COVID-19 and the Future of Supply Chain - What to ExpectCOVID-19 has forever altered the supply chain—here are several ways in which supply chains are reorienting themselves going forward.

The pandemic has dramatically impacted supply chains, and that, in turn, has led to dramatic transformation. The past year has seen developments in the supply chain at speeds never seen before. As should be expected, not all the things supply chains are doing now are greatly divergent from what they were doing before.

Rather, top supply chains have embraced a combination of best practices, old a new. In some areas, they’ve simply placed a change in emphasis in their operations. In others, they’ve sped up processes that they already had underway. With that said, it’s important to review what supply chains are doing now, to what degree that they are different than before, and how companies hope to see them look soon.

This article by Morai Logistics outlines the numerous changes supply chains are experiencing and the ways in which they’ll look different in the future.

A New Focus

In a pre-pandemic world, while still potentially risky, focusing on making a supply chain as lean as possible made some sense. In a world shaken by disruption, it no longer does. Of course, having minimal waste in a supply chain remains important, but resilience and, by extension, agility is a great deal more.

As such, companies are now trying their utmost to make their supply chains agile. Sufficiently so to respond to whatever unforeseen hurdles come their way. This means being able to pivot quickly and effectively, without impeding their operations. What arises from this kind of flexibility and responsiveness is a resilience to unpredictable external pressures.

A Different Approach with Suppliers

One of the most notable vulnerabilities that COVID-19 highlighted is the reliance on single suppliers. When many of these suppliers were rendered near-useless by the pandemic, supply chains were left scrambling. Thus companies have been combating this shortcoming.

This has included them diversifying their supplier base, taking on a “China plus one” strategy in order to no longer have dependence on China, as well as considering moving away from overly globalized supply chains and moving to regional ones. It’s yet to be seen how significant any move away from China or more globalized supply chains will be. Nonetheless, diversification certainly has seen greater traction than before.

Visibility and Transparency Only Grow More Important

As mentioned earlier, many of the most important areas of concern for supply chains now were already getting plenty of attention prior to the onset of COVID-19. Two of those are visibility and transparency. In large part, they’re getting even more notice now because they can reveal risk.

An article by Supply Chain Management Review offers insights from a recent supply chain strategy survey,

Manufacturing executives are taking prudent steps to manage risk in their supply chains, with strengthening relationships and increasing transparency with suppliers and buyers … In addition, the vast majority (92%) are taking at least some action to create more visibility within their supply chains, including requiring more information on suppliers’ own risk management and continuity strategies.

Innovation is Central

The advantages that come with technology have always been something that companies have looked to. Yet, now, companies are adopting technologies which they were once simply showing interest in. Or, adopting technologies that they were already planning to, just faster than before. In short, they’re acting  quickly. Automation, softwares for supply chain management, or tools for visibility and real-time tracking. They’re all seeing greater usage in supply chains than before.

The Digital Transformation Imperative in a Post-COVID 19 WorldThe world has changed and the supply chain has changed with it—here’s why digital transformation has been central to that change in a year dominated by a pandemic. 

Supply chains have had to adapt in number ways in response to COVID-19. However, no change in supply chains has been more prominent than the speed at which they’ve conducted digital transformation. Digital efforts which might’ve otherwise taken years to come to fruition, have taken a small fraction of that time. What this highlights is just how important digitization has been for supply chains and their survival during this time.

With that in mind, an obvious question arises. That question being: what about digital transformation makes it so critical to supply chain health? Even more specifically, what about it allows supply chains to combat the most disruptive effects of the pandemic? While there might be too many byproducts of digitization to name, it’s worthwhile outlining the most significant benefits it brings in regards to overcoming the pandemic in order to answer those questions.

This ebook covers the main ways in which digital transformation is helping supply chains deal with COVID-19 and remain resilient going forward.

Why has Digital Transformation Become Undeniable with the Onset of COVID-19?
morai_ebook-digital--transformation-covid-cover

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The Top 6 Supply Chain Trends in the Year of COVID-19After a year dominated by a pandemic, many of the anticipated trends heading into 2020 have been reconsidered—here are 6 to be mindful of going forward.

