Covid 19 Implications for Business Supply Chain
Covid-19 is here and impacting every aspect of business and especially in the supply chain. How long will it last? Who of your suppliers will survive? What will the business landscape look like when we begin to turn on the covid-19 economy? Critical items are in short or non-existent supply. Suppliers of non-critical and essential items are shut down. Employees are staying at home or in quarantine. Demand is ramping up and suppliers struggling to keep up.
Crisis or opportunity? Depends on how you position your organization during this period. Supply chains will definitely be different when the economy is turned back on. Crisis: Many companies are only working in the short-term view of desperately trying to locate PPE’s and testing kits for when their employees return and production can again begin. Relying on existing agreements with suppliers hoping they will perform as before prior to the crisis. Opportunity:
Strategic. Determining the number, location and capacity of suppliers. Number and locations of warehouses and flow of material through the logistics chain
Tactical. Decisions on demand requirements, purchasing agreements and contracts, production requirements, inventory policies, critical and non-critical items, transportation delivery and frequency.
Operational. Day-to-day scheduling, lead time requirements, deliveries.
Looking at the future opportunity, your SCM program should address the integration of your organization along with your suppliers so that product is produced and distributed at the right quantities, to the right location, at the right time, in the required order quantity, meet cost expectations and support your customers requirements.
Crisis or opportunity? Depends on how you position your organization during this period. Supply chains will definitely be different when the economy is turned back on. Crisis: Many companies are only working in the short-term view of desperately trying to locate PPE’s and testing kits for when their employees return and production can again begin. Relying on existing agreements with suppliers hoping they will perform as before prior to the crisis. Opportunity:
Strategic. Determining the number, location and capacity of suppliers. Number and locations of warehouses and flow of material through the logistics chain
Tactical. Decisions on demand requirements, purchasing agreements and contracts, production requirements, inventory policies, critical and non-critical items, transportation delivery and frequency.
Operational. Day-to-day scheduling, lead time requirements, deliveries.
Looking at the future opportunity, your SCM program should address the integration of your organization along with your suppliers so that product is produced and distributed at the right quantities, to the right location, at the right time, in the required order quantity, meet cost expectations and support your customers requirements.
Covid-19 Considerations for Supply Chain
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Understanding Your Customers: Knowing the economic and intrinsic value of your product or service in the customer’s eyes, including what your competition offers your customer that might take them away from you.
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Design - Redesign Products and Processes for Customer Demand: Understanding customer volatility patterns, in order to accurately determine ebbs and flows in product or service demand. This helps eliminate overstock inventory.
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Control Product Flow: Structuring product offerings so that the commitment of materials and resources is postponed for as long as possible. Or working with a relatively small number of standard products or modules, in semi-finished form that configure to a larger variety of end products.
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Mapping a Value Stream - In its Current State: illustrate the structure of physical and informational flows within your supply chain as it exists today., Identify links that have severe constraints, those that are effective, as well as ones that need attention.
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Work with Value Chain Controllers: Collaborate in rapid work teams to determine revised product costs. Knowing the economic and intrinsic value of your product or service in the customer’s eyes, including what your competition offers are essential as we move to reopen.
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Developing a Holistic Perspective: Recognizing the optimization of each link must take place with the other links in mind in order to be effective. Relationships between each link, including communication and mutual understanding are essential to the restarting of the chain.
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