Achieving an Agile Supply Chain

After the last year, it has shown all types of businesses that supply chain resilience has never been more important and has exposed weaknesses that all of us didn't dare look at before. Now that we are emerging on the other side, we may be better off for it.

Global markets have always been apt to change at a moment’s notice, often a result of dramatic shifts in consumer demand and availability of products. These sudden changes in demand can affect manufacturers in every sector.

The inevitability is that retailers and consumers will expect manufacturers to continue to deliver the same quality and variety of products, often also demanding a greater range of SKUs, such as for smaller or bulk sizes, event-based or seasonal packaging varieties - and continue to expect it how they want it and when they want it, regardless of the difficulties.

 

 

This Butterfly Effect-type chain reaction, if you will, impacts not just production and packaging, but also end-to-end management of the supply chain, particularly downstream traceability.

The past year already demonstrated that those with supply chain agility who are ready and able to respond to such shifts, can vastly benefit significantly versus their competition by being able to outmaneuver them.

As the effects of the global pandemic are expected to last well into 2021, adding contingency and agility into supply chain operations has become a priority for many businesses.

In this article, Andy Barrett, Senior Product Manager at Domino North America, outlines how Coding Automation and Serialization can have a substantial role to play in supply chain agility and – particularly in such uncertain times – enable manufacturers to not just remain competitive, but potentially outpace the competition.

Supply chain disruption is nothing new - especially for the global economy that we find ourselves in. Weather events, earthquakes, explosions, and even the CO₂ shortage of 2018[i], have all been known to cause disruptions to the normal flow of goods and services – and the majority of companies have some form of contingency planning in place to cope with unexpected slowdowns and all-out breaks in the supply chain.

However, with the global reach and extended duration of the COVID-19 pandemic, has created unprecedented challenges for many businesses. Prices vary not only day to day but increasingly hour to hour, particularly in online retail, which has seen a massive increase in volume as access to – and staffing of – stores became difficult. Similarly, lead times across a global supply chain were very hard to predict, demanding continuous modification to production schedules.

Limited access to raw materials and product packaging in the face of a huge increase in demand has put further strain on manufacturers – with some major food and beverage suppliers struggling to obtain labels, cans, bottles, and other packaging materials.

In response to this challenge, and to keep up with demand, some companies have streamlined processes by limiting SKUs: reducing product lines, and minimizing customization. In addition, some companies even resorted to revamping and investing in mechanizing their production lines where possible, further insulating themselves from future disruption from the impending changes brought on by the Industry 4.0 revolution. 

In order to improve production line efficiency and manage their supply chains more effectively. While others sought to fundamentally redefine their supply chains[ii], by exploring near-shore and local suppliers for both primary and contingency roles.

Throughout the pandemic, customer buying models have also evolved, necessitating further changes to manufacturing operations.

The global lockdown encouraged many individuals to embrace ecommerce for the first time – raising the need for companies to flex dynamically between bricks and mortar and ecommerce sales. Importantly, packaging requirements for ecommerce shipments are very different to standard retail – with products sent out in different batch sizes for example – demanding a change to both coding and the end-of-line production schedule.

As we enter the second year of the Pandemic, it is also clear that many consumers are not exactly rushing back to stores to shop in person; suggesting that brands will need to dynamically manage a hybrid sales model – and the associated implications on packaging – for some time. In fact, the die may have been cast for this type of hybrid model of shopping moving into the future. 

Customer expectations with regards to product safety and hygiene are also creating new trends within product packaging, trends which reverse the shift away from plastic that has occurred over recent decades. In Italy, for example, fresh fruit and vegetables that were previously sold loose are increasingly being wrapped in flexible plastic.

With hygiene concerns outstripping sustainability goals for the time being – a situation that may or may not reverse over the next few months as many governments’ ‘green’ incentives come into force – companies may need to explore different packaging solutions to help meet customer expectations.

The economic pressures of the pandemic are unprecedented – whether from supply price variation, the new investment required to ensure workforce safety, the pull to embrace ecommerce, or the needs to streamline product lines; each has necessitated significant changes to business models the world over.

For companies still reliant upon traditional, manual production processes, the past few months have been extremely challenging. Building in contingency, dynamically reducing SKUs, and managing the evolving bricks and mortar/ ecommerce mix means an urgent need for control.

The necessary levels of control and agility can only be achieved by creating trusted, repeatable processes that improve efficiency and reduce the risk of expensive errors – adopting automation in coding and marking is one way that manufacturers can look to achieve this.

To take a recent example, one well-known food manufacturer – who fully automated coding through their SAP – was able to successfully eliminate coding errors, and significantly increase productivity by removing associated downtime that typically accounted for as much as two hours each day. Similarly, a major beverage company – where gaps in coding processes had previously led to a $40,000 recall – completely removed human intervention failures with the introduction of integrated automation, mitigating production risk and increasing efficiency by 100%.

There's an unintended positive consequence from all of these changes - constant trackability. As well as limiting the risk of coding errors and associated downtime, coding automation can also provide manufacturers with a full, seamless communication stream, and options for increased visibility and data sharing.

This type of visibility can fuel more efficient operations and provide increased control and agility when coping with changes in demand or moving between e-commerce and traditional brick and mortar stores' product packaging.

Furthermore, by automating coding solutions, manufacturers can streamline production processes, reduce downtime by improving product changeovers, and benefit from greater visibility of what is happening in real-time on a production line. Moreover, utilizing vision control alongside coding automation to check codes can help to avoid unnecessary waste when a problem does arise.

Finally, coding automation can provide manufacturers with business insight that can prove essential when coping with an unprecedented change in demand. Understanding at a glance the number of items coded per day can help ensure the right amount of inventory – from packaging materials to labels, inks, and make up supply – everything required to keep production lines running smoothly.

COVID-19-related supply chain challenges have abated over time and companies have adapted. However, it was an excellent stress test for our supply chain and finding weak points as we move into an ever-changing future.

One thing for sure is that in the current geo-political climate, it is more important than ever for manufacturers to remain flexible and agile, in order to respond to sudden changes in supply and demand. On modern-day production lines, manual processes are a barrier to success. To achieve the rapid change and adjustment required to respond to supply chain disruption – be it due to economics, weather, or health event – automation is essential.

Coding and marking may not be the most immediate thing that springs to mind when you think of automation in manufacturing. However, coding automation can play a surprisingly significant role in increasing accuracy and agility on production lines.

As we move beyond the current crisis, manufacturers who take the opportunity to automate their coding solutions, and realise the benefits of enhanced control and visibility over their production processes, will find themselves better equipped to continue production, whatever the future holds.

[1] The Independent, “UK faces beer shortage during World Cup and barbecue season”, accessed 21st August 2020. https://www.independent.co.uk/news/business/news/uk-beer-shortage-world-cup-2018-co2-carbon-dioxide-barbecue-a8407971.html

[1] The Manufacturer, “Beyond Covid-19: Building supply chain resilience”, accessed 21st August 2020.