The supply chain has experienced more disruption and subsequent evolution than any time in recent history. As a result of COVID-19, companies have had to reevaluate the state of their supply chains and make the necessary adjustments to make them thrive in a time of great uncertainty. What that means is that many expectations as to the state of supply chains this year have had to have been thrown out and replaced. And, while certain shifts in the supply chain have been long anticipated, they nonetheless require reexamining for how they’ve unfolded.

This article by Morai Logistics presents 6 of the most prominent trends in supply chain today.

Agility is More Important Than Ever

As important as forecasting is, it’s agility that’s gained greater attention over the course of this year. If this pandemic has demonstrated anything, it’s that supply chains can’t always anticipate the market. With that being the case, it’s critical that supply chains be agile (and flexible) enough to respond quickly to fluctuating demands.

Blockchain Gains Traction

Blockchain has been a technology that for years has gained attention and displayed promise. Yet, despite that being the case, reservations around its viability have remained and adoption rates have remained low. While the pandemic hasn’t radically changed that, it has once again highlighted the value (specifically, transparency and security) of the technology. As such, it has garnered renewed interest.

Sustainability is a Must

The demand for sustainability has been building for many years. COVID-19 has done little to dampen that demand. Simply put, sustainability within the supply chain is quickly becoming something that is no longer optional.

An article from Manufacturing.net expounds,

For example, 66 percent of millennials are more likely to patronize a company with sustainable and eco-friendly culture. Furthermore, brands that advocate for sustainability grow 5.6 times faster than brands that don’t.

Big Data Remains Critical

Supply chains need to be intelligent to succeed. As self evident as that is, the route to intelligence is multifaceted. One key facet is data. Data is the lifeblood of intelligence. Thus, the more data a supply chain has to work with (given the right tools), the more precise it can be with its intelligence. That precise intelligence, in turn, helps combat the many disruptions that supply chains might face.

AI Continues its Ascent

Tied closely to big data is artificial intelligence and its subsets (such as machine learning). Another critical component of an intelligent supply chain is having the right tools in place to utilize data. No tool is quite as robust and varied as AI. From forecasting to automation, its uses are as wide as they are advantageous.

The previously mentioned Manufacturing.net post explains,

By 2019 end, 37 percent of organizations had implemented AI, and in 2020 the numbers are poised to grow. Businesses that make use of AI technology in their supply chain have seen improvements. Such improvements include inventory management, staff productivity, supplier selection process, and customer experience.

Omnichannel is the new Standard

Finally, given the impact the pandemic has had on physical patronage, the need for omnichannel fulfillment has only increased.  What’s more, at this point, quality customer experience is nearly synonymous with omnichannel service. Customers desire seamless service, where what’s physical and digital no longer need to be clearly distinguished. This is even more so the case with the onset COVID-19. It’ driving an unprecedented number of customers online, with physical interactions having been reduced to a minimum.

The New Normal - 5 Ways Supply Chains are Reshaping ThemselvesSupply chains have undergone extreme change in response to the pandemic these past few months—here’s what they’re set to look like going forward.

It’s hard to overstate the impact COVID-19 has had on supply chains. It has brought risk to numerous processes within them, particularly in warehousing. Moreover, it has made certain areas of sourcing as well as supplies inaccessible or unreliable. Equally, it’s called into question the very shape of the modern supply chain. It’s demanded acceleration in some aspects of the chain and a step backwards in others.

This article by Morai Logistics highlights several ways in which supply chains are transforming in response to the pandemic.

Regional Supply Chains

With global supply chains breaking down due to the impediments that come with COVID, supply chain leaders are looking to adapt to a regional model. This is because many of these impediments are coming by way of companies’ reliance on China. As such, companies are now looking for regional independence in their supply chains.

A CNBC article from earlier this year, covering a EIU report explains,

“By building quasi-independent regional supply chains in the Americas and Europe, a global company will provide a hedge against future shocks to their network,” the EIU said. “For those companies that have this luxury already, they have been able to shift production of key components from one region to another as lockdowns and factory closures resulting from coronavirus have unfolded.”

Sourcing Diversification

While most companies aren’t going to outright abandon China, the sensible ones will look to not have sole sourcing dependency on them. It comes down companies wanting to have options in case of future emergencies such as this one. They don’t want to be once again stuck and scrambling for a path ahead. Thus, the “China + 1” approach has gained a great deal of traction. It gives companies the ability to still benefit from Chinese sourcing while having the flexibility to pivot.

