Here is a startling statistic—44% of companies do not have a plan in place to address supply chain disruption from China. Of those, 23% were already seeing supply disruptions very early in the Coronavirus disease (COVID-19) pandemic, according to a survey conducted by the Institute for Supply Management (ISM). No doubt those numbers have changed, though not for the better.
If the idea of planning hasn’t hit yet, now is the time. While supply interruptions will undoubtedly impact businesses for months, it’s still not too late to formulate a plan to ease that pain and position yourself for a quicker recovery while preparing for any future disruptions.
Here are some recommendations in how manufacturers should respond to this crisis.
o Be flexible. Being able to adjust quickly in these types of situations is extremely important, as conditions change rapidly. For example, government decisions, whether from the local, state or federal level, dictating behavior and requirements can happen quickly, rendering any previous plans moot. You must be willing to adopt to these changing conditions.
o Sure up the supply chain. The pandemic is exposing weaknesses in the supply chain for companies of all sizes across all industries. And, while in the middle of this situation, it’s not too late to begin learning some of the lessons being taught. Strengthening the supply chain, now and for the future, is mandatory. Some questions to ask yourself and your team:
· Are you aligned with the right partner, one capable of supporting planned and unplanned requirements?
· Do your supplier relationships cover the range of categories required in emergency situations?
· Are there sourcing options for critical spares?
Being able to answer these questions will go a long way in strengthening the supply chain.
o Implement a stronger digital platform. Developing a proactive supplier management programs with a long-term focus. There are multiple options available for supply chain management technology. Use it. The technology offers better visibility into the spare parts and materials you’re using and how fast. Armed with that information, you’re able to initiate better demand planning and ensure that critical inventory is owned and secured.
o Plan now. While positive signs are beginning to emerge regarding the COVID-19 pandemic, it is never too late to begin planning for the next unforeseen event. Using an integrated supplier is one option to consider. With deeper sourcing options, an integrator is positioned to deliver better planning and sourcing options in a crisis. For example, one large manufacturer in the Southeast United States worked with its integrator in creating a hurricane evacuation plan. That plan involved the relocation of critical materials, equipment and personnel (and their families) within a few hours of making the evacuation call. Those plans have been implemented twice in the last two years. Each time, the company’s preparedness has enabled them to return to production immediately after the storm passed.
While the pandemic crisis is different from hurricane evacuation, the lessons are the same. It’s about understanding your needs and communicating those needs across the company. When the crisis eases, it will be too easy to fall back into previous habits and processes. Avoid that trap by picking the right supply chain partner and position yourself for a faster rebound.