The truth of the matter is that we are all struggling. Struggling to learn how to work remotely. Struggling to figure out how to restart supply chains and respond to new and sometimes extreme demand signals. Struggling to do what is best for our employees, customers, partners, and the population at large.
In early March, before most of the United States had shut down, supply chain resiliency consultant Philip Palin in a commentary published on the Quarterly’s website, “Coronavirus-related cancellations and closures—How they could affect the supply chain,” wrote that government-mandated workplace shutdowns “will quickly and seriously undermine the capacity of all supply chains.” While the shutdowns may have been necessary to slow the spread of the disease, almost all supply chains have been profoundly impacted. How do we now move forward?
Here’s another uncomfortable truth: No one really knows, especially for your particular company and supply chain. This pandemic is unprecedented.
Recognizing that uncertainty, however, the following is some advice from commentaries that have been published on Supply Chain Quarterly’s website over the past couple of months. Take a look, see if there is something that can be gleaned or adapted for your particular situation.
1. Be prepared for “panic buying.” COVID-19 and toilet paper shortages are destined to be forever linked in the world’s collective memory. Could panic buying and hoarding affect your supply chain too? In “How to respond to panic buying,” Albert Oca, partner of strategic operations at the consulting firm Kearney, warns that “Panic buying isn't going anywhere yet, and supply chains need to be able to flex to the situation. Companies in the retail supply chain will need to understand what they need to do to distribute, replenish, and fulfill supplies in bigger quantities and with increased frequency until the virus is contained.” In addition to beefing up supply chain staffing, creating an internal task force, and increasing visibility with supply chain partners, Oca recommends that companies start planning now for similar events in the future. Companies may look to hold greater inventory buffers and use data analytics to rapidly sense demand changes and pivot their supply chains in response. In addition, as sick employees shut down factories and distribution centers, more companies may consider automation so that they are less dependent on human labor.
2. Embrace digital solutions. The pandemic has pushed even more consumers to embrace online sales channels. But this trend is not just limited to business-to-consumer markets, the same effect will be seen in the business-to-business (B2B) world. Oca’s colleague at Kearney, Joshua Swarz writes in “Getting B2B digital sales right in the wake of COVID-19” that the crisis can serve as a wake-up call to companies that do not have the digital capabilities or integrated systems in place that they need. Swarz recommends that companies focus on ensuring that their technology that can help provide five critical capabilities: inventory tracking, distribution tracking, inventory forecasting, prioritization of who gets products first, and identification and tracking of essential stock.
3. Consider diversifying supply. Early in the year, COVID-19 revealed how dependent we all are on manufacturing operations in China. In his online article, Madhav Durbha, a group vice president at the supply chain technology company LLamasoft Inc., specifically looked at how “Coronavirus exposes the weak links in the pharmaceutical supply chain.” Going forward, Durbha recommends asking the following three questions: 1) What part of my supply, and how much of it, is coming from China? 2) What finished products is this supply going into? and 3) What alternate sources do I have to meet the demand? While these questions sound simple, answering them may not be, writes Durbha. Companies may need to turn to artificial intelligence and advanced analytics to build resiliency; identify and weigh the benefits and costs of sourcing alternatives; and monitor future risk.
4. Know where you are vulnerable. One of the side effects of the COVID-19 crisis is that many companies have had to cancel on-site audits of their suppliers. While the cancellations are necessary, they also expose supply chains to greater environmental, labor and human rights, and ethical risks, writes David McClintock, marketing director of ratings company Ecovadis, in “What to do if coronavirus canceled your sustainability audits.” Instead of “flying completely blind” during this time, McClintock makes a case for using supplier ratings and industry-specific self-assessment tools such as the Higg Index for apparel industry.
Have other advice or strategies for navigating out of the crisis? Please contact the editor of Supply Chain Quarterly.