The outbreak of COVID-19 continues to draw attention to the vulnerabilities of supply chains around the globe. Specifically, for manufacturing and companies that depend on the outsourcing of goods from China. In Part 1 of this article series, we explored the long and short-term impacts of coronavirus on global supply chains.
In Part 2 of this article series, we will identify for you 5 ways you can better prepare your business for future supply chain disruptions and the micro-actions you can take to ease company stress.
Supply chain disruption due to the coronavirus will continue to influence how we adapt to the new obstacles of a redefined economy, far beyond the discovery of a vaccine or the halt of social distancing. Here are 5 ways you can prepare your business to help mitigate the impacts of supply chain disruptions:
When it comes to emergency response plans to COVID supply chain disruption, technology allows you to gather valuable insight into the current state of your company. Those data insights can highlight opportunities for improvement. Gaining insights will also help you to better communicate with your employees and give them peace of mind regarding the state of the company. Companies that have prioritized their employees during crises have been proven to recover faster, according to the Harvard Business Review. Continuously evaluate where your company stands with its assets, workforces, operations and facilities during this time.
Understanding how your company’s demand for products is going to fluctuate can save you thousands of dollars — especially if your company relies on global manufacturing, and in this case, goods from China, to keep up with production requirements. “In the case of the coronavirus crisis, China’s influence is so wide-ranging that there will almost inevitably be unexpected consequences. Inventory levels are not high enough to cover short-term material outages, so expect widespread runs on common core components and materials,” states the Harvard Business Review.
Materials that were once easily accessible before the coronavirus supply chain disruption may be more difficult to source, procure and transport now. On-hand inventory levels need to be able to address more than just demand and it’s normal variation, but also supply lead time and availability variations. This should not be a “seat of the pants” guess, but one taken with careful consideration and evaluation of data. Generally speaking, supply has always been taken for granted. The disruption of coronavirus has shown that our supply chain is fragile for essential products, and strategies like right-shoring and associated logistics are vital.
Technology increases flexibility and the ability to be more proactively responsive. Regardless of whether your company is an essential business or your workforce has moved to a work-from-home situation, by having the proper technology to collect and analyze data, manage assets and critical processes, and communicate with employees and vendors, you will create a supply chain that responds to the highs and lows of disruption through automation and cloud-based collaborative tools.
The supply chain disruptions that have surfaced due to the coronavirus pandemic largely have to do with sourcing and logistics as a result of drastic changes to supply and demand. Disruptions to logistics are somewhat inevitable during a disruption due to geographical impacts and available capacity. When considering sourcing, there are notable gaps in the pre-pandemic approach due to heavy reliance on global trade that have led to larger implications as we face the consequences of single-sourcing and dependence on global manufacturing.
As your company looks forward and for ways to mitigate future supply chain disruptions, consider multisourcing and supply diversification. A strategy that includes local manufacturing, geolocation, and access to a wide network of vendors are all ways you can safeguard your supply chain to the impacts of disruptions. In some cases you should also include your suppliers’ suppliers in your evaluation and planning. This will help guarantee access to manufactured goods and logistics capacity to meet customer demand.
The coronavirus pandemic has stressed the importance of supply chain risk management. As your company prepares for the future, make sure risk identification and management are integral parts of your supply chain best practices with documented contingency plans in place. Scenario exercises can help your company identify gaps and risks to address before they become problematic. Share and communicate your contingency plans with critical suppliers and carriers, working collaboratively to prepare for future disruptions and minimize impact to all within your trusted network.
With proper planning and a resilient supply chain, your company can be better positioned for future supply chain disruptions — in whatever form they make take.
Alpega offers technological solutions that can help bring efficiency to your logistics and supply chain operations — from TMS solutions to optimized logistics planning to dock appointments to freight cost settlement and analytics. If you’re looking for ways to assess and improve your company’s logistics operations, contact Alpega today for a free consultation.