Supply Chain and Coronavirus: How to steer through the "current" global health crisis
Updated: Mar 29
Global trade volumes and activity has had an enormous impact from the latest global health crisis. Not only the movement of people, but also the movement of goods (and services) has come to a near standstill. Even though global trade restrictions by the various governments in the past, already changed our global trade landscape, the latest lock-downs and restrictions have created even further challenges across the global supply chain for many businesses.
Due to the recent closure-requirements of the various governments, numerous small and medium business owners have decided to stop trading completely (close shop), and either sit out the “storm” or look at alternative career opportunities. Even though many governments have announced economic relief packages for small and medium business (and communities), it's clear that for many businesses, this will not be enough. And even though, based on historic data (link), numerous (now) global multinationals have been established during a "crisis", this is currently the furthest from "our minds".
Over the last years, many organisations, have grabbed the opportunity to introduce new business models, producer/ manufacturing and supply chain solutions to remain financially competitive in the ever-growing and changing global market. Initiatives, like lean, just-in-time, small-batch-production, global sales and operational planning, zero-inventory, manufacturing outsourcing (low wage countries - e.g. China - See below the latest Bloomberg, OECD visual), etc. have all contributed to reducing costs and to ensure in being pro-active to deliver value to the continuously evolving and changing consumer requirements.
All these operational excellence solutions are very effective to increase the performance of your financial and operational supply chain, and your bottom line, but when one or multiple of these "elements" are not able to perform, e.g. borders close, manufacturing plants are closed, bush fires impacting producers/ farmers, etc., it will have a direct impact on "your" supply chain and therefore your business.
In the last 10 years, there have been numerous economic, climate and health disasters. However, these were often local and/ or regional, but never on such a global scale. So how do we manage this new norm, which clearly affects not only businesses, but more important communities and people.
Transition from "Just in Time" to "Just in Case"
Introduce local, regional and global supply for "your" critical products, ensuring relevant back-up models to continue to deliver in times of local, regional or global shortages. The focus is on a resilient supply chain model which can deal with local and regional disruption, while continuing to deliver to your customers. Numerous multinationals have started to introduce local-for-local and global-for-local supply chain models
Review and assess inventory/ stock levels and locations to allow continued supply to your customers when you have to switch from local to global supply or vice versa
Customer channel diversification to deliver, deliver, deliver
Review and assess market trends on an on-going basis and ensure that your diversify, where possible. This can be customer channels, but also geographic customer locations
Asses delivery models, e.g. eCommerce, retail, distributor and/ or direct-to-market
Effective Supply Chain Network to increase Supply Chain Performance
Many supply chain managers have a single supply chain strategy, involving either in-house or external manufacturing/ warehouses/ distribution centres, using internal or external logistics providers. But in the last years it has become very apparent that a solid and effective mix of these various models have allowed businesses to secure supply and stock levels far more effective, then supply chain managers that have adopted a single model
Use supply chain metrics, incl. key performance indicators, turn-around-time measures, etc. to eliminate potential performance issues. By introducing targets and monitoring averages (incl. seasonality), it allows supply chain managers to continuously review how changes in the business environment might have a negative impact on customer satisfaction and therefore, hamper the success of your business, incl. long delivery lead times, returns, low delivery-on-time, poor product and/ or delivery quality, etc.
Supply Chain Visibility, Traceability, Sustainability and Availability
Through the introducing of leading-edge technologies, incl. SCM Blockchain, Artificial Intelligence (AI), digital twin and/ or spatial web, it's possible to trace your product from origin to consumer delivery. This will allow supply chain partners to know the ETA for their incoming/ outgoing processes, obtain direct feedback from supply chain partners, easy extension to other partners/ distributors and producers/ manufacturers (as the digital connections have already been established), resulting in sure-supply and distribution models
Use Internet-of-Things (IoT) devices to capture accurate data, allowing better, more comprehensive data, which can provide forward-looking information. Instead of solely using supply chain-relevant data, external data sources, e.g. macro-economic data, transport data, weather patterns, etc. can be captured, allowing pro-active supply chain risk management to reduce the impact on your business when economic, climate or health issues start occurring
Although numerous of businesses and people are questioning when everything will be back to "normal", I strongly believe that this global (health) crisis is a new norm, maybe not as drastic as this Coronavirus, but there will be similar crises. We'll therefore will see businesses fall into one of two categories.
Businesses that will wait for this disruption to be over and are hoping such a disruption won’t ever happen again. These companies will be taking a highly risky gamble, and
Businesses that have learned their lesson, and make investments in mapping their supply chain model and networks, partner with technology providers, etc. allowing them to generate end-to-end visibility across their supply chain when the next crisis hits, while rewriting their supply and customer contracts so they can quickly implement and adopt solutions when disruptions occur.
In the end the businesses which take action will be the winners in the long term...
In the last 6 months, Unique Excellence has partnered with a leading-edge Paddock-to-Plate technology solution provider, which uses Blockchain/ digital twin, IoT and AI to deliver full end-to-end supply chain visibility, traceability and sustainability to "our" customers, delivering REAL solutions in supporting them with the new global supply chain management norm...