Restarting Supply chains

“Opportunity lies in the place where the complaints are” – Jack Ma

Since the pandemic is going to gift us an additional estimated poverty of 400 million, it would take another 12-36 months for the world to actually get back to the Pre-Covid shape. One of the biggest pains to discuss is surely going to be the ways to retool & restart supply chains. Post Covid, the top priorities will be quick delivery of inventories, lean operations and wider distribution by corporations involved in the supply chain cycle.

The global coronavirus pandemic has starkly demonstrated that many management teams have vastly underestimated the value of supply chain resiliency and visibility. The new challenge for the CEO’s is all about striking a new equilibrium between efficiency and reliability. The risk factors involved will include parameters like geography, length of supply chain, dependencies, number of supply chain partners, exposure to trade risks, degree/timeliness of data involved in the business of supply chain & finally changes in the regulations of shipping, by many countries. Well, the CEO’s can’t work on planning as of now, because the magnitude of the factors may vary accordingly. The possible future challenges for the corporations include the need to choose plants, outlets or distribution centers; whether to bring them online & when. The retailers will ask some similar questions like when do we restock & how much inventory is enough to consume the surge in demand; how to identify customer behavioral changes & how long will it take until the normal pattern establishes itself. Assuming I am an apparel company, how do I skip right into fall collections, when I have a whole summer stock piled up, would be a question of pertinence.

It’s also possible that suppliers will be out of business, in different geographies, or start up on different schedules. So it might be necessary to re-negotiate new terms & credit arrangements to reflect new levels of volume and risk. The only option that exists now, for the leaders is that they have to wait for the re-ignited demand to lift their earnings before interest, taxes, depreciation & amortization. They have to make tough decisions to bring operations in line with the new normal of lower demand. The facilities would require them to automate or become more agile, taking the logistics to an in-house setup. In many cases, back office operations that are running without select workers in the short term, will be automated at a leaner level, for the reminder of the FY 21.

As per the Bain report 2020 on the pandemic, three new words will come into existence, which will add balance to the definition of supply chain – Visibility, Resilience & Simplicity. Real time intelligence to predict the need for redundancy using AI/Predictive analytics, focused product lines and lean production/waste reduction will be the global vogue as the market re-establishes itself.