Supply chains under covid-19
In the year 2020, the globe witnessed an unprecedented phenomenon in the form of a novel disease (Covid-19), which had unanticipated consequences in the history of humanity. On January 30th, 2020, WHO proclaimed a Public Health Emergency of International Concern, and by March 11th, it had escalated to a Global Pandemic. Covid-19 emphasized the importance of the supply chain function to our economies and communities. It showed flaws in our healthcare system, production lines, and supply chain, while also showing corruption possibilities that hindered pandemic response, depriving people of effective health care. As a result, it is critical to learn from the obstacles how to design a more robust, smarter supply chain system to combat future pandemics. This article discusses the problems that must be addressed to maintain a more resilient supply chain system in the event of a pandemic.
For a resilient and smart supply chain system, four principles of the supply chain are needed to be developed:
- Supply chain engineering
- Supply chain collaboration
- Supply chain agility and
- Supply chain risk management culture.
These principles define and develop the ease of supply chains and when adhered to, the supply of critical resources is easily coordinated from point to point with a refined efficiency
Supply chain engineering
It is critical to detect bottlenecks in supply that are creating restrictions on inflow, capacity, and visibility of production. This includes mapping the supply chain structure to ensure that all members, first and second-tier suppliers, distribution channels, and the ultimate customer are covered. Potential bottlenecks are processes that jeopardize the supply of important products and services. To address these problems, it is necessary to conduct a supply chain map evaluation to design a feasible path and identify supply chain hazards.
Developing a procurement plan is crucial for every firm in this regard since it allows them to examine their present and prospective supplier base. Because Covid-19 was unexpected, it emphasized the need for organizations, particularly those in the health and humanitarian sectors, to rethink their supply chain operations as they faced a severe lack of resources required to save lives. This technique helps them to establish resilience in choices involving multiple or single sources, local or global sourcing, and internal and external variations as contingency plans. Due to a scarcity of resources, this would necessitate a compromise between efficiency and redundancy, necessitating the adaptation of a crucial supply chain at uncertain periods.
Supply chain collaboration
A robust supply chain system must be agile and flexible. This characteristic, as important as it is, is dependent on the capacity of supply chain operations to function together as a system. This is accomplished through information exchange, which promotes visibility while decreasing risks in the supply chain. Collaboration throughout the supply chain results in the shared knowledge of the strategy being implemented. Furthermore, collaboration among supply chain actors allows for the exchange of outputs from political, economic, social, and technological analyses concentrating on risk assessment of demand and supply processes, resulting in a communal perspective among the engaged parties.
Many economies were shut down as a result of Covid-19, resulting in a scarcity of resources. This revealed the dark side of many supply chain systems. Over time, the exchange of ideas and the reevaluation of systems allowed for a gradual return to normalcy. The establishment of shared objectives among supply chain partners via conference calls, workshops to evaluate progress, and the sharing of projected projects aided in the stabilization of supply over time.
Supply chain agility
This principle in the supply chain is important and it is subdivided into two sections: visibility and velocity.
Visibility is essential for ensuring procurement, manufacturing, delivery schedules, and orders are met and accounted for. Visibility encourages collaborative planning and forecasting by providing a clear shared perspective of the supply chain activities. The majority of businesses use a shared software portal. This analyzes real-time data sharing with suppliers, distributors, and end-users to enable cooperation, process monitoring, and risk identification to alter the process to accommodate or sort them.
Velocity, on the other hand, is concerned with lowering the time it takes between the creation and delivery of products and services. The practice of identifying processes or activities that should be decreased or eliminated to optimize material flow is known as value-stream mapping. This might be accomplished by technology advancement, batch size reduction, cellular design, or the ability to quickly transfer output during disturbances. Through real-time information exchange, Velocity traces and tracks procurement, production, and delivery orders. This focuses on order flow, which aids in the development of contingency plans, the calculation of inventory requirements, and the tracking of changes in manufacturing orders while keeping the whole supply chain informed.
