Best Practices for Supply Chains Following a Crisis
The COVID-19 crisis has added many layers of uncertainty and unpredictability to supply chains. Industry leaders are having to rethink every aspect of their operations, and address an ever potentially permanent shift in consumer behavior. Soon, it will be the organization’s primary focus to significantly invest in technology and automation in their supply chain processes. As e-commerce demand remains high, manufacturers and online retailers will be looking to automation to optimize their supply chain operations and deliver higher volumes to consumers.
The global pandemic has caused every industry to review their current strategies, operations, and processes. Many have realized that a key factor is an end-to-end visibility. This gives manufacturers, distribution centers, and retailers the flexibility to react and respond quickly to the fluctuations in consumer demand.
Supply chains have been presented with many unprecedented challenges. Now is the time for organizations to focus on making the necessary adjustments to their operations to continue to survive this pandemic, as well as thrive in the “new normal.”
Scenario Planning During COVID-19
The first place to start is with the drive to increase inventory velocity. At the start of the pandemic, bottlenecks appeared at nearly every point along the supply chain. This left supermarket shelves barren and deliveries delayed. Organizations had to adjust quickly to increase the speed to market for essential items, such as toilet paper, requiring quick reconfigurations by suppliers and retailers. If consumers had visibility into toilet paper inventory levels, panic buying and hoarding could have been avoided. This situation magnified the need for end-to-end visibility throughout the global supply chain.
The impact of a crisis could have a ripple effect on other aspects of business operations as well, such as marketing. Following the 2008 recession, consumers’ buying habits shifted. Retail consumers began to value what was permanent and focus on what they could take out of the retail experience. While in the food industry, retail food spending increased as restaurant sales slumped, due to consumers’ efforts to cook more at home during economically turbulent times.
Once we reach a “new normal” with the current pandemic, will consumers remain brand loyal, or will behaviors permanently shift toward the grab-any-brand-you-can mindset? In the coming months, name brands need to communicate their differences clearly, while store and off-label brands may see a surge in demand.
Another area is to implement agility into lean logistics. Currently, it is too early to tell if workforce furloughs will be permanent as cost-cutting grows more severe. It is clear, however, that reducing manpower will force manufacturers, retailers, and distribution centers to look at technology to automate many processes.
Organizations with a lean environment already have operations that are set up to process inventory to maximize labor efficiency. However, that does not allow for shifts required to meet changing demand. Agility in supply chain operations is key. Organizations need the ability to adjust operations to meet fluctuating demands.
What happened with toilet paper at the beginning of the pandemic is once again a good example. Historically, this supply chain revolved around moving truckloads of toilet paper pallets to stores, which would then break down the pallets for sale to consumers. Recently, as consumers have moved online, shippers have been challenged with getting the toilet paper directly to the consumer. With essential items now being bought online, supply chains need to evolve operations to accommodate much higher volumes of direct-to-consumer shipping.
Through the digitization of goods, supplier performance can also be improved. With the current surge in online ordering, logistical adjustments have become a must to meet fluctuating fulfillment needs. By giving products a digital unique identifier at the origin of the supply chain, full transparency of inventory at the product level becomes possible. This is vital to meeting the rise in direct-to-consumer expectations.
While some industries such as grocery are seeing surges in business, and others like apparel are taking a hit, all sectors are re-evaluating business operations to ensure their ability to meet the ever-changing consumer demand. As the COVID-19 pandemic curve rises and falls over the coming months, and possibly longer, the true leaders will be those who adopt technology that offer flexibility and agility.
Supply chain planning technologies are important enablers to introduce more agility into supply chain planning processes. Modern cloud-based technology, such as Vanguard Predictive Planning™, enables supply chain planners to use capabilities like advanced analytics, artificial intelligence, and scenario planning.
Restarting Global Supply Chains in Fashion & Apparel