As the Coronavirus disease (COVID-19) crisis and focus spreads beyond China and Europe and the impact deepens, specifically in the United States, businesses and supply chains continue to come under increasing pressure.
While shippers apply current lessons learned from the pandemic to rapidly establish proactive safety measures to protect their employees, they are also trying to stay afloat and operate their supply chains under the “New Normal.”
By now, shippers should have solidified adoption and implementation of new supply chain processes and tools from what we at Kearney call the “Survive” phase and begin shifting to the “Operate” phase. This translates in not just how to efficiently operate in the new business environment, but also how to make smart decisions/tradeoffs within the first few months and proactively prepare for the next phases of the crisis.
Five operations-focused actions are recommended to build resilience and pave the way for success within the “Operate” phase:
- Rethink your physical supply chain and decentralize as needed to offset critical risks. Identify the weakest link in your supply chain, as this will increasingly become your pivot hinge for success or failure. Evaluate the redesign and build of regional supply chains that can sustain full operations under severe economic stress by enabling sense and pivot and early triggers/alerts capabilities that can increase responsiveness, agility and flexibility to proactively deflect risk
- Accelerate demand planning and forecasting capabilities. Rapidly enable capability to constantly simulate demand planning and forecasting and inventory management and deployment what-if scenarios and re-set of flexibility/efficiency cost benefit tradeoffs and associated impact to sourcing, manufacturing, warehousing and distribution functions. Shippers will need this to be close to reality and efficiently monitor cash, liquidity and stress test capital requirements.
- Sharpen performance metrics. Expand metrics beyond the traditional cost, quality and delivery to include resilience, responsiveness and reconfigurability.
- Prepare for increased e-commerce adoption and impact of new supply requirements. Reassess the reliability, transparency and strength of your Tier 1 and 2 supplier relationships and re-shuffle as needed to build more strategic partnerships that can reduce dependency and ensure rapid and flexible securing of raw materials and components and protection of supply lines
- Enhance automation and digitization. Prioritize investments that enable or an increase 360-degree connectivity and visibility across materials, logistics, inventory, production and capital within your supply chain and automation within your factories and warehouses.