China is a major global contributor to consumer electronics, smartphones, automobile parts, pharmaceutical and such other industries. Although, nobody could have anticipated the intensity, outbreak timing, and scale, it is not the first-time that supply chain (turmoil) has occurred. Earlier, trade war, tsunami, SARS, and similar grave situations occurred that have created unforeseen problems. In the year 2003, when China was affected by SARS, it represented 4% of the Global GDP. Now, in 2020 it has significantly jumped to 16% of global GDP. In the recent scenario, multiple global manufacturing industries rely on China to a larger extent. The entire supply chain system is facing the consequences of the Covid-19 outbreak and is also disrupting the worldwide manufacturing processes. Although government and health boards of Covid-19 hit countries are decelerating the outbreak by imposing strict actions. On the other side several companies are grappling to handle both demand and supply of essential goods. The products that we consume are obtained post rigorous monitoring over multiple stages such as raw material extraction, manufacturing, storage, transportation and distribution. Every stage is crucial for the accomplishment of end to end supply chain operations. The Covid-19 pandemic has interrupted fundamental blocks in the supply chain.
Covid-19 spreads over the world:
Source: World Health Organization
Global Manufacturing competitiveness in 2019 Q3 (Billion):
Problem: Shortage of Labors
The major impact of COVID-19 was seen on the workforce. As the virus is spreading globally supply chain leaders must think about alternatives to avoid such events in future. Government has restricted workers to stay at home or work on alternate days. It is correct time to rethink of any alternative and plan accordingly to sustain the loss and work on effective measures to bounce back.
The best solution to avoid such an epidemic is augment the process with automation to your arsenal. The Smart Warehouse and Manufacturing will bridge this gap by making operations automated with the help of AGV, AMR, drones, cobotics, wearables, automated picking process, and such others.
Problem: Shortage of inventory (Data and analytics are the key to overcome from the epidemic period)
The major drawback of just-in-time inventory systems is that when any desirable material is unavailable, it may lead to operation breakdown. In the absence of essential components, suppliers should find alternative supply sources. When these essential components become more challenging to find, costs tend to rise, which increases the financial burden leading suppliers to pass it on to consumers to recover the difference.
- Real-time Inventory Visibility – Omnichannel OMS systems provide unified visibility of enterprise inventory from warehouse, distribution center, store, and in-transit location and perform complex order routing to enable efficient order fulfilment from the optimum location.
- Supplier Diversity – Map the suppliers manufacturing unit, warehouse, and distribution sites to seek geographical diversity to avoid total loss of supply chain in the future.
- Estimate available Inventory for production – It is always preferable to have an initial check of available spare parts and after sales products to keep running in a production environment.
Logistics plays a vital role in end-to-end supply. Due to the impact of coronavirus there is a lack of drivers, maintenance crew, warehouse workers, and other logistics employees. The major impact is visible on cross-border movements. It is more difficult for goods to move due to lockdown in some regions around the globe.
- TMS – Transportation Management Systems (TMS) software supports enterprises in formulating freight movements in a more effective, trustworthy and affordable way. A typical TMS software enables several modules including route planning & optimization, load optimization, shipment execution, delivery sourcing and procurement, freight review and payment, order visibility, carrier management, and such others.
- Assessment of available logistic – Existing inventory capacity should be evaluated and jointly discuss to achieve optimal capacity utilization.
- Early Access – As the company will start production after a few weeks, supplier must forecast the shipment of the goods and gain access for pre-booking of transportation model.
Problem: Managing cash-flows
In this epidemic, organizations can encounter a financial crisis, due to the increased cost of sourcing and shipping as well as the lockdown of manufacturing. These factors will indirectly affect companies to achieve their early profits and set goals.
- Epidemic Clause – Supplier can consider calling or implementing force measure or other alternatives such as price adjustment clause and others.
- Realistic Demand – S&OP plays a crucial role in forecasting real-time rising demand, and fulfilling customer need in small batches. This will help the supplier to increase volume, based on forecasting tool eventually.
- Inventory management – Real-time inventory visibility will be able to fulfill supply and demand, significantly avoiding wastage of material in this crucial period.