COVID-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.