Building Supply Chain Resilience for the Next New Normal

Supply Chain

Supply Chain

Why there is an increasing need of supply chain resilience during and post the COVID-19?

The outbreak of COVID-19 has put almost every business across the world at standstill. It has caused a heavy toll on human health and economic well-being alike. At the same time, the effect of the pandemic has also wreaked havoc supply chains on a global scale, forcing businesses to respond on multiple fronts simultaneously. Many industry players are able to mobilize rapidly and establish crisis management in their fight against the disease impact. They also must make quick decisions and take abrupt actions to endure business operations in order to serve their customers, clients and communities, while safeguarding and supporting their workforces.

To respond to COVID-19, McKinsey noted some actions that should be taken in parallel with steps to support the workforce and comply with the latest policy requirement. They are:

  • Create transparency on multitier supply chains, establishing a list of critical components, determining the origin of supply, and identifying alternative sources.
  • Estimate available inventory along the value chain, including spare parts and after-sales stock, for use as a bridge to keep production running and enable delivery to customers.
  • Assess realistic final-customer demand and respond to (or, where possible, contain) shortage-buying behavior of customers.
  • Optimize production and distribution capacity to ensure employee safety, such as by supplying personal protective equipment (PPE) and engaging with communication teams to share infection-risk levels and work-from-home options. These steps will enable leaders to understand current and projected capacity levels in both workforce and materials.
  • Identify and secure logistics capacity, estimating capacity and accelerating, where possible, and being flexible on transportation mode, when required.
  • Manage cash and net working capital by running stress tests to understand where supply-chain issues will start to cause a financial impact.


Ensuring Supply Chain Resilience

There is no surprise that supply chains are crucial to supplying and getting goods and services quickly, safely and securely. Unfortunately, the effect of COVID-19 has a tremendous impact on the efficiency and effectiveness of global supply chains. As a highly sophisticated and indispensable to many companies, the modern supply chains are not able to be easily switched to a state of effectiveness and responsiveness, particularly in a time of crisis where the customer and product segmentation are changing at an unprecedented pace.

The pandemic impact now has demonstrated that organizations were not aware of vulnerabilities to their supply chains. And without having proper tools and technologies in place, they might struggle with processes and visibility across their supply chain management and operations.

They need to understand how global manufacturing is managing through disruptions to their supply chains to structure their own responses. In order to create resilience against future mayhems, businesses must improve their supply chain visibility, focus on resilience, identify and monitor the sub-tier suppliers, buy profit cover insurance, and model risks and costs. With these practices, businesses can lessen their global supply chain vulnerabilities and ensure proactiveness by integrating new solutions against any future crisis.