12 Lessons on Supply Chain Agility During the Pandemic
2020 has been a revealing year for the industry, particularly on supply chain agility. While no one could have expected the disruption, many companies were able to respond to the new set of challenges quickly and accordingly, some would even say magnificently. As we approach the new year, it is time we review the playbook of these successful companies. The list below comes from a Forbes article, which provides a dozen lessons on supply chain agility that we must take into the next year.
Lesson 1: At the onset of the pandemic, businesses with supply chains that included China as a key node received invaluable input from their Chinese employees, who gave initial warning of what was happening in the country. This crucial information provided companies a way to develop a regional blueprint to react to the disruption, which they also implemented across other regions where the coronavirus had reached as well.
Lesson 2: Although not new initiatives, risk management and resiliency were also key for procurement leaders in these agile firms, especially in terms supplier risk management.
Lesson 3: Robust functional communication in firms played another important factor for successfully reacting to the disruption. As the article explains, a company that has weekly calls with the supply and demand sides of their global organisation will perform better compared to a company that holds an Inetgatred Business Planning meeting once a month. Agile firms during the pandemic held alignment calls several times in a week, while some even held them daily.
Lesson 4: With challenges come opportunities, and many businesses have adopted this mindset to develop a better, more robust supply chain as they faced the pandemic.
Lesson 5: The article states that firms had to quickly increase their capabilities. This was done by changing their supply chain processes and/or implementing new applications. To speed things up during the pandemic, some companies used agile project methodology. According to the article, agile project management “involves continuously making smaller changes, more often, getting feedback, and then quickly adjusting based on the feedback.”
Lesson 6: Don’t single source key components.
Lesson 7: According to the article, many firms realised that a “key component” constitutes something broader than what was initially thought. For instance, a business may source a component from multiple companies, but if that component was built with a component that was single sourced by its suppliers, then the risk of shortages remain.
Lesson 8: Supply chain visibility was certainly one of the major lessons this year in the industry, which is not only for effective sourcing but also for managing logistics effectively. To bolster visibility in the supply chain, companies need to use real-time tracking applications, which help immensely especially during unforeseen disruptions.
Lesson 9: The article notes the importance of risk notification and visualisation solutions which can provide companies with a graphical view of their bill of materials and supply chain across multiple supplier tiers. Additionally, these applications also provide a way to monitor social media and large volumes of news to quickly and proactively surface alerts.
Lesson 10: During the pandemic, many companies had struggled to create accurate forecasts. However, some were able to adjust more quickly by using demand management applications whose forecasting is based on external data with machine learning.
Lesson 11: This pandemic has highlighted the need for quick ad hoc scenario planning. According to the article, companies that had supply planning applications with concurrent planning capabilities were able to perform better.
Lesson 12: Last but not the least, firms will need to be able to conduct robust scenario planning, which is based on both the application and the capabilities of planners.
12 COVID-19 Lessons on Supply Chain Agility
These are just some of the huge number of realisations and improvement points this year has unveiled in our supply chains. But armed with these lessons, it might make all the difference as companies move towards another year of unforeseen obstacles and opportunities.