Management Consulting

COVID-19 and Supply Chain: The New Route to Transform

supply chain

Stores are left with empty shelves and a bunch of questions. How will they get a new product? How will they keep employees safe? How will this affect the supply chain and distribution?

As the economy sees a major jump in consumer purchases, it raises the question of supply and demand. It’s common for companies to keep a few weeks’ worth of product on site, but in just a few short days, that inventory level could be dropping.

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Food distributors and wholesalers are focused on continuing the supply chain. Yet, companies are trying to perform logistical miracles, which includes redirecting truckloads of food from shuttered businesses toward places where people now crave it — mainly grocery stores.

How is this affecting our goods and their distribution?

Recently, Howard Roth, president of the National Pork Producers Council, wrote in a statement, “Slaughterhouses, dairies and vegetable producers are open for business, ready to feed the nation. Telecommuting is not an option for us; we are reporting for work as always””.”

Currently, there is no dramatic reason to think the supply chain will end. According to numerous sources, the food production and consumer goods industries are keeping up with demands. With that said, these companies can now focus on delivery and safety. But how will these companies prepare for the future?

How to move forward

  • Understand and plan for supply and demand risk
    • Consumers aren’t going out to social events, nightlife or stadiums, so the demand risk can possibly get severe very quickly. Hopefully, supply chains take the time to monitor and maintain communication with vendors. These methods will help predict supply issues and, in turn, allow for retailers and logistics companies to plan for the weeks to come.
  • Develop new inventory and distribution levels
    • While most companies keep a certain “number of weeks” worth of inventory, just-in-time manufacturing allows companies to increase efficiency and lower the cost of their supply chain. But this method also means, in a situation like this, a company can quickly run out of that inventory. Tactics to store the proper amounts of inventory will need to be readdressed. Making companies less resilient to sudden shocks and supply shortages.
  • Efficiently map the supply chain
    • Continuously monitoring locations and their COVID-19 updates is the biggest priority for success. As these companies map out the chain, it’s crucial to understand which locations have the highest risk and when. The data sharing between logistics and partner companies must be transparent and prompt; to minimize disruption.
  • Be proactive and design tactics for “what-if” situations
    • A step-by-step, case-by-case analysis is required here. We don’t know how long this situation will be around, nor do we know the overall effects this will cause. Therefore, it’s absolutely crucial to be proactive and develop multiple “what-if” plans for even the worst situations.

As this dreadful situation continues to extend across the world, it’s important to remember that employees and customers are always the biggest priority. When a situation like this occurs, and businesses have to re-evaluate distribution methods and supply chain logistics, it’s crucial to have a plan in place.

Once the situation with COVID-19 resolves, how will your company start to prepare for the future supply chain? Will you offer new services or modify the logistics in place? What steps towards risk management will you implement? Will you shift the way you communicate to businesses and partners? There is a lot to think about.

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