COVID19 -Supply Chain Planning Navigating to the Normal
Businesses are facing three major disruptions due to COVID-19 – Supply disruption, demand disruption, and business disruption. Considering current situation it looks like lock-down will continue for some more time, and we will probably see a phased relaxation.
Some of the major challenges are
- Lack of Manpower
- Customers have stopped ordering the entire range. Therefore, manufacturing has to stop the entire range.
- The important questions are- should we forecast, if we forecast is it going to be important, how do we forecast. No statistical models that will help you deal with the situation. You have to go back to scenario building and model your end to end supply chain and figure out where in the backend supply chain the disruptions are.
Planning side need to understand the demand shift on the ground. Organisation need to take hard calls on SKU rationalization, partnerships for delivery.
SAP Integrated Business Planning ( IBP ) can help to reduce complexity of the supply chain. Demand Sensing can be beneficial to achieve more accurate short-term demand plan. It is advised to go for Demand driven MRP.
We need to be agile and responsive -moving from a monthly Production plan to daily Production plan.
Every business will need to find the options that suit their needs – there is never a “one size fits all” approach.
Organisation has to quickly scale up their on-boarding of new partners, without sacrificing the due diligence and compliance requirements.
Adopt Collaborative approach, share updated plans with supply chain partners -including prioritizing and scheduling deliveries, and ensuring their priorities match with what is available at the suppliers end. Need to identify the difficulties their supplier faces, and help them out.
One of the biggest lessons from the lock-down is that we need to improve our ability for scenario planning.
We need flexibility across the chain not only in terms of procurement but also in the management of Logistic function.
We need to explore the possibility of multiple models of go to market.
The long-term outlook will be evolution of partnerships, a balance between Global Sourcing and local Sourcing, and creating an ecosystem of partners to support.
These steps will be the determinants the supply chain of the future
Need to focus on people, technology, and risk mitigation.
Retailers are struggling to serve customers and many have recognized a need to invest in supply chains to modernize, build operational resilience, and reduce dependency on people. Automation in distribution center, transportation, and last mile delivery will see a significant jump in investments in technology. Post COVID-19 we would not be surprised to see robotic deliveries and unmanned distribution center gain traction.
We see that companies have resolved to meet the challenges of the supply chain during the lock-down at the first level of response. Now, they are also creating resilience policies to deal with future disruptions till the time this pandemic remains. But when the business returns to normal they need to re-imagine supply chains.
DISCLAIMER: Note all above points are purely my interpretation based on product used so far.
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