Increased Storage

Although this won’t necessarily be a long-term trend, for now at least, shippers will require more storage. With many carriers having cancelled their shipments, leading to a much higher proportion of blank sailings than before. Put more simply: wherever demand has been negatively impacted, inventory needs to be stored.

As Supply Chain Dive’s post with Georgia Ports Authority Executive Director Griffith Lynch emphasizes,

Shippers will, in the short term, need ports and carrier partners that are able to provide extra storage, he said. Much of the warehouse space available throughout the U.S. is being absorbed by e-commerce customers that have seen a significant increase in business since the pandemic, he continued.

Focus on Collaboration

The value of strong supplier relationships has never been more apparent than it is now. More than ever before, there needs to be mutual trust and understanding between supply chain leaders and their suppliers. In an uncertain supply chain landscape where demand can rapidly change and hindrances can spring up in any section of a chain, it’s critical for those running them to be working in unison with their suppliers so they are able to anticipate and address any possible risks. What’s more, this additional consolidation of information will only make the supply chain as a whole run more smoothly and efficiently.

Digitization

There’s been a considerable focus on resilience following this pandemic. Rightfully so. Supply chains need to be robust enough to weather whatever comes their way. Central to achieving this for many companies has been digital transformation. Through going digital, companies have been able to address many of the factors necessary for resilience.

Via digitization, companies have been able to make their supply chains more transparent, integrated, collaborative, proactive, agile, visible, and so on. By giving themselves access to the best technologies available, companies are putting themselves in the best position to handle uncertainty.

Supply Chain Disruption - 5 Steps to Overcome itWith COVID-19 causing havoc on supply chains the world over, being able to handle disruption has become more important than ever. 

Companies are currently facing unprecedented obstacles with the advent of COVID-19. Not only is it presenting significant issues for warehouses and those working in them but also the ability for companies to utilize their supplies. This is only being exacerbated by the growing demand for delivery by customers as so many of them are limited to their homes at present. As such, COVID-19 has been the greatest source of disruption to supply chains globally in memory. And that, in turn, means companies have to reinforce their supply chains if they’re to survive.

An article by the World Economic Forum highlights the unforeseeable nature of supply chain disruption and the numerous harms it can have,

…the triggers of supply chain disruption are hard to predict, and sometimes neither controllable nor influenceable. The robustness of networks is paramount to ensuring demand can be met with supply even in extraordinary times. COVID-19 and related responses are delivering an extraordinary shock both on supply and demand sides to the global economy – by shuttering production and cutting consumption – even as demand for healthcare materials soars.

This article by Morai Logistics covers 5 steps companies should be taking in order to manage the disruption of their supply chains.

Create an Overview of Your Supply Chain

Immediately, you should map out your supply chain. This is so you can get a better sense of the state of your supply chain and suppliers, as well as its ability to handle impediments. It is only through an overview of your supply chain that you can evaluate the risks it faces and work towards overcoming them. Critically, you need strong visibility throughout your chain in order to do this effectively. Thus, if you struggle with mapping your supply chain, that’s the first issue to address.

Contact Your Procurement Team

Your suppliers are typically hit the hardest with a disruption event. With that in mind, it’s important to reach out to your procurement team and talk about your suppliers. When you do, you should get a good sense of where your suppliers are located and how significantly they’ve been impacted. Through this knowledge you can get a sense of whether you need to diversify your suppliers. Moreover, this knowledge will also prepare you for any further disruption.

Check on Your Suppliers

This may appear to be a redundant step, given the last one, but it isn’t. Both steps are important. The last, to get a general sense of the state of your suppliers. This step, in order to get the finer details you might be missing. So, directly contact your suppliers and get a more precise picture of how they’re doing. Ask any outstanding questions you might have so you can be certain before making any decisions regarding them.

Seek Out New Data to Assess Demand

Due to the nature of a disruption, your preexisting demand data won’t be useful. A disruption, particularly of the scale of COVID-19, will alter the complexion of your demand. With that said, you’ll need to look for new avenues of data in order to accurately ascertain demand.

Focus on Risk Management

Once you have completed all the previous steps, you’ll be in a strong position to elevate your ability to handle risk. Look at all the holes in your supply chain the disruption exposes. Address each risk head on. Make risk management a priority. Ensure that both this disruption and the next are something your company can handle with confidence.