The COVID-19 pandemic has shown the frailties in our supply chains. If we would like to keep our supply chains from being paralyzed by a global health crisis in the future, perhaps we can learn something from our colleagues in Environmental Health & Safety. Because the EH&S departments of manufacturing companies perform assessments periodically to lower the risks in their field. If your Supply Chain technology has the capability to run business scenarios, now would be a good time to take advantage of that and do a Supply Chain risk assessment. With the help of scenarios you can consider lessons learned from the early stages of the pandemic and include global health with the other supply chain risks, to explore viable alternatives…
… and the actions you can take:
- Have your contingency plans in place and visit them more frequently. It may seem like mundane administrative work but will prove to be valuable in a crisis!
- Know your upstream suppliers and understand their network and the various impacts to your supply chain.
- Avoid an ‘all the eggs in one basket’ predicament and get to know your alternatives. Spend time, at least once in a year, to simulate what could go wrong in a worst-case scenario. This will help you understand your vulnerabilities and your options. You may include multiple sources or local alternatives if they exist. Fine tuning the percentage splits amongst them will assist in their planning and help you in the long run. Because you can anticipate potential next steps leading to a nimble reaction. Thus, providing an ultra-agile and efficient way for coping with a crisis.
- Identify your high margin and low margin customers. Utilize your facility capacity to mitigate the risk for the high margin/large share markets that you supply.
- Revisit contract terms with your customers and suppliers, including force majeure provisions provided.
- Validate and rework your data cleansing activities. If you have data that is not trusted, you may fail even on a normal day. Procurement data without the duplicate supplier records and with reasonable lead times is a good start. This cleansing activity should include rationalizing your SKUs. A reduction in the overall number and effective prioritization increases your ability to pivot to changing customer demand quickly.
- Acquire good demand planning data and allow for more efficient production. Transparent information has always been critical and now is more important than ever. Digitalization will help you make better decisions and prioritizations. Integrating advanced analytics (ML, AI, etc.) to gain insight into the market and utilizing optimization will help you make the best decisions.
You will likely never eliminate all risks in your supply chain. However, incorporating recent lessons learned into your overall strategy by doing periodic Supply Chain risk assessment will positively impact your resiliency. If this seems too complex to take on… WE CAN HELP!