The new environment demand from organisations innovative approaches to their Supply Chain (SC.) A scheme process to depict difficulty, volatility and ambiguity of the circumstances hard-hitting contemporary SCs performance. These challenges can be achieved when backing professional knowledge, edge-systems and potential-analytical approaches which combined to enhance decision-making transparency improves design solutions and mirror the organisations’ real-life challenges currently facing.
What can we do today?
What about preparing your SC for the mid-long term response whilst building the resilience that could bring you back during an emergency?
· Set up transparency on multitier SCs, generating a list of unfavourable components, verifying the origin of supply, and finding alternative sources.
· Work along operation and production teams to check your catalogue components and bills of materials (BOMs) to detect the ones from high-risk areas.
· For risks that could halt/decelerate production lines or substantially augment the cost of operations, you should detect alternative suppliers, in terms of experiences outside harshly-disturbed regions.
· Connect with all suppliers through all tiers; establish collaborative agreements; check lead times, inventory levels and set up a recovery strategy for key suppliers by commodity, as early-alert practices for disruption.
· Be aware that differences in local policy might have a significant impact on the accessibility of other options. Companies can work closely with affected tier-one organisations to address the risk collaboratively.
Assess existing inventory along the value chain. Consider these categories:
· Add in spare parts and after-sales stock to keeps production running and to facilitate delivery to customers.
· Finished goods.
· Define spare-parts inventory that could be repurposed for new-product production.
· Assess lower-grade-ratings parts or those with quality issues.
· Evaluate parts in transit to see what steps to take to accelerate their arrival, particularly those in customs or quarantine.
· Supply currently with dealers who guarantee stock where transparency could create for cross-delivery.
· Evaluate reasonable final-customer demands and customers’ shortage-buying behaviour.
· Develop a demand-forecast strategy accordingly to the granularity and time to make risk-informed decisions.
· Integrate market intelligence into product-specific demand-forecasting models.
· Ensure dynamic-monitoring forecasting to react quickly to inaccuracies.
Making small-frequent orders, and adding flexibility to contract terms can improve outcomes, both for suppliers and customers; level peaks that might raise cost and waste, and classify customers by strategic importance, margin, and revenue to safeguard the continuity of the commercial relationship.
Delimit production and distribution capacity to warrant employee security, by supplying personal protective equipment (PPE); communicate with teams about working-remotely options and infection-risk levels.
· Prepared a demand forecast to optimise production and distribution capacity to understand financial and operational implications.
· Manage a scenario planning to project the financial and operational implications of a prolonged-shutdown, assessing impact based on the available capacity to find out which products deliver the highest strategic value, considering the importance to health and human safety, and the earnings potential, both today and during the future recovery.
· Work with cross-functional teams (marketing, sales, operations, and strategy staff.) Design a digital end-to-end S&OP platform to better match production and SCP with expected-demand in a variety of circumstances.
Pinpoint logistics capacity to speed up and be flexible on transportation, when demanded.
· Understand current and future logistics capacity by mode, prioritising logistics needs, required-capacity, time sensitivity of product delivery, minimising exposure to potential-cost increases, collaborating with partners to gain priority and increase capacity on more favourable terms.
· Develop emergency planning under rapidly evolving circumstances; real-time visibility will depend not only on tracking the on-time status of freight in transit but also on monitoring broader changes, such as airport congestion and border closings. Logistics management needs to fast-tracking adapting to any situational or environmental changes.
Manage cash and net working capital by directing stress tests to be aware of where SC financial problems would start. Constrained SCs, slow sales, and reduced margins will add even more pressure on earnings and liquidity.
· Businesses require a healthy amount of realism so that they can free up cash.
· Firms will need all internal-forecasting capabilities to test their capital needs on a weekly and monthly bases.
· As finance on account payable-receivable functions run again, SC managers could unlock the cash in other parts of the value chain. Robust governance can promote considerable savings.
· Improved logistics, such as smarter fleet management, allows defering significant capital costs without impacting customer service. Minimising/eliminating unnecessary purchases can bring in instant cash flow.
· Stick to consumption-based stockpile, manufacturing models to negotiate supplier’s contracts in more favourable terms.
· Market Insights, direct-to-consumer communication channels, and internal and external databases can provide priceless info on evaluating the present status of demand among your customers’ customers.
Forecasting demand requires a strict process to overcome ever-evolving conditions.
· Develop a demand-forecast strategy, defining the granularity and time scope for the forecast to make risk-informed decisions in the S&OP process.
· Use advanced-statistical forecasting tools to generate a realistic forecast for base demand.
· Integrate market intelligence into product-specific-demand-forecasting models.
· Ensure dynamic monitoring of forecasts to react quickly to inaccuracies.
· Shortage-buying ensures customers can claim a higher fraction of whatever is in short-supply; businesses can question whether the demand signals received from immediate customers, both in short and medium-terms, are realistic and reflecting underlying uncertainties in the forecast.
Leaders must design a resilient SC for the future. It begins with establishing SC-risk function assessing and updating risk-impact estimates and remedial strategies, and foreseeing risk management. Previous processes and tools generated all through the crisis management period should codify into formal documentation; a Nerve Centre should turn into a permanent means to monitor SC weaknesses. Vital supplier collaboration can likewise strengthen the whole supplier ecosystem for better resilience.
Summing up: when coming out of the crisis, companies and governments should take a detailed look at their SC vulnerabilities, and build up financial models for different-upset scenarios to decide on how much “insurance” is needed to the mitigation of specific gaps, such as by establishing dual supply sources or relocating production. The time is now to act and find opportunities from crises. Have you looked at your Supply Chain vulnerabilities?
Dave Food
Prophetic Technology
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