Coronavirus: A lesson in supply chain management
There is no denying the fact that risk management, be it in any industry, any field, or any business, is a crucial concept to ponder upon considering the essence of the supply chain. Over the course of time, companies have implemented strategies to reduce the overall cost such as getting orders from a single source, economic offshoring, and centralized inventory management. Though these strategies have managed to make a significant impact on the cost, it has given rise to an amplified vulnerability of the supply chain to abundant sources of disruption.
It should be noted that the primitive supply chain planning processes look for aligning functions within an organization and those of the majority of its suppliers and customers to cut the expenditures and working fund requirements through the minimization of inventory and capacity bulwarks. Most recently, the worldwide spread of the COVID-19 pandemic beginning in late 2019 and continuing through the years 2020 and 2021 has given rise to issues related to supply chain risk and pliability in a way that it has never been before.
The world was definitely not ready to witness the repercussions of the coronavirus and as a result of this, a majority of the supply chain experts were hopeless when it came to dealing with the notable supply chain disordering. A fair share of factories and organizations producing goods for numerous international companies were unable to continue their services and remained shut down because the employees were not able to return to work.
All the affected regions were sort of boycotted by the shipping companies to halt the spread of the deadly virus. As we witnessed, the companies based in other countries started to make announcements related to the plans involving temporary suspension of production because of not being able to import the raw materials.
The Traditional Supply Chain Management Encountering Major Issues
Well, all the experts, researchers, and practitioners share a common belief that suggests the primitive way of managing the supply chain needs to be updated in the after-effects of the pandemic in order to develop an increased adaptable network to manage all the future disturbances. In addition to this, it should be noted that the professionals in the field of the supply chain are required to be careful to ensure that they are not letting their guard down in case if they are not affected by major disruptions for a significantly longer period of time.
Talking about the ways to make sure that the professionals consider and appreciate the necessity of supply chain management is to involve indemnity of the concepts and tools that are embedded in the higher education supply chain management syllabus. While discussing this, we should not forget the fact that the supply chain is considerably vast and despite this, a lot of supply chain educators may not be well-equipped to integrate vigorous presentations based on the supply chain risk.
Survival is a basic human need, and hence, regardless of the fact that COVID made it nearly impossible to step out of our homes and carry on our businesses, individuals as well as organizations, adapted to the crisis. We became aware of the situation of how a crisis carries the potential of controlling the demand and how demand can control the supply chain.
The Significance of Technology that was Witnessed in COVID
We should also lay an emphasis on the fact that technology and digitization were already surging before COVID. As a result of this, the requirement of virtual tools and integration of technology into businesses scaled up. Furthermore, it should be noted that regardless of the earlier expansion of the international supply networks, the COVID-19 pandemic lead to the exposure of weaknesses in such long and lean supply chains. It has been witnessed that there is a surging transition towards localization and near-shoring methods to align even more clearly with the market-focused requirements and behavior.
Due to COVID, the rise in the need for exploring options for multi-sourcing was recorded and as per the data revealed from sources involved in this field, only 31% of companies have managed to develop alternate sources of supply for over 70% of their tier 1 suppliers. This is in accordance with the data released by APQC that the coronavirus pandemic has cast a glaring spotlight on risk management around sourcing, companies are becoming more sensitive to being single-sourced in a single geography.
Additionally, we should focus on the fact that the pandemic has given us an opportunity of investing in New Supply Chain Technology. As the major two pillars of the supply chain success, people and processes failed because of the lockdowns and restrictions imposed by the governments of different countries. The third pillar, technology, was the only one thriving amid the pandemic. Companies were investing fiercely in technology and digitization to ensure recovery from the negative impacts of coronavirus.
Conclusion
Discussing further the resilience factor, 94% of the participants in a survey actually care about supply chain resilience. Due to COVID, the lack of resilience in modern supply chains was witnessed and the increasing need for a resilience strategy is an alluring investment from the companies. Well, COVID triggered a signal of how the traditional resilience and supply chain models are expiring with technological advancements.
Cover
COVID removed the blindfold from our eyes so that we could actually witness where we are lacking in terms of supply chain management. This ultimately gave rise to a need for searching for new methods and techniques to facilitate the proper functioning of businesses. The COVID-19 crisis lead to the implementation of advanced strategies in this management.
