The sheer magnitude and unpredictable nature of the novel coronavirus COVID-19 has put even the best, most established businesses on shaky ground.
All the best laid plans have had to be revisited and brought back to the drawing board. Businesses have had to adopt a ‘reactive’ approach and go into fire-fighting mode to stay afloat.
There have been questions like “How can supply chain performance be improved in order to ensure that it is responsive and efficient in meeting the needs of final consumers during the pandemic“.
So, what are the lessons that have been learnt? Are we wiser from our experience of this kind of disruption and can we use these learnings to make our supply chains more resilient?
One of the major lessons COVID-19 has taught organizations is not to put all eggs into one basket. Shippers have understood how the overdependence on key primary suppliers can create significant risk on revenue streams.
Over-reliance on China is an example of this. Almost all carriers, shippers and logistics decision makers recognize that there could be a significant change in strategy for future sourcing and inventory management.
While just-in-time shipment delivery with tight inventory-to-sales ratios was the norm for lesser carrying costs and greater efficiency, COVID-19 is well on its way to shift the focus to a more conservative and safety inventory stock supply strategy.
According to a report by EY, “A market-leading car manufacturer needed to shut down seven of its factories in Korea due to qualified vendors’ inability to deliver components to produce wire harnesses for their vehicles. These suppliers happen to be located within Hubei province, where the Government has implemented a complete and total lockdown during the outbreak.
The immediate impact of this issue has affected 40% of this global car manufacturer’s total network output, dictating the pause of a new model launch.”
In the value chain planning domain, forecasting is based on the history of prior sales – traditional demand forecasting relies on time series techniques. However, considering real-world events such as abrupt market shifts, weather-changes or natural disasters, past sales can be a poor predictor of future sales.
What are some of the best practices that worked and could work during and post COVID-19?
Katrina Arabe, sheds light on this when she posed the question, “What COVID-19 supply chain pivot impressed you the most? Why?” to a few of the industry leaders.
Guido Gries, Managing Director, Dachser Americas, said, “Our supply chain partners seamlessly transitioned to a combination of a remote and rotational workforce without impacting operations. Working within restrictions, the industry continued to meet the needs of the marketplace as well as aggressively pursue solutions.”
The industry is more adaptable and resilient to change than expected. When push came to shove, the stakeholders stepped up to the plate, brought their A-game and found previously unexplored avenues to ensure the continuity of the supply chain.
According to Kevin Beasley, CIO, VIA, “companies utilized technology such as mobile route management, analytics for performance monitoring, and supply and demand planning for inventory management, to fill the gap with supply chain import and export distribution issues.”
If there was one thing that was front and centre, that everyone relied on, it was technology – people began to harness technology solutions for optimisation of processes, to stay connected and discover new ways of working.
Bruce Williams, CEO, Haultails is of the opinion that retailers of all sizes have rapidly adapted. From groceries to home improvement, they’ve digitized their operations and offered contactless delivery that is scalable and provides end-to-end visibility.
To meet customer demands, businesses were forced to rethink their strategies and come up with safer, better and faster ways to appease customer expectations. This meant jumping on the digitalisation wagon whether they were there yet or not.
Kirk McCann, Executive Director, North American Development, TransGroup Global Logistics, sheds light on the importance of relationships, stating, “customers strengthening relationships with goods and service providers to navigate production timeframes. Some shippers brought their logistics providers immediately into the fold in February, conducting crisis avoidance analysis daily. These customers helped to innovate alternative supply chains and cooperatively streamline the balance of supply and demand.”
A collaborative way of working and not in silos is something that has gained a lot of traction during this period.
Businesses have no option but to communicate with each other and share best practices in order to keep afloat.
This marks the beginning of a very positive trend, one that is hopefully here to stay.
Reimagining the workforce, cutting out bulk and focussing on lean processes to improve the efficiency of supply chains are important facets that businesses have to consider.
The conventional office set-up has had to change due to the pandemic and considerations such as work-from-home and remote working have become the norm.
Many businesses have realised that major costs can be avoided and this could indicate the new normal for days to come. “Executives everywhere wonder how to bring people back to the workplace and how they will do their jobs,” a report by McKinsey & Company says.
With a careful analysis of the situation and strategic planning, shippers and logistics managers can minimize some of the risks we are experiencing with the COVID-19 supply bottlenecks and work together to build future, more resilient and collaborative supply chains.