There’s nothing like a global pandemic to cast a spotlight on all the ways an organization’s supply chain can be disrupted. According to an April 2020 report from the Institute for Supply Management (ISM), “nearly 95 percent of respondents of a recent survey of supply management professionals report they have experienced or expect to experience global disruption due to the pandemic. That disruption can include lack of supply, delays in shipments, workplace and operations issues and loss of revenue.”
While the ripple effect of COVID-19 may have seemed temporary at first, it didn’t take long for companies to realize that related disruptions would become long-term problems in need of immediate attention. In this light, stabilizing the supply chain has become an urgent need for organizations around the globe. If your company is one of them, here are 10 ways you can do it.
1. Have a Plan B.
In an interview for BTG Insights on Demand, supply chain and manufacturing specialist Rosemary Coates discussed how the coronavirus pandemic has highlighted the importance of diversification when it comes to manufacturing and distribution: “I’ve been working with clients for quite some time, and I always try to emphasize the need to have a plan B. Even when times are good and shipments are moving and so forth, you never know what’s around the corner.”
2. Prepare for reduced demand.
Coates also emphasized the need to prepare for reduced demand across the supply chain: “…re-optimize the number of products you make based on what you think will sell.” She says the first step in doing that is for a company to evaluate its “global landscape” to identify the “most strategic or most important things and how that’s going to balance your incoming supply chains with your outgoing shipments to customers.”
3. Improve supply chain visibility.
Another thing Coates highlighted is the critical need for visibility throughout the supply chain: “In today’s environment, supply chain is really about moving information. It’s less about looking for particular boxes and more about knowing what is in your supply chain, what’s coming to you, what’s going out, and how you make that flow happen or rebalance it so that it moves in an orchestrated way across the world.”
4. Go digital.
One way to improve supply chain visibility is through the use of digital technologies, such as artificial intelligence (AI)—which can also provide actionable analytic insights to support timely, agile decision-making.
In its predictions about what global supply chains will look like after the pandemic passes, the World Economic Forum (WEF) says there will be a shift from the “predominantly paper-based” relationships between buyers and suppliers to those which are digitally oriented:
“Digitizing the buyer-supplier relationship is a fundamental element for building sturdy supply chains, and will make identifying and recruiting new suppliers far less time-consuming. With technologies like artificial intelligence and the Internet of Things, supply chains could quickly switch to alternative providers when regular suppliers face disruption.”
5. Consider sourcing closer to home.
Another thing that can help to stabilize an organization’s supply chain is reassessing where suppliers are located. In this context, the WEF says organizations will likely consider whether having suppliers located closer to home may be a good idea:
“We will also see a decentralization of manufacturing capacity, with companies looking to bring production home. …Policymakers may be increasingly pressured to consider whether certain products need to be manufactured in the country or the region.”
Along the same lines, the WEF also highlights the need for diversification, since the pandemic has made it crystal clear how risky it is to rely on a single supplier from one region to support supply chain needs: “COVID-19 has exposed the vulnerabilities of complex global supply chains built on lean manufacturing principles.
This is particularly true in the healthcare sector, where the scramble for protective equipment has laid bare the inherent risks of inventory and single-sourcing models driven exclusively by cost control. …The urgent need to design smarter, stronger and more diverse supply chains has been one of the main lessons of this crisis.”
7. Nurture relationships.
Although regular communication with suppliers is essential, many organizations don’t make the effort until a problem arises—which may not be the optimal time to work on relationship building. Instead, consider how you can be more intentional about nurturing your supplier relationships in a way that can benefit you both. As one small business owner said in a FedEx post on the topic:
“Suppliers are key to your success, and if they feel like a true partner of yours, they will be more likely to bend over backwards to help you succeed.”
8. Know your customer’s customers.
In an interview for SupplyChainBrain, Lisa Anderson, founder and president of LMA Consulting Group Inc., said the first step toward supply chain stabilization is to “reach out to your customer’s customers” to get to know and understand as much as you can about their business needs.
While this may be a challenge, the ease with which you can do so will be influenced by the type of relationship you have with your “Tier 1 buyer” : “If you’ve been treating them as if you’re in a constant negotiation, they’re unlikely to provide you with details on who their suppliers are. It’s a matter of presenting it in their best interest. For them to be successful, you need to have customers continue to buy from you,” Anderson said in the interview.
9. Accelerate the cadence and visibility of SIOP for critical needs.
Additionally, Anderson highlighted the need to accelerate sales, inventory and operations planning (SIOP) for critical product and process needs. In a video of the interview, Anderson recommends companies “Take the 80/20 approach and start by focusing in on your critical customers, critical suppliers, critical items, critical capacity constraints…look throughout your supply chain and just pick a few that are the bottlenecks…or the hot buttons.”
She recommends using such sources of volatility as a starting point to increase the SIOP cadence to a frequency that makes sense for a company’s specific needs: “An accelerated 80/20-type approach on your customers, your suppliers, and your internal operations can yield some excellent results when it comes to stabilizing the supply chain,” Anderson says.
10. Be agile in balancing short- with long-term planning.
In such uncertain times as these, Anderson says it’s also important to find a way to balance both short- and longer-term planning needs. To do so, she recommends using SIOP at a higher level for the longer-term view: “SIOP is always at a higher level the further out you go.”
Acknowledging the challenges of long-term planning when the future seems so unclear, she recommends balancing a high-level, long-term view with frequent evaluations of more critical needs. In this context, she underscores the need for agility that integrates “changing conditions” into ongoing supply chain management and planning.
In the midst of challenging times, it’s critical to have an experienced partner who understands the inherent complexities of supply chain management to help companies stabilize the supply chain to better meet business goals.
CLN Worldwide is such a partner.
Contact us today for a free demo of our Proprietary International Logistics Management Platform.