The corona crisis reveals weaknesses in the supply chain – one of the many consequences of the corona pandemic on business processes. Many companies have failed to adapt their risk management processes to the complexity of today’s global supply chains. With SEEBURGER’s electronic supplier integration, you never lose sight of your supply chains.
Supply chains are becoming increasingly complex
In 2011 some companies were faced with a massive challenge due to the earthquake and the accident at the nuclear power plant in Fukushima (Japan). Nine years later, the lessons learned in Fukushima seem to have been forgotten.
Many companies around the world are desperately trying to find out which of their ‘invisible’ subcontractors – those with whom they do not deal directly – are in the regions affected by the Corona pandemic lockdown.
A multinational corporation such as Volkswagen works with 5,000 suppliers (so-called Tier 1 suppliers), each of which in turn has an average of 250 Tier 2 suppliers. This means that the group is actually dependent on 1.25 million suppliers, most of whom are unknown to the company. At the epicenter of the Corona virus outbreak, in Wuhan, China, are the headquarters of the Tier 1 and Tier 2 suppliers of at least five million companies from around the world. According to a report by the data analysis company, Dun & Bradstreet, it has been determined that approximately 51,000 companies worldwide have one or more Tier 1 suppliers in Wuhan and at least 5 million companies worldwide have one or more Tier 2 suppliers in the Wuhan region, the epicentre of the Corona pandemic.
The consequences of crisis-prone supply chains
The current global Corona pandemic emphasizes the need for continuous monitoring of supplier risk and rapid identification of possible alternative or secondary suppliers and their quick and easy integration to increase the resilience of supply chains. This is because the impact of the landslide effect of the global pandemic on the economy is dramatic:
- Important suppliers remain far below their usual capacity levels due to quarantine measures and staff shortages, or have ceased production altogether.
- This results in delays in the logistics of semi-finished products and raw materials.
- Production schedules cannot be met due to supply bottlenecks.
- Current and future orders cannot be accepted or executed due to insufficient inventory levels.
- Sales revenues decline.
Stable and secure supply chains thanks to modern tools and applications
Whether in the areas of logistics and manufacturing or in the integration of new business partners – in many industries (automotive, manufacturing, high-tech, mechanical engineering, etc.) bottlenecks occur as a result of fluctuations within the supply chains caused by the Corona virus. Often, new business procedures and processes must be mapped as quickly as possible using new software. Companies therefore need modern, timely tools and applications to monitor and control their current and individual requirements quickly, easily and clearly. Communication with suppliers is of particular importance here.
By conducting business electronically, companies can tap into enormous rationalization potential and win new markets and customers. The supply chain is optimized by the efficient integration of suppliers. This offers considerable advantages in cooperation between business partners. In addition, thanks to fast communication and information available online, suppliers are always up-to-date and can act independently at an early stage. The Internet replaces costly and inefficient communication via telephone or fax with a continuous and transparent flow of data. This also provides the customer with constantly updated information, for example about the current processing status at the supplier and the ongoing material flows.
SEEBURGER offers an efficient solution for the integration of suppliers worldwide with the electronic supplier integration solution. Protect yourself from the risks of supply chain disruptions, such as those currently being experienced as a result of the Corona pandemic.
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Written by: Peter FelsPeter Fels is Product Manager D-A-CH (Germany, Austria, Swiss) at SEEBURGER for the automated processing of incoming invoices for all non-SAP systems. Mr. Fels has many years of experience regarding the conversion from paper to the electronic invoicing processes.