Global trade has taken massive hits due to the pandemic. During this unprecedented time, there was an initial disruption of supply chains followed by a demand shock as online shopping became the new norm. Supply chain vendors and consumers both struggled for basic products, exposing the fragility of the network. Chief Supply Chain Officers learned many difficult lessons from this crisis and are responding by restructuring and re-strategizing for a stronger, smarter, and divergent Supply Chain network.
Through careful planning, adopting sound digital models, improving capabilities, and shifting the focus from short-term responses to a structured transformation, Chief Supply Chain Officers can efficiently respond to both immediate and post-pandemic challenges. Following are a few important actions that can strengthen supply chain resilience and enable businesses to eventually recover and position themselves stronger than before.
Be in touch with key stakeholders such as suppliers, vendors, and end customers on a regular basis. Set up periodic meetings to discuss the demand and supply scenario and gain insights into the demand drivers as well as supply constraints. Determine inventory status and potential issues that might arise as bottlenecks. With improved understanding and forecast available, you can then work together on connecting the supply chains leading to improved service and better cash flow.
Build a central governance team that oversees and reviews entire processes right from sourcing, manufacturing, transporting, warehousing, to delivery – the journey from supplier to customer details. This makes it easier to address and resolve issues immediately and also assists in making effective decisions at the right time; sometimes even before the occurrence of a bottleneck.
Identify and simplify inefficient systems as well as complex processes. Limit low-volume stock-keeping units to limit build-up of inventory. Dedicate some stock-keeping units to select products that are in demand, improve the efficiency of the plant, and increase the output to meet the ever-increasing demand.
Utilize demand sensing and forecast accuracy to improve capabilities according to priorities. Be flexible enough to redesign processes that are essential to manage the demands of a highly volatile market. Priority processes in times of crisis might include supply planning, sales and operations planning, replenishment planning, warehouse management, and production scheduling.
Anticipate future risks and plan to be proactive. Invest in automation to make your supply chain network more agile and boost flexibility in meeting the business demands. Be prepared for alternative material sourcing, not only through external but also through local manufacturing. It is always good to have contingency plans in place to address potential risks in future. Be prudent to plan for investments once the economy rebounds and the crisis is over.
Fostering change and enabling transformation will most likely require changes at all hierarchical levels of the organization. Leadership needs to rethink the supply chain model and deploy agile executive teams who can quickly react to changing market dynamics. Routine tasks should be rationally delegated so management can focus on the transformational efforts. Building a risk-aware culture throughout the supply chain to respond purposefully will go a long way.
Chief Supply Chain Officers provide a unique view to the entire supply chain process. They are the ones who manage suppliers and ensure that the product gets delivered to the end customer. It is imperative that the voice of these Chief Supply Chain Officers be heard, their strategies supported and abided by, as any misstep can significantly impact the entire business.
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