What has happened?
Manufacturing hubs at China and cities where COVID emerged had to shut down, and largest 1,000 companies and their suppliers who own 12,000 facilities have suffered from a quarantine.
*COVID has mainly affected demands and sales in a 37%; then comes productions with 27% and a 16% on SC; factories are shutting down, whilst demand patterns are changing.
*We are watching a Domino effect as panic, social distance, and stay-at-home orders stopped the life of people and businesses around de world.
*Shipment delays and widespread closings disrupted global SCs. High-tech is at the top of all industries affected, followed by automotive, heavy machinery, as well as medical services and health care, causing a significant impact on Manufacturing.
How are we now?
*The rules were broken by COVID-19. These are challenging times representing great opportunities, but there is a need to move fast and set priorities. The need for a better state of things brings us to a “better-balanced normal,” only if the society and business observe the new rules.
* Changes we are experiencing range from workers working from home, people shopping online for the first time, consumption limiting the amount of product bought, bank transactions done mainly by electronic means, to mention a few.
*Previous ways of doing things no longer fit in our processes.
Does your company have the ability to adapt to new scenarios?
*Regarding adaption to change our mindset, studies mention that 65% of businesses are leveraging some new opportunities, whilst 55% want to limit risk, and 41% try to maintain balance.
*These events cause a new thinking, new rhythms, new priorities, new rules, and future-new-norms approaches to recover.
*For SCs to compete in this crisis they must have an expedite SC to understand the granularity of when, where, and what products to allocate to retain customers.
Build a resilient Supply Chain Planning. How?
- Realising the change of demand and buying patterns to restructure your inventory stock.
- Looking for a range simplification by narrowing the maximum and minimums amount.
- Identify your top priorities to move forward.
- Develop collaboration to increase growth.
- Deploy Machine Learning (ML) and Artificial Intelligence (AI) to make an important decision to change current scenarios.
- The Digital Twins approach can help you to simulate possible procedures.
- Change your production capabilities, for instance, to fulfil the community medical needs as the demand for ventilators.
What comes next?
Studies found that 74% of experts think that their priority is to have a SC capability review; 39% are thinking to readjust service-levels, and 38% are thinking of enhancing innovation collaboration.
* We must manoeuvre to meet shifting demands.
* This crisis brings opportunities to newcomers from other countries coming into scene, as China and the USA suppliers have to stop production.
*Brands and retailers have new rules, new ways customers engage to buy and shop online, shop less frequently, and buy fewer products.
* We will see prices and taxes incentives issues, and changes in behaviour on the SC.
* Prices are going up and down depending on needs of fulfilment, availabilities, and profitability.
* Your inventory strategies represent an opportunity to re-design replenishment more efficiently, as it depends on demand variabilities.
* Be ready for an exciting mix from different approaches.
* Both short-term and long-term planning will be necessary; so, leverage your capacities as both will be part of the success.
* Transparency is a crucial necessity challenge.
* Flexibility is crucial for SCs to understand new possibilities and to build new capabilities.
* Think about your capacity to supply and change Manufacturing to what is currently needed.
* Is the way you are forecasting the correct one? Is your reconfiguration of flexibility on replenishing demand and obtainability of products still working?
Anticipating future risks on the demand
* Planning will intelligently consider the options.
* The rapid reconfiguration and wiliness to re-conceive the way we replenish and bringing new products to the market.
* By increasing the spectrum of behaviour diversification, to get better at triggering, identifying trends and changes earlier.
* Understanding which products will sell well, and which have died. What has triggered the change on demand from one item to another?
* The way product is used lead to an exciting inventory mix.
* Unarticulated and unpredictable demand needs balancing between the right inventory, at the right time at the right place.
* Be aware of escalating competition and signals of particular product drop. Create a behaviour in services within the SC.
* Companies will find extra inventory, prices changing, and competition actively promoting.
* Diversified portfolio through strengthening the supply net.
* Adaptively place inventory to protect customer service.
* The granularity of process defines the level of detail used in modelling of situations and of the understanding of data, and such data about demand signs.
* A more adaptive-thought of where to locate in place the product to our customer service.
* Get closer to the data.
* We are not completing Automation processes, as we still need professionals.
* Moving and supplying down the different channel and products needed to be more flexible.
* The analysis of demand signals will become more complex and challenging scenarios to look.
Paths to COVID recovery
- We will see more systematic planning with less history.
- Collaborate with stakeholders to assess the market and opportunities to react.
- Model growth/declines with more reactive short-term forecasting and demand sensing.
- Collaborate with suppliers to receive information on product availability constraints.
- Correcting possible stock imbalance by re-distributing excess stock in the network.
- Use “fair share allocation” logic to determine the best way to allocate scarce resource until supply replenishes.
- More responsive to our demands, processes and prices.
- Demand product quality, quarantine stock fulfilments, or inventory getting stocked fills from around the world.
- Challenge your patterns with alternative locations or already qualified suppliers used to diversified supplies for short-terms.
- Reliability increasing would result in more clever thinking.
- Think about segmentation in different ways.
- Try the diversification of risk by looking at small segments of the product supply, ensuring the transition both into downtown and out downtown.
- Think about alternatives, as multiple routes to supply and to avoid risks.
- To reduce complexity, move from fixed stocking strategy to an optimal one with optimisation algorithms.
- Increase variability to manage stock mix and to get a stocking strategy right.
Where do we prioritise in terms of inventory service and metrics?
* How much visibility do we have about our supply? Hopefully we have visibility of second and third suppliers; because they are the mix of an assembled product.
*We might have 90% of the components we need, or even higher, to be able to assemble finished products, but it might be that one key component is not available. That visibility will help us to understand which supply product we prioritised and consequently how much we will invest besides inventory to give us flexibility.
*There will be scarcity and limitations in our supplies; then, where is the best place to position that inventory? Is it the cost to the customer, is it at the point of the supplier? In reality, there should be a mix.
*Are you using the proper logic to make sure you have "the right product in the right place, and at the right time" to maximise a service level, but also to minimise the risk of failure?
Forecasting is difficult on the face of current events.
How to be ready for the next curve?
- Test and validate scenarios at the segment
- Start fast – fail quick –
- Minimise friction out of the flow.
- Synchronise processes using the power of machines.
- Use key flows through data.
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