AS THE PANDEMIC CONTINUES--RISK, RESILIENCE, AND MORE

The longer the pandemic goes, the greater the change I see in a new reality & will run the gamut Supply Chains, container lines, transportation, logistics, retail, manufacturing. This is more of a rebuild than reset & in concert & conflict with less risk & more resilience.

ACTION PLAN FOR POST-PANDEMIC SUPPLY CHAIN MANAGEMENT

First, the global pandemic is not over.  Its impact is still being felt in economies, industries, and markets around the world.  How businesses come out of this will differ. From a restart to a rebuild.

CoViD has validated the criticality and strategic importance of supply chain management (SCM).  That is a given.  It has shown to be the operations backbone of retailers, etailers, and manufacturers.  Supply chains and their transportation and logistics components are essential services.

It has been nearly impossible to come through the coronavirus without a changed supply chain management.  And it raises a question.  Has CoViD shown that supply chains were in operating ruts—pre-coronavirus?  Or, another way, has it taken a global pandemic to make needed changes in SCM?  

So, what now?  It is time to build on what was done—the good and the flaws that were exposed.  This is an action plan that supply chain management people can use to put in place for the new supply chain management. 

What I am presenting may not apply to supply chains across industries, market sectors, and the world.  Each business has been affected differently by CoViD from none/little to extensive.  But there are changes and a new supply chain.  While every point here may not be relevant to every business, it does present thoughts to consider for the new supply chain management and new economic/business reality that is being formed.

Some of the changes that are happening are overdue, call it pre-CoViD.  An example is firms that are doing SKU rationalization which is a subset item for inventory and warehousing.  Others may have been held back.  But that was then, and this is now.

Several of the items contain talking points that appear in more thane one action item.  That reflects the nature of supply chain management.

STRATEGY.  This is your starting point.  A cohesive plan for where you are going and how you will get there—your new supply chain management.  This is what will be done and how it will be implemented/executed.  The what, how, and why.  The steps.  It should include collaboration and buy-in from other areas in the company.

The strategy should be about more than fixing problems that the coronavirus exposed.  This is your clean sheet of paper.  It should reflect how your end-to-end supply chain should be designed and managed for viability.

Here are two approaches for your assessment:

1)     Upstream/inbound and downstream/outbound/fulfillment.  These are the two sections of the end-to-end supply chains.  These are the parts that had to deal with CoViD.  Think about that and all you have been dealing with.

And/or

2)     Inside the 4 walls and outside the 4 walls (This is a variation of warehousing and transportation.)  Much of your supply chain is outside the four walls of distribution centers, factories, and stores.  Four-wall myopia limits seeing the end-to-end supply chain and its complexity.  In turn, this view can impact how well your ERP system functions.  And, it leaves a hole in lean efforts.  Do not miss the big picture where so much goes on.

These are different from how supply chains have been traditionally structured, and that presents opportunities for new ideas.  This includes the usual operation as to stop-go/node-link.  This can help with streamlining how products move and sit.

STRUCTURE.  There are three parts to the foundation and formation of your supply chain.

1)     Process.  This should be streamlined.  Gaps, redundancies, and unnecessary actions corrected.  This is for both operations and planning.  

2)     Technology.  This will be a big issue for your supply chain.  More will be in the Technology section. 

1)     Organization.  Some of this is reflected in your assessment for your strategy.  Think of a shift from the usual transportation and warehousing to something more relevant to your new supply chain—such as upstream and downstream. 

Procurement and the upstream with its transportation focus should be brought together into one operation. Having them in two different groups in the company misses performance improvements, lessening risk, and improving resilience.

Technology should be embedded in the organization. Tech is important to what is needed. So they should be part of the supply chain management organization. They should also interact with the corporate technology organization.

Think about segmenting the activity by common supply chain requirements.  This is different than segmenting by customers—some kind of 80/20 view.  The attention will also reduce risk and increase resilience by designing and placing resources where most needed, important, and with clear roles. 

SUPPLY CHAIN COMPLEXITY. What has happened is more than a bullwhip effect.  The supply shocks and then demand shocks showed the complexity of supply chain management.  It was always there but hidden with buzzwords of agile, linear, and others. Now the complexity, nonlinearity, and supply chains within supply chains were exposed.  This is especially so with the upstream section which often gets less attention.  

Now you have recognized it.  What do you do about it?  Your answer is shown in the Structure, Resilience and Risk, and other parts of the action plan.

RESILIENCE AND RISK.  A hot pandemic buzzword for supply chains is resilience—the ability to recover. Now against the background of a global pandemic, some of this is a bit of stretch. But given what supply chain management has done and has struggled with means they are critical to both operations and the recovery effort.  

Here are two areas for you to consider for your resilience study.  The first is transportation and logistics activities, both those inside your company and those outside of it.  They moved your

products. Imagine what may have happened if they had not performed as they did?  They are fundamental to your company.  They deserve an Oprah shout out.

The second is technology.  Think about drones and warehouse robotics—think contactless. Tech is not affected in the same manner as people by a pandemic.

Risk has always been a factor in supply chain management.  Insurance has viewed it in terms of assets.  But the coronavirus has shown it is much more.  Transportation and logistics parties and infrastructure should be included.

