COVID 19 The State Of Supply Chains (Part 2)

Introduction –

The first part of this article described the negative effects on Supply Chains as a result of COVID-19. It is crucial to understand the problems faced and the reasoning as to why these problems had a big impact amongst Supply Chains across many different companies. It is only when problems and their origin are understood in detail, effective and adequate solutions can be implemented to prevent the return of future negative effects.

Now that the negative effects are known and understood to a degree, companies are starting to implement counter measures. Of course, the type of measure implemented depends on the specific company in question. However, the main issue Supply Chains across companies have issues with coping with the effects of the pandemic lies at the current/prior resilience level. Supply Chains simply did not invest sufficiently in the resilience element to minimize these negative effects. Now, how can companies specifically improve their Supply Chain Resilience?

Increasing Resilience

According to BizClik Media (2020), the pandemic will not disappear anytime soon. Companies must instead learn to adapt to the business environment. To improve resilience, companies require steady, start to finish appraisal and enhancement and observing. Strong analytical systems must be implemented that monitor constant changes in the marketplace.

Strong analytical capacity will allow companies to better understand the situation’s complexity, anticipate potential disruption, and quickly develop a response (BizClik Media, 2020).

See the figure below for a clear visual on how to improve your Supply Chain’s Resilience level in a structured way.

Figure 1 Operate – Execute – Monitor Cycle (Resilience)

Let’s create a scenario on how to improve the Supply Chain’s resilience using the diagram above. Remember, the end goal of increased Resilience is necessary to enable and increase a company’s ability to respond accordingly to unexpected changes within the demand/marketplace.

Step 1: Mobilize

To counter unexpected changes in demand, an initial response plan must be in place that holds specific operating rules. For instance, if demand rises above level X%, automatic notifications must be sent to Suppliers A/B to deliver new products on time. These parameters can be established based on safety/stock margins that are a result of product priority and lead times. Regular flow and depreciation value also play important roles in determining these specific parameters.

Step 2: Sense

After creating the fundamental counterplan, risks and implication on the Supply Chain must be identified and analyzed as soon as possible. For instance, if Supplier A uses a specific raw material to create your product that is known to become scarce upon demand increase, inform yourself about alternatives that enable product delivery past these scarcity levels. Diversify risks by looking for ways to counter potential bottlenecks in production and delivery.

Step 3: Analyze

It is important to analyze ‘what-if’ scenarios in case of unexpected plan failures. These scenarios must all elements of the Supply Chain including Source, Plan, Make, Distribute, Service. It is best to review these plans and scenarios every couple of months depending on the company to ensure their validity. Furthermore, having multiple perceptions on/off the scenarios and solutions may contribute to increased quality and resilience. The more a company asks itself the questions of what if x will happen, the better the understanding of the possible unexpected obstructions.

Step 4: Configure

This final step of this never-ending cycle should include the configuration of the entire counter process. All steps/elements needed in order to facilitate the counterplan should be in place. New transport/backup modalities, alternate materials, backup machinery etc. The more extensive the preparation, the better. This last step really ties in with the third analysis step as the potential disruptive scenarios determined the level of configuration needed.

Looking ahead

After continuous focus on Supply Chain optimization to minimize costs and improve efficiency across the board, COVID-19 clearly illustrates that many companies are not fully aware of the vulnerability of their supply chain relationships to unexpected Global changes within the marketplace/demand (Deloitte, 2021).

Fortunately, new digitalized Supply Chain technologies are showing potential to drastically  improve the visibility across the end-to-end supply chain. It is clear that the current linear model of Supply Chains was not sufficient to be resistant to such global changes as the pandemic. Technologies such as the Internet of Things, artificial intelligence, AVG (Automated Guided Vehicles) are designed to anticipate and meet future challenges.

Would you like to know more about the state of Supply Chains moving forward? Stay tuned for our next Blog where we will go more in-depth or talk to a ModusLink Expert today by clicking here!.


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