Covid19: Navigating through the ongoing Supply Chain disruption
The outbreak of COVID-19 has had a profound impact on both the demand and supply side of many businesses, disrupting operations and often bringing them to a complete halt. For instance, a few months ago, people rushed to the stores, overstocking on any rations they deemed as emergency, placing online purchases to get seemingly urgent supplies, and as a result, people are making decisions that dramatically imbalance the systems further.
According to a recent survey conducted in March 2020, close to 75% of organizations reported supply disruption. And almost 44% of businesses lacked a strategy to deal with this kind of disruption. The global supply chain has seen massive disruption in revenue and resource management and continues to grapple with the implications and effects of the pandemic.
Global supply chain challenges during COVID-19
Let's take a look at some major challenges of the current supply chain disruption.
- The significant impact that supply chains and operations have on the organizations is that they are not meeting stakeholders’ expectations for sustainability.
- Supply chain management and operations are becoming more costly (e.g. less global and ecommerce fulfillment costs) – resulting in company’s highest costs.
- A lack of flexibility inhibits the ability to address customer demands for personalization and customization.
- Talent gaps across the supply chain and operations continue to create high dependency on the human workforce.
- IT systems continue to be expensive to run, inflexible and often over-reliant on legacy technologies.
How to handle supply chain disruption efficiently
- Focus on supply chain mapping: Invest in comprehensive supply chain mapping (collecting information from suppliers and sub-suppliers) to create backup and manage supply chain risks or alternatives for emergencies.
- Create transparency: Establish a centralized emergency supply chain risk management centre to handle operations and address upcoming problems.
- Nominate a single voice for the enterprise: Keep critical stakeholders in the loop and authorize one individual to communicate on what is happening in the organization and the industry.
- Continued decentralized decision making: Let experts continue making decisions at the micro-level and control their respective functions during the times of crisis.
- Agile Planning: Agile processes can be used to help organizations plan, develop their strategies, refine their budgets, and make decisions. Agility provides speed, flexibility, continuous learning, and improvement.
- Collaboration: The supply chain collaboration leads to enhanced knowledge across the chain allowing organizations to achieve improved customer service metrics, visibility into customer demand and supplier performance, and more.
Let's look at some interesting use cases of supply chain disruptions
Amul, one of the well-known FMCG company in India, witnessed an unexpected surge in the demand for dairy products and a sharp decline for frozen products. It has a very complex supply chain management, which is multi-layered and multi-dimensional. It required a super agile, extraordinarily scalable and responsive solutions that would offer real-time visibility and complete control to their complex logistic management process. A complete disaster recovery solution was much needed given the highly perishable nature of the products.
For Amul, IBM developed a private cloud with a data centre and a disaster recovery system that has automatic back-ups in place. So, whenever there are issues the disaster recovery kicks in, ensuring zero down time. This was proven during the recent lockdown when Amul was able to divert idle resources overnight and ensure steady supply of dairy products.The digital transformation has helped it gain a 10x growth in business. By improving data accuracy and integration with the distributor management system, processes are seamless now. Coupled with mobile applications and automations that efficiently manage applications, Amul not only has better operations, but also gained much-needed insight into the logistics management things.
Jaguar Land Rover
Jaguar Land Rover, which makes the namesake Land Rover and Range Rover SUVs, typically relies on forecasts issued years in advance, granting hundreds of suppliers lead time to craft parts. In addition to helping JLR estimate demand, the forecasts ensure it can commit to purchasing minimum buy volumes of parts. But the COVID-19 outbreak forced JLR to scrap its sales forecasts, says Harry Powell, JLR's director of data and analytics. He told his business peers the company had to be more agile about balancing supply and demand, given the uncertainty about whether suppliers would be able to make enough of the 30,000-odd parts automotive makers require.
To perform more timely analysis of its supply chain, JLR leaned into graph database software to correlate data and identify relationships between entities across multiple complex data sources, including forecast and supply chain data, parts data and car configuration data. Graph analytics helps data scientists find new relationships and connections within data that are not easily discovered with traditional analytics technologies. The analysis helped JLR potentially avoid millions of dollars in charges from suppliers for failing to fulfil minimum buy volume stipulations.
How Investment in technology will make the supply chain robust
The COVID-19 global crisis places extra importance on investments in technology that will help build robust supply chains and flexible workplaces. Businesses now have a responsibility to protect supply chain ecosystems, the health and welfare of its employees, and the wider communities it operates in.
This shows how industrial organizations need to build sufficient flexibility into their supply chains to protect against current and future disruptions. For that, they are required to prioritize investments in applied supply chain analytics, artificial intelligence and machine learning, ensuring complete transparency across the supply chain.
At the same time, industrial organizations must enable virtual work whenever possible to protect their people, confirming the highest levels of productivity. For production, this means moving to remote-controlled, automated, and data science augmented production, enabling the digital worker.
For support functions, companies should implement no-touch business services using robotic process automation, intelligent automation, and user experience design. They will also need to invest in building a human plus machine workforce that makes transactional processes more digital.
These changes will put more focus on the current IT infrastructure and systems to the limit, making investments in building resilient systems an investment priority, where businesses can easily operate during a significant crisis or disruption, with slight impact on critical business and operational processes. And that means mitigating their impact, or preventing outages from them. Steps to build more resilience into systems include, for instance, cloud optimization, investing in automation, data analytics to unearth shortcomings and cybersecurity.
Organizations that develop target-oriented action plans now to tackle these challenges – and execute them when indicators show the time is right – will be revived, revitalized and ready to compete in a post-COVID-19 world.
The Covid-19 crisis has permanently challenged our supply chains, and we are instituting proactive measures to guarantee business continuity while ensuring stakeholder safety. The post-COVID world will see digital technologies playing a critical enabling-role in delivering improvements throughout the breadth of businesses, including more resilient supply chains.
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