We explain what a bill of materials is, what they are used for, the different variations of BOMs, and why they are useful records to have.
Managing Global Supply Chain Complexities
This has been a challenging year for all businesses, but COVID-19 has only exacerbated existing global supply chain complexities.
According to Körber’s 2020 State of Supply Chain Complexity survey, only 9% of businesses felt that they can stay ahead of the most pressing challenges facing their supply chain, and 51% believe they can only tackle one complexity at a time.
So, what are these supply chain complexities and how can they be addressed?
What are the complexities currently facing supply chains?
Manufacturing and supply issues have been problems for global supply chains for a while now. Factors such as the increasing use of technology and the rate of technological advancement have been causing component shortages and meaning demand has been outstripping supply for some time.
According to the Körber survey, 2020 has also seen supply chains facing challenges with integrating software and materials handling equipment/technologies, and there are also struggles to integrate functions across the supply chain, such as manufacturing and end-customer deliveries.
Customer expectations of order fulfilment speed, cost and adaptability are also all struggling to be met, which has been made even more challenging due to the various restrictions to travel and number of employees working at one time brought about by COVID-19.
How can these global supply chain complexities be tackled?
Conquering these challenges must be a priority, as they are not going to resolve themselves. The best approach is to make a plan of action that not only tackles these issues but also safeguards the supply chain against future complexities and disruption.
Choose your partners carefully
The first thing you can do is work with strategic partners who are as invested in your product and end-user satisfaction as you are, because they realise that your success will equate to more business for them, and reliable service on their part will ensure you continue to use them.
Prioritise forward planning
You should also work with partners who are forward planning, so that you’re not always playing catch-up. Working on sales forecasts with suppliers is a great way to overcome problems such as component shortages and lengthy lead times. By anticipating when you will need your components in higher quantities, your suppliers can acquire the stock for you in plenty of time.
Invest in new technologies
You can also look to invest in new technologies that will simplify your processes. AI and IoT devices can take over many of the tasks that are taking up the time of employees who could be better used in other areas. These systems will help to streamline your business and can often also be operated remotely, so that important processes can still be carried out even if you have to limit the number of employees on site, or complete tasks out-of-hours.
Streamline your supply chain
It’s also worth noting that you are more likely to experience complexities when your supply chain itself is more complicated, and therefore you should look to streamline your supply chain where possible.
Having many suppliers in order to get the lowest prices on individual components can make it much harder to keep track of the stock you need and align it with customer or client orders, which will cost you money in the long run. If you can consolidate your suppliers into as few as possible, it is much easier to manage your supply chain and integrate any new processes end-to-end.
The pandemic has played a huge part in furthering complexities that already existed in global supply chains, but the problems are not insurmountable. By planning ahead and working closely with strategic partners, you can develop a business model that not only overcomes your current complexities but is also more resilient for the future.