Respond to the crisis, make better-informed decisions, and maximise supply chain value. Oaklin Consultant Grant Laten discusses practical steps that supply chain organisations can take to weather the COVID-19 storm and emerge more resilient than ever.
"Organisations should take advantage of this opportunity to innovate. For supply chains facing variable demand or significant potential growth, consider capacity-on-demand and asset pooling partnerships to minimise up-front investment while maximising future potential."
Supply chain may be a simple term, but for many organisations, it comprises an incredibly complex orchestration of multi-tiered suppliers, customers, distributors, shippers, third parties, government bodies, and even banks and insurers. Enabled by technology, just-in-time operations promote lean and profitable supply chains, but these models are especially sensitive to disruptions.
Enter COVID-19. Many elements of this intricate ecosystem have been upended by historic disequilibrium caused by constrained supplies of raw materials, production disruptions, price manipulation, and incapacitated workforces. As governments seek to stem the spread of the virus and slow economic erosion, global distribution networks are struggling to adapt to new quarantine regimes, restrictions on trade and movement, and a concerning trend toward protectionism.
These factors have created the perfect storm for supply chains. Upstream, organisations are encountering severe price fluctuations, unpredictable availability of critical components, and multi-factor strains on supplier relationships. Downstream, higher carrying costs for unsold inventory, distressed customers, and shrinking operating capital balances are diluting the efficacy of traditional responses to these stimuli. Every organisation along the value chain, from the micro producer to the largest multinational, is feeling the effects of this turbulent new dynamic. If anything is clear, we are operating in uncharted waters.
How can supply chains weather COVID-19, better identify risks, maximise existing investments, and drive differentiated value over the coming year?
Author: Grant Laten, Consultant