Nine Supply Chain Strategies to Guide You After the Pandemic
Even before the pandemic has ended, companies will need to start building a resilient supply chain to better manage risks. They can inject agility into their supply chains by renewing their focus on procurement, changing the demands of customers, doing inventory management and setting up business-partner collaborations.
The COVID-19 pandemic has shown that only those businesses with an agile enough supply chain to quickly adapt to the extremities will survive in challenging environments. Here are nine strategies that can help your business survive in the short, medium and long terms.
Top Six Strategies for the Short Term
No. 1: Create Transparency
As a supply chain leader, you have to establish a list of critical components while determining the origin of the supply. You also have to assess the risk of interruption and identify the risks associated with secondary suppliers and onwards. If the suppliers are located in severely affected regions, you have to identify alternative sources.
No. 2: Estimate Available Inventory
Leaders should clearly understand the available inventory across the entire value chain, including the estimation of spare parts and after-sales stock. Once the inventory management is done, you will be in a better position to keep production running and enable timely delivery to your customers.
No. 3: Make a Realistic Assessment of Customer Demand
It is very important to have a proper assessment of the final customer demand so that you can easily respond to customers’ shortage-buying behavior. To get a proper demand signal and determine the needed supply, it is very important to work closely with the sales and operation teams during the planning, and to leverage direct-to-consumer channels of communication. To get a proper estimation of your customers, it is essential to use market insights as well as external databases.
No. 4: Optimize Capacity
Leaders must understand the capacity levels (current and projected) in terms of materials and workforce. They must offer adequate safety to their employees and other workers. This process may include the supply of PPE, the option to work from home and proper engagement with the communication teams about COVID-19 risks.
On the basis of the available capacity, supply chain leaders must properly plan the scenario and make a proper assessment of the operational impacts.
As the production remains limited in the post-COVID-19 scenario, you should try to optimize the human health impact, margin and opportunity cost or penalty.
No. 5: Identify and Secure Logistics Capacity
You must thoroughly estimate the available capacity of the logistics and customs clearance must be accelerated.
As per the existing exposure, the mode of transport should be changed for smoother transport. If needed, you may have to pre-book air/rail capacity. For leveraging freight capacity, joint capacity collaboration must be promoted.
Promotion of contactless delivery, curbside pickups and physical internet solutions will definitely improve logistics capacity and take care of the healthcare aspects of your delivery people.
No. 6: Manage Cash and Net Working Capital
You should have a clear idea when the issues of supply will start stressing both your business’s liquidity and financials. So, you should run supply-chain stress tests against the balance sheets of major suppliers.
Top Three Medium- to Long-Term Strategies
Once you have taken care of the immediate supply-chain risks, you need a resilient supply chain for the future, especially in the medium and long terms.
No. 7: Digitizing Supply Chain Management and Process Innovations
Supply risk management’s speed and accuracy will improve by making major process improvements and digitizing supply chain management. Automation, new processing technologies, continuous flow manufacturing and additive manufacturing will lower costs and make the process more flexible.
Here are some examples of digitizing:
- Robotic palletizers can automate the product preparation process for shipping by reducing the need for labor.
- Automated optical inspection systems can optimize the quality control process.
- New chemical manufacturing equipment optimizes the process as they are less capital intensive, use less expensive operations, use less energy or solvents and produce less waste.
- The U.S. Defense Advanced Research Projects Agency (DARPA) has funded a continuous flow manufacturing initiative to increase supply chain resilience.
- 3-D printing is revolutionizing the production method, reducing the dependence on distant suppliers of the machinery or tools, and rationalizing the cost.
No. 8: Monitor Inventory and Supply Chain Vulnerabilities
Artificial Intelligence will help logistics companies accurately review an area or room and assess inventory accurately in an instant. Post-purchase visibility will also get a shot in the arm with the help of real-time monitoring technologies. The trend is going to spread fast with increased investment in GPS technology.
No. 9: Optimize Route Planning Process
Logistics managers should adopt a delivery route planner app to plan well-optimized routes and provide accurate driving directions to their drivers. This will reduce mileage, increase the number of deliveries possible in a day, make routes more cost-effective and ensure happy customers. All of this is critical to improve your return on investment and stay in the game.
George Shchegolev is the co-founder of Route4Me, a route optimization software company.