Towards the end of the 2019, when tensions in the China-US trade war escalated and China was practically being held captive, then the whole world could not understand what a terrible time is awaiting for them due to Covid-19 outbreak. Gradually lockdown was announced in all the countries. When all countries were busy in building their infrastructure to fight against covid-19, this sudden lockdown put the whole supply chain system in a strange crisis. It seemed no one had signed up for this challenge but everyone has had to suddenly fall into competition. The sudden shutdown of production units and the increase in demand revealed weaknesses in the supply chains and production strategies. Shortages of essential items such as pharmaceuticals and medical supplies demonstrated their inefficiency in meeting demand for these items. In this situation, companies had to develop a more resilient supply chain while keeping the main challenge in the form of market competition.
Management should first analyze its vulnerabilities before considering a series of steps. Although some steps may have been taken long before the pandemic actually struck. The visibility of demand, and the ability to make decisions at speed with the right players in the room are the utmost requirement.
Uncovered risks and address to mitigate
Identifying vulnerabilities: Risks may be hidden in many places, which may require a lot of digging. This is very much time-consuming and expensive process too. But it is much more important to be aware of a disarmament that can bring a business to a halt. Therefore, the mapping process should be aimed at categorizing groups as either low-risk, medium-risk, or high-risk. So, here in supply chain, high-risk can be considered as non-availability of an alternative sources to recover from the disruption. It also makes an impact that how long can you keep your manufacturing unit active without procuring raw materials? It's also a million-dollar question about the replenishment cycle which involves distribution channels, replenishment time, delivery cost and demand patterns.
In order to answer these questions, manufacturers should know whether their manufacturing capacity is flexible enough to reconfigure and redeploy as needed or whether it is highly customized and hard to replicate.
Diversifying Supply sources and manufacturing units: This is very important to address this point of diversifying supply sources and manufacturing units. Adding multiple locations instead of single factory, supplier or region always reduce the risk of halting the business. Management should also look into producing the materials within countries or adopt policy to expand atleast more than one country to avoid additional delivery times, international hazards due to trade war or any lockdown situation within that country due to pandemic. Thus, it will reduce the dependency on any particular region.
So, if we divide our focus according to time horizons then we have short term, mid-term and long term problems of supply chains to solve. This diversification of manufacturing units is a long term solution and alternative sources is a part of mid-term solution. During the immediate or short term risk mitigation process, organizations must intensify their focus on workforce planning since quarantine and travel restrictions mean a longer time period to ramp up to full capacity. Also, focus on tier-1 supplier risk and update inventory policy accordingly in order to focus on production scheduling agility.
Process Innovations and movement towards Automation: It has been seen that many industries have already started realizing their need to move from traditional forecasting to scenario based forecasting because the historical data of last few months sometimes are not helping them to get a good indication. They have started to unfreeze their organizational routines and revisit the design assumptions and other orthodox organizational processes. Focus has also been shifted to identify bottlenecks to build mitigation measures. More connected planning approach has been taken to achieve real time data in order to enable agile planning process. External indicators and predictive modelling are also being used for more accurate planning.
In the era of declining human interventions and more focus to social distancing, companies might invest more on robotic process which can reduce human interventions sharply in preparing products for shipping, with more accurately.
How Anaplan supports:
Business can plan effectively and manage supply chains, build connections, and enable partners to share business goals if supply chain planners can access and utilize one cloud-based platform. Leveraging Anaplan's connected planning environment can enable to centrally manage inventory, supplies, staffing in the new normal. Anaplan provides a widespread portfolio of applications to match between supply and demand, empower S&OP (sales and operations Planning) processes. Successful decision making within supply chain can significantly impact on cash flow, capital and distribution patterns. It also supports to reallocate reusable inventory in a rapidly changing environment. Comparing actuals vs forecasts, reassessing inventory requirements, evaluating emergency staffing with the ability to identify alternative suppliers & shipment flows of the product and providing new projections at the same time are the advantages of Anaplan. Gradually, Anaplan helps to move traditional supply chains to a digital supply aspect to dramatically improve in real-time end-to-end visibility, collaboration, responsiveness, agility and optimization planning.
