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.