Think of the chain of custody.  That is something that was missing before in risk assessment, identification, and mitigation.  All the parties involved with an order, with a shipment.  Those you know of and see.  And those you do not.

Look at upstream and all the parties.  Your suppliers.  Your suppliers' suppliers.  And so on. Think of how these suppliers may provide across product categories, make assemblies and components that go into multiple products. Supply chains within supply chains.  Nonlinearity.

Map your supply chain. This is important.  All the participants and stakeholders.  Look at the complexity.  See possible supply chain weak spots—risk. And some have higher risk as the pandemic showed. 

A question for you.  How does any outsourcing you have done of your transportation or logistics play against the pandemic themes of increased resilience and reduced risk?  This is not looking at why you outsourced, instead, this is about the R&R tests and whether you should bring any of it in-house. Transportation.  Warehousing. Procurement.  3PL.  Think about it.

TECHNOLOGY.  Even before coronavirus, technology for SCM was getting attention.  Now it is getting more attention—some for use with resilience.

Against a list of all the technologies, some you may want to consider are:

·       Data and analytics.  There is an incredible amount of data in the end-to-end supply chain that can be analyzed for management, improvements, savings, and performance.  It would leave your spreadsheets in the dust.  

          

·       Digitization.  This is a way to get needed end-to-end data with the many parties involved with supply chains.  With it, the supply chain can be streamlined as compared to paper documents. Think of the purchase order, bill of lading, and using the bill of material in new and better ways. And those are just starters.

·       Blockchain.  The digital ledger seems to have a way to go to reach the potential that is mentioned as to visibility and track and trace.  Blockchain enthusiasts, right now, have a simplified, linear view of supply chains.  The present approach misses many parties involved in the movement of orders.  This may mean holes in the visibility and risks by not maintaining the chain of custody.  All this said you should get involved with it and lead your company's effort.

·       Contactless.  As mentioned, this has to do with technology not catching diseases.  Warehouse robotics. Drones. Driverless trucks.  These and others can increase resilience.

If you do not have the deep pockets and resources for the kind of technology mentioned here, then focus on your supply chain process as the way forward.  Review where you get data and all the parties involved with your operations and planning.  See where you can reduce who all are involved and smooth what is done and how as a way to improve resilience and mitigate risk. 

AND.  There will likely be pressure for you to control and reduce costs as businesses start back up.  And even more so, with the recession.  There may be fewer transportation and logistics providers to negotiate with, including those you worked with before all this happened.  

At the same time, you may be dealing with the costs to restart your supply chain and restock inventory.  So there may be conflicting challenges for you.  Carrying additional inventory is a possible resilience tactic.  That also means you may need  additional warehouse space

I hope that the new, post-pandemic supply chain management gets rid of meaningless performance metrics, such as supply chain costs as a percent of sales or transportation as a percent of revenue. These are poor metrics that have nothing to do with SCM performance.  Use the data and analytics for performance measures that are relevant to the C-suite—not ones that are internal to supply chain management.

If your company is involved in e-commerce and looks to hold the sales increase it picked up during the coronavirus from online or is looking to step up e-commerce efforts, this should get

top attention.  The reality of online sales has been proven numerous times and there may be required as an effect of the pandemic.  You should understand the differences between the end-to-end supply chain for e-commerce versus your traditional business—including perfect order delivery speed.

There are discussions on moving production onshore.  That is a matter of the tradeoff in product costs vs higher resilience.  You may be asked to develop a way to transfer your sourcing from a certain country to another or to reshore/onshore/nearshore it.  This is not an overnight project.  You should also consider a transition plan between where you are now and where you want to be. 

CONCLUSION. There will be a new, post-pandemic supply chain management.  It will recognize resilience and risk.  Your challenge is to develop the action plan and strategy to lead your company with this new supply chain and the new reality it will be working in.

You should have similar exchanges with your end-to-end supply chain participants. Improving your resilience and reducing risk is not enough.  It is not a standalone endeavor.  You need others, starting with the ones you have identified as critical, to also do their action plans.

NOTE: The longer the pandemic goes, the greater the change I see in a new reality.  It will run the gamut Supply Chains, container lines, transportation, logistics, retail, manufacturing. This is more of a rebuild than reset and is in concert and conflict with less risk and more resilience.

For more on post-coronavirus supply chain management, please go to my blogs at:

http://ltdmanagement.blogspot.com/2020/04/post-coronavirus-pandemic-supply-chain.html

http://ltdmanagement.blogspot.com/2020/05/wake-up-call-retailers-3pls.html

http://ltdmanagement.blogspot.com/2020/05/the-nonlinear-supply-chain-in-linear.html

FUTURE OF SUPPLY CHAIN MANAGEMENT: POST-PANDEMIC

CoViD has validated the criticality of supply chain management for both manufacturers and retailers. Through the pandemic, SCM has been the operations backbone of companies. While you deal with the day-to-day of the pandemic, you should also be thinking of what your supply chain should be like when the coronavirus is contained and what it should recognize, including greater resilience and reduced risk. And--chain of custody, technology--analytics, digitization, blockchain.
https://www.youtube.com/watch?v=-WQ8PVkKo90&t=4s