Supply chain risk management culture
Risk management is crucial in any business that involves a supply chain. It should be built as part of any organization’s and its supply chain’s routine as a method of anticipating and responding to disturbances. Lessons learned, particularly during the epidemic period, will be crucial in dealing with future disruptions. Initially, tiny regions may be impacted by pandemics, and the worldwide community will pitch in and cooperate to support the affected region. The entire globe was touched by Covid-19, resulting in extraordinary challenges. There was no way to fix the world’s damaged supply chains because most important manufacturers chose to stockpile and hoard rather than provide. This caused many countries and organizations to reconsider their supply sources, with some implementing their manufacturing procedures and others opting for locally accessible resources.
Data collection and preservation for prior occurrences aids in the systemization of lessons learned over time. Risk management supports the construction of a robust supply chain system via the pursuit of flexible and efficient information and material flow.
How to recover from COVID-19
Many organizations are currently attempting to recover and learn from the challenges posed by COVID-19. Recovery refers to the capacity to return activities to their pre-disruption state, whereas learning refers to the ability to enhance activities based on the effects of disruption.
Organizations will need to review their supply chain architecture in terms of location, manufacturing capacity, and information flow management to recover. This will aid in the discovery of benefits and drawbacks, ultimately leading to the restructuring of the supply chain structure. Implementing practical contingency plans would necessitate the allocation of resources. Collaboration and integration among key components of a supply chain are undeniably important. This is done to establish a shared goal and allow for the sharing of both losses and potential earnings to rebuild the firms’ roots.
It is critical that, while dealing with supply chain interruption, we simultaneously focus on the three T’s of supply chain management. These T’s are time, transparency, and trust.
- Time- this means concentrating on processing adding value
- Transparency- this is focusing on necessary inventory and cost of production. Reduction of wastage of resources through corruption and damages, managing cost to be fair and reliable without exploitation of challenges.
- Trust – this is the byproduct of effective collaboration between members in a supply chain process which enables the sharing of gains and losses
All participants of a supply chain process must perform their roles during the recovery phase. The government, business, and society as a whole are major players in this system.
The government must assume the function of a policymaker. Key resources in many regions of the world were depleted as a result of the epidemic. These included food, personal protective equipment, medical equipment, and, most importantly, human resources to carry out certain tasks. Most governments resorted to lockdowns, which slowed manufacturing and consequently impacted the whole supply chain. As a result, there was a greater reliance on localized supply and regionalization of specialized resource output. With growing government engagement and control, the supply chain has shifted from being heavily reliant on private organizations to taking a hands-on role in supply.
Society, for its part, must assess its decision-making processes in terms of consumption patterns. Covid-19 resulted in isolation and habits shifting from being able to quickly get things to relying on door-to-door delivery. Dependence on a third party for crucial resources, or, at worst, a complete absence of them. This transition enabled more sustainable consumption models to emerge on supply chain management, moving towards a sharing economy logic (collaboration and information sharing), with ramifications for consumer goods supply chains.
Decisions about logistics have also been influenced. Logistics, a vital component of supply, includes transportation, warehousing, material handling, and packaging. Partially, logistic decisions must be reconsidered to find even more efficient and agile solutions. Procurement activity is another important issue to examine. This action is crucial in ensuring that the correct quality of products and services are obtained from the right place, at the right time, and the right cost.
Each industry has distinct but linked issues. The pandemic has compelled most important supply actors to review how to manage their systems, with a focus on teamwork, information sharing, and investing in localized ability to create essential PPE and food to ensure continuity of life and return of normal living.
Following the Covid-19 experience, the globe is likely to have a more nuanced interaction between geopolitics and supply chain decision-making processes. To secure national security, governments are expected to spend more in and control critical industries such as pharmaceuticals, personal protective equipment, and agri-food chains. This is in contrast to prior long-term touch-and-go strategies on critical supply chains. Through this crisis of localized/regionalized supply chains with rising government interference, a new age has begun.
The role of intermediaries who organize micro and small producers to have a greater influence on the provision of resources to shorten the supply chain by being actively involved in production/distribution systems is also a danger of being reassessed (increased online usage).
As governments alter their supply-side policies, so should society and corporate groups. These shifts should be seen favorably as opportunities for progress and preparedness for potential disruptions in the future. The lessons learned from the Covid-19 system outage should be incorporated into supply chain protocols. With the adoption of new methods to boost supply systems, it becomes easier to coordinate and facilitate the movement of produce regardless of the challenges presented.