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Exposed vulnerability of the supply chain system - Covid-19 strikes back
Tuesday, 04 August, 2020, 16 : 00 PM [IST]
Anshu Raj
Covid-19 pandemic is now known as the most challenged and dangerous crisis in the world. This has slowed down the economy of the entire world and affected great corporate and businesses.  Impact of Covid-19 has been very unnatural and uncommon as it has been devastating. Response of the nation has been unpredictable as well, such as bans on travel, closure of borders, closure of business and several cases in complete lockdown. Hence, the vulnerability of supply chain has been brutally exposed by this pandemic.

The outbreak is not an isolated event. It is becoming difficult to find alternative suppliers to keep the business running. For many years, low cost supply and minimal inventory has been the key roles of a supply chain management. An investment in the supply chain system can bring its vulnerability in to a resilience mode. Leading distributors are now thinking of the cost of network risk and to invest more in resilient supply chains. The recovering power becomes stronger.

To meet the customer’s need, which has now shifted due to Covid-19 is a challenge for the supply chain system. There is a need of flexible supply chain that can cut cost and improve cash flow with increase to inventory turn. Once the pandemic passes and the global economy begins to function normally, many might assume they should manage their global supply networks as in the past, with the lowest-cost supply and minimal inventory levels. While that approach worked in a stable global economy, it now brings increased risk. The assumptions about supply chain management have shifted.

Domestic firms must now develop its own local sourcing units and adopt alternative strategies to reduce its dependency on imported goods and raw materials. Slowing growth and shrinking consumption is a matter of acute concern. This has emphasised on minimisation of cost and “just in time deliveries.”

We always had a strong vendor and inventory management system and an approved vendor pool. This has helped us in continuing our operations even during the lockdown. However, a completely smooth supply chain will take time. Recently, we had to temporarily discontinue a few of our SKUs due to the complete shutdown of their raw material supply but with the hope of relaxation of restrictions during the lockdown, we hope to start with those SKUs back soon.

Looking at the challenges in the supply chain management, shortage of manpower and sealed borders has now been a great drawback. There have been challenges in operating as the routine has been disrupted due to unforeseen circumstances, which include the commute of employees, last-mile delivery, and vendor supply chain.

On a regular day, we had about 100 people working in the organisation but due to Covid-19 and government-issued advisory, we are practicing social distancing as well as keeping the workforce in shifts that have led to us, operating on skeletal staff. Also planning of deliverables is being planned within the city or the area itself. The logistics is a great problem which has been sorted out with managing of chain procuring system.
Flexible supply chains played a critical role, including rapid raw material sourcing, product design, development and testing, and distribution. A goal of any procurement specialist is to uncover cost savings opportunities. However, just focussing on ways to save money is not an effective approach to supply chain optimisation because it has the potential to hurt other critical areas. Through proper planning, partnership, process and performance, the supply chain can be managed tactfully.

In conclusion, the supply chain has not seen the end of manual interventions in supply processes, however. Many replenishment systems use simple moving averages to calculate store-level requirements. With such an unprecedented demand spike polluting these moving averages, supply chain planners will have to modify supply quantities manually and scramble to adjust their planning systems. The supply chain system has to focus on more resilient structures while operating during the Covid-19 pandemic.

It is not the organisations that are competing; it is the supply chains that are competing.

(The author is founder, Caterspoint. He can be contacted at anshu@caterspoint.com)
 
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