SUPPLY CHAINS, SPREADING OR AVERTING THE CONVID-19?

It is well known that, when there is a spike in demand of a particular product a surge in the price of the product is inevitable. The justification being companies will gear up to try and satisfy the sudden jump in the market. They employ more workers, ask employees to work overtime to try and maximize labor and machine hours, etc. Due to the sudden rise in requests for materials, often suppliers tend to increase the cost of raw materials as well. Thus this causes production costs to rise. The question then is, are some of the price increases justified or they are just done speculatively and for profiteering reasons? 

I have observed with great concern the skyrocketing of face masks, hand sanitizers, hand washing liquids and other hygienic products due to the Convid-19 outbreak. 4 weeks ago I bought masks at an equivalent of 0.14USD per unit, I went back 2 weeks, the price was 0.27USD per unit and yesterday the same mask was going for 0.54USD equivalent per unit. After making an inquiry on why the prices changed drastically, I was told, "The demand is too high and our HQ have instructed us to raise the price". I was not shocked as I expected this response. What then worried me was when a gentleman came in and requested the price for the same masks and so he was told 0.54USD equivalent per unit. The gentleman shook his head and so I watched in agony as the gentleman left off. He could not afford the price.

I was left with many questions and as a supply chain practitioner, the dominant question in my mind was," Are supply chains exacerbating the spread or are they averting the spread of the Convid-19". How many people have failed or are going to fail to protect themselves and their families from the corona virus due to the high prices of masks and detergents? The future looked so gloom to me as I saw an enormous gape between the spread of the virus and containment efforts.

If the other parts of the supply chain are increasing prices speculatively or due to profiteering, let them be reminded that the gains are equated to blood money. However if the price increases are justified, supply chains have a big role to help avert the spread probably through redesigning their supply chains or strategies.

Supplier or vendor consolidation within a specific supply market would improve operational efficiency and helps reducing administrative and ordering costs. There is realization of supplier responsiveness to quality and product specifications as well as augmenting agility efforts within the logistical flow. Volume consolidation improves purchasing power which is good ground for negotiating for bulk discounts. As volumes are consolidated for onward movement, space volume is maximized as containers and trucks are cleared in full loads. Risks related to shortages, compliance, inconsistencies can be easily dealt with within the supply chain upon successful vendor rationalization.

There is need to optimize production schedules through demand planning which offers data driven methods of manufacturing. Demand planning enhances forecasting accuracy between available raw materials and production such that labor and machine hours are accurately optimized as well as onward to market distribution. This eventually helps flexing cash flows.

It is imperative for supply chain practitioners to question unusual price increases . There is need to request for detailed cost structures from suppliers to be able to objectively challenge the existence of cost layers that may seem unjustified. With permitting cash flows, practitioners may trade off longer payment terms for shorter payment terms to try and force prices further down.

It is critical for compliance officers within supply chains to perpetually monitor their downstream and upstream partners for quality and price checks to try and maintain levels of normalcy. It is as well common that during catastrophic times, malpractices within supply chains are rampant hence compliance officers and supply chain practitioners need to be very alert and on top on the situation.

This is a catastrophe that requires the conscience of humanity to take lead. In what ever we do as supply chain practitioners, be it contract reviews, price reviews or even redesigning our supply chains, lets remember the fight against Convid-19 is ours too and the choice to spread or arrest the corona virus is ours too. Many strategies can be well thought of and implemented in our supply chains. Lets do whatever is rationally possible to drive the prices for masks and hand washing detergents down albeit the difficult circumstances.

LET THE CONSCIENCE OF HUMANITY GOVERN OUR SUPPLY CHAINS !