3 minute read • published in partnership with SCCG
Insight: Is your supply chain ready for economic recovery?
It has been tough for companies to navigate their way through the current supply and demand challenges. However difficult it is, we all have to prepare for the recovery that will surely arrive, although we don’t know in which form or when. The Supply Chain Consulting Group shares some tips to help prepare for the recovery period.
Our supply chain processes have been designed for normal (pre-pandemic) operations and have become unfit-for-purpose in the current environment. Systems and operations need to be adjusted to handle the demands of the future. And we do not know what that looks like yet.
What we do know is that consumer behaviours shape the requirements for supply chain and logistics operations and that due to social distancing measures including ‘lockdowns’, the shift in consumer behaviours has been monumental. Take for example on-line grocery shopping where the demand far exceeded service supply, so logistics operations adapted to these very different supply chain demands, including the commercial foodservice and wholesale businesses that set up home delivery operations in a very short timescale.
Will all of those consumers shift back to visiting the shops as opposed to the newfound ease of on-line grocery shopping – doubtful, although some of course will. This is just one example of consumer trends driving supply chains over an intense but sustained period of time raising uncertainty over what will be needed in the future.
What we can be certain about however, is that businesses must have a medium-term plan that is adaptable enough to capitalise on every opportunity. Measures that have been put in place to restrict trade will slowly be eased. Businesses need to be prepared for the upturn in demand as sectors are reopened. The demand and volume for products will return in the supply chain, but how they will be purchased and subsequently delivered is not easily defined.
Use available technology
Visibility in the supply chain will be of increasing importance once demand picks up. Digital solutions play an enabling role in delivering supply chain improvements across the business. They can reduce the need for physical labour, especially in warehousing and distribution environments. Cloud-based software solutions are widely available to manage supply chain data right from spend analysis through to logistics management, providing real-time reporting. Businesses must make full use of the opportunity to access these systems remotely.
Staffing levels in warehouses and distribution centres have had to be reassessed and reallocated due to the current restrictions on the sales of certain products. The demand for essentials, health-related items and certain niche products has risen, creating more temporary roles to cope with the surge. Other industries have been negatively affected causing staff layoffs. As demand changes, plans need to be constantly readjusted and staffing levels aligned whilst being mindful of employee wellness and capacity. This may require retraining of some staff, recruiting new skills and encompassing new ways of handling remote workers.
Successful businesses have processes in place that include a continual review of the performance of their suppliers. Current pressures may have diverted attention away from this. Supporting our partnerships and nurturing key suppliers will continue to be critical during the economic recovery, while not committing ourselves to future volumes or spend levels.
Despite the lack of clarity about future sales volumes, supplier capacity and inventory levels, here are some practical steps that you can take:
• Map your current supply chain activities. Focus on what you know for sure: costs, locations, volumes, customers, suppliers, and partners.
• Consider 3 future scenarios: worst case, preferred, and best case. Focus on sales and operational planning. For each scenario establish how long it will take to recover and how you can optimise resources and cut costs.
• For each scenario above: Establish how you will implement the changes you have identified that are required to achieve the desired results. Allocate resources to those activities that will allow you to achieve your specific objectives.
This exercise may identify the need to source alternative sources of supply for both products and services, for one or more of the scenarios. There will be obstacles in the medium term to manage legislation changes, dynamic consumer demand patterns, further supply disruptions and human resources issues.
The recovery period may be chaotic, but this is an opportunity to consider how to build a more resilient supply chain for the future.