vice president of product management and of strategy at E2open. “However, the sad reality is that business has not returned to normal. Instead, things settled into a new baseline where every aspect of doing business is more difficult than it was before the pandemic, and that was before the Delta variant and the Drought Series, d ‘floods and forest fires that occurred in 2021. “
- From a planning standpoint, the pandemic has made businesses inherently more difficult to predict than in previous years. The demand planning error has increased by over 20% and the extreme error has increased by over 33%.
- The study found that companies are using artificial intelligence (AI) and real-time data to understand current market realities and better predict what customers will order.
“Understanding what really happened during the pandemic helps leaders prepare for other large-scale disruptions in the future,” said Michael Farlekas, President and CEO of E2open. “Being better prepared is a crucial factor in building resilient processes, being proactive rather than reactive, supporting the communities you serve during difficult times and coming out stronger than before.”
“Today’s supply chain processes span internal operations, multiple levels of upstream and downstream business partners, and extend to the end consumer,” Farlekas continued. “While these are all intrinsically linked and interdependent, few companies have invested enough in connecting end-to-end processes and systematically leveraging current information and AI to build resilience. This is an area of great potential for most businesses to help them better manage future disruptions and capitalize on the hidden opportunities that disruption can bring. “