January 14, 2025 Confronting Supply Chain Challenges with Fresh Strategies

Building resilient supply chains: cost optimization, strategic partnerships, and advanced technology for navigating disruptions.

In the face of widespread disruptions, such as strikes at major ports across the globe, manufacturers are reevaluating their supply chain strategies. These challenges, compounded by intensifying competition from low-cost producers and an uptick in severe weather events, highlight the pressing need for supply chains that are both more resilient and adaptable.

As the complexity of these disruptions increases, innovative solutions are stepping in to help manufacturers mitigate risks. Among the most impactful are three pivotal strategies aimed at bolstering flexibility, optimizing resources, and maintaining cost efficiency.

Strategy 1: Cutting Non-Essential IT Expenses

Forward-thinking companies like global tire manufacturer Nexen are taking a hard look at IT expenditures to enhance operational stability and adaptability. By breaking free from vendor-driven IT upgrade cycles, Nexen has uncovered opportunities to streamline operations while reducing costs.

For instance, by reassessing its SAP Business Suite/ECC 6.0 support model, Nexen achieved maintenance cost reductions of up to 50%. These savings were then reinvested in cutting-edge technologies like AI and real-time analytics, enabling the company to improve production oversight and supply chain management without overhauling its existing systems.

Similarly, Gunung Raja Paksi (GRP), Indonesia’s premier private steel producer, moved away from higher vendor costs by transitioning its SAP S/4HANA support strategy. This move slashed its total ERP support costs by up to 90%, freeing up resources for initiatives that boost production efficiency and strategic decision-making. GRP has since channeled these snowballing savings into advanced technologies, positioning itself to optimize resource allocation and profitability.

These examples demonstrate that minimizing IT costs doesn’t equate to reduced functionality. Instead, this approach creates opportunities to focus on transformational projects, enabling manufacturers to balance resilience with innovation.

Strategy 2: Optimizing Costs and Strengthening Partnerships

Disruptions in supply chains can lead to staggering financial losses. To counteract these challenges, companies are focusing on managing costs more effectively and enhancing collaboration with their partners.

Manufacturers must prepare for elevated logistics expenses, including higher freight rates, storage fees, and container handling costs. Transparent communication with stakeholders is equally crucial, as it helps set realistic expectations regarding potential delays.

Fostering deeper supplier relationships is another critical element of this strategy. Coordinating production and shipping schedules with suppliers, while being open to adjusting order quantities or timelines, can mitigate disruptions. Expanding the supplier base to include local or regional partners also reduces reliance on imports and strengthens localized supply chains.

Additionally, leveraging data analytics and scenario planning empowers manufacturers to anticipate potential disruptions and better prepare for the future. These tools provide valuable insights into vulnerabilities, enabling companies to solidify partnerships and enhance overall supply chain resilience.

Strategy 3: Strategically Adopting Advanced Technology

The integration of advanced technologies is revolutionizing supply chain management, equipping manufacturers with the tools needed to navigate today’s complexities. From real-time monitoring to predictive analytics, technology offers unparalleled advantages.

For example, real-time visibility platforms allow companies to track shipments, monitor port performance, and swiftly identify potential bottlenecks. This heightened transparency facilitates quicker decision-making, enabling teams to mitigate delays and minimize disruptions.

Predictive analytics amplifies this advantage by forecasting potential challenges, such as weather disturbances or congestion at critical hubs. Equipped with these insights, manufacturers can adjust routes, optimize shipping schedules, and proactively address potential setbacks, reducing both time and financial losses.

By embracing these technologies, organizations shift from reactive problem-solving to proactive planning—a vital capability in today’s unpredictable environment.

Preparing for Tomorrow’s Challenges

From labor uncertainties to climate-related events, manufacturers have realized the greater need to reinforce their supply chains. Companies like Nexen and GRP are setting the standard, showcasing how cost reductions can fuel innovation and how technology adoption can aid adaptability.

By streamlining IT expenses, fostering collaborative supplier relationships, and embracing cutting-edge technology, manufacturers can construct supply chains that are not only robust but also agile enough to thrive in the face of uncertainty. These forward-looking strategies position organizations to overcome disruptions, seize growth opportunities, and remain competitive in a rapidly evolving global market.

About the Author:
Mr. Cortesio serves as VP, Manufacturing Industry Solutions for Rimini Street.  In this role, he is responsible for global strategy and business development to build and grow revenues across the Manufacturing industry.  Mr. Cortesio serves as Rimini Street’s thought leader for all topics related to Manufacturing, both internally and externally.  He further establishes and maintains strong relationships with key industry stakeholders, partners, and customers to understand their needs, support their innovation strategy, and ensure ongoing satisfaction.

Mr. Cortesio is an accomplished Business and Technology executive leader who has advised CIO and other C-Suite clients along with their supporting organizations, on manufacturing innovation, business transformation, and best practice IT services and solutions.  He has provided advisory and management consulting services to Manufacturing clients for over 30 years, including having served in Business / Technology Transformation Client Director roles for more than 15 client enterprise programs.

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