COVID pandemic is an unexpected occurrence that caused severe damage to the Economy of the Globe. Both Supply and Demand has gone into disarray with the Lock down and shut down of the businesses. When hit by a crisis, a business should do whatever it can to manage the demand and supply equation and forecasts with high level of efficiency despite the circumstances.
Businesses have to respond on the multiple fronts, all at once, addressing the Pandemic, the economic effects arising from the crisis, and at the same time protecting the Worker’s safety, that should also enable the operational safety. Supply chain systems are finding themselves battling with the unique challenges that the pandemic crisis situations have developed.
According to a recent data, Services, Wholesale and Retail manufacturing, account for more than 75% of the business in the region of the China that is impacted by the pandemic. On an International level, more than 50000 companies, have one or more direct or indirect Tier 1 supplier there and more than 5 million companies have Tier 2 suppliers there, 940 of them being Fortune 1000 companies.
The Supply chain impact is two-fold. One for which the companies will have to closely monitor the situation, of the long and short-term demand and inventory, to accommodate for the production loss, in the period of Factory and plant shut downs and the Global slow down of the economy. The excessive demand by the Consumers in the wake of the preparation for the potential Quarantine has led to stock depletion at the retailers. With the raising options for the Deliveries for the customers who wants to play safe and order within the comfort of their houses, retailers are running on ideas for fulfillment of the demand, while also keeping a look on the Employees health.
For weeks at the beginning of the Pandemic, the experts have been focusing on the Supply shocks, as a part of the Disruption of supply chain for the goods sourced from China due to COVID-19. All the organizations have tried to figure out the disruption, to make any feasible plan of production and meeting the demands. It made a sense, to think of the Supply chain Resilience at that point of time.
With the raise of Pandemic crisis, and the lock downs, there are systematic Demand Shocks. People start to stock up on the consumer staples to comply with the restriction in the movement of People and the Goods. Consumers trying to buy months’ worth of goods in a single day.
Supply chains have been disrupted on the Global level, creating a huge emergency situation. There is a continuous cycle of risk mobilization, analysis, configuration and operations that supports the organizations into adapting the Supply chains and help protect the communities. For this, the Supply chains should leverage the platforms that support Analytics, Artificial intelligence and Machine learning. This approach can build high level responsive systems, and Resilient systems into the supply chains for the protection against Future crisis situations and disruptions.
Developing a Supply chain response can always be a bit challenging, especially in the case of Pandemic situations, as the crisis is evolving at an increased pace. But it is always very important to be ready for a crisis, before it hits, as the options become much limited once the disruption arrives.
Even if the companies are not prepared to handle the crisis, there are steps that can mitigate the risk, at the short-term levels. In the current situation, a short-term response might help tackle six set of issues at hand. These steps are to be followed with the support of the work force and the following the latest policy requirements in parallel.
- Creating the Transparency of the Multi-tier supply chain, that can help to set a list of crucial components, finding the origin of supply and identify the alternative sources for the resources.
- Estimation of the existing inventory levels along the value chain and use them as a bridge to keep the production running and to enable the delivery to the consumers.
- Assess the final Customer demand, and respond to the shortage and buying curve of the customers
- Optimization of the production and distribution capacity to ensure employee safety and engage with the communication teams. This can help the organizations understand the current and projected capacity of the workforce and the material resources.
- Securing the Logistics capacity, estimation and acceleration of the capacity, and flexible transportation mode.
- Management of Cash and Operating Capital
What Can be Done Now?
Creation of Contingency Plans:
Different demand environments should be considered across the entire supply chain while planning the contingency strategy of an organization. When unique risks are faced by the businesses, companies should always develop a positive and conservative attitude towards the situations.
Mitigate the Supply Shock:
Companies should not try to move with new network of suppliers, but continue with their existing network to plan the Business continuity. In the meanwhile, the businesses should start to identify the suppliers in different regions to diversify their supply chain, and work against the shortage of Raw materials, especially for the products with much longer supply chain cycles.
It is always important that the business allows for a buffer stock in these kinds of situations where the crisis is deepened at every moment. The spread of Corona Virus has also made the retailers think of resilience and flexibility for the supplier network to enable the customer demands.
Also, aggregation of the third-party data allows the visibility in the stock movement across supply chain networks. In long-term, companies always benefit from using Digital solutions that can simulate the demand and supply with-in and across the enterprise.
Technology that can provide for the Visibility of the Inventory across a distribution network offers flexibility and transparency for the best customer service possible in the given supply limitation.