Leading an organisation through the rebound from COVID-19, when uncertainty and concerns over the health and safety of people remain, will be challenging. Needless to say, restarting complex global supply chains that have been impacted by both demand-side shocks and supply-side disruptions will not be easy.
Yet, the pivot that organisations must make is across all management dimensions of this crisis – risk and financial management, people, customer, and supply chain. Here are 7 recommended steps from Deloitte professionals on how to restart and synchronise supply chain businesses in the new normal.
1- Implement dynamic sales and operations (S&OP) planning processes
Originally focused on matching supply and demand, sales and operations planning must now facilitate organisational alignment between business goals and plans, while enabling quick responses to continuously changing business conditions. The next normal will require a much more integrated and iterative approach to S&OP processes, while S&OP process and key alignment meetings will need to accelerate significantly, likely from monthly to weekly, in this volatile period.
See also: Coronavirus Impact on Port and Economy Globally
2- Focus on end-to-end supply chain constraint management
It is crucial to proactively identify possible constraints in each area of the supply chain, be it an internal limitation, such as production or workforce availability, or raw materials or production availability. Good constraint management means creating a plan to manage these constraints and to understand their impact on financial performance and avoid lost opportunities. As the constraints change, adjustments are made to the business plan so that it stays aligned with the financial plan and remains on track for consistent profitability and cash flow.
3- Enhance dynamic inventory deployment capabilities
As the current environment is far from normal and demand and supply side volatility is much higher than normal, companies should expect imbalances of inventory across the network that will necessitate fast action to determine when inventory from a non-primary location will be used to satisfy customer demand.
4- Secure logistics capacity, considering alternative routes and modes to and from impacted markets
The recovery period may be marked by irregular flows of goods for extended periods as regions emerge from (or re-enter) periods of quarantine. Recovery-oriented organisations are already anticipating and preparing for potential mismatched regional availability and demand for logistics assets, particularly international shipping containers, cargo planes, and to a lesser extent, rail cars and freight trailers.
5- Revisit costs and implications in supply agreements
The demand shocks induced by COVID-19 have impacted commodity costs in almost every sector of the economy, with sharply lower prices for widely consumed commodities such as oil, natural gas, copper, iron, and plastic resin. Resilient organisations will proactively drive down their costs to reflect changes in commodity prices, while working thoughtfully with suppliers who may be struggling themselves, to be well-positioned for whichever market conditions greet them in the “next normal.”
6- Enhance multi-tier supply network visibility
Companies will need to embrace new digital approaches to illuminate the supplier network to gain visibility to critical material and component supply as quickly as possible. This includes ensuring adequate visibility to inventory in sales channels through to the locations that will serve the ultimate customer so that more intelligent inventory allocation decisions can be made.
7- Refine alternate supply sources
A resilient supply chain recovery may require the temporary or permanent substitution of alternate supply sources for materials. Such an approach will reduce the number of choke points in the supply chain that could develop as regions emerge unevenly after the pandemic by working around congested ports of entry, mitigating shortages due to supply rationing or as insurance against supplier collapse.
It is important to realise that even as regions emerge from the pandemic, individual supplier workforces could be forced into reduced operations or full quarantine should the virus re-emerge in specific cities or workplaces. For new suppliers that are likely to become more permanent members of the supply network, now may be a good time to review the tax, customs, and duties considerations of the new supply chain flows.
Read also: Recovering Process for Supply Chain in The COVID-19 Crisis