The COVID-19 pandemic is unprecedented in modern times, a 'black swan' event with critical impacts throughout society. From the way we live to the way we do business, on both micro- and macro- levels we need to adapt, get through this, and grow together.
For manufacturers and the supply chain logistics sector key principles are being underscored, whereas other accepted mantras are being overturned: how lean do you run your inventory when you don't know where a supply disruption, curfew or lockdown will come from next? is a globalisation a source of fragility or robustness for our supply chains?
Resilience and risk-mitigation strategies are essential. We've distilled some key takeaways into five stages to consider during this time.
Batten down the Hatches
Preparation, prevention and mitigation.
In a perfect world we'd have a playbook to cover almost every scenario. But it's not reasonable to expect us to have covered every outlier event imaginable. We can do things though which help in most scenarios. Understand your supply relationships, work with your suppliers to understand upcoming issues, and anticipate possible shortages, including alternatives and workarounds (at Acorn we’ve been actively managing our suppliers from different parts of the world, along with looking at component substitutions for clients).
If you work on JIT – with 'inventory just-in-time' – consider additional buffer stock and/or additional monitoring. Working with a supply chain specialist like Acorn gives you additional expertise and capacity to carry out supply network assessments and mitigation.
Monitor the Horizon
Detection and prediction.
If you have a master supplier they will help you monitor any upcoming issues in your supply chain. Otherwise you need to have regular check-ins, or trigger-actions that make sure your suppliers alert you to impending stock or inventory issues. Part of your regular strategic outlook work should include monitoring events that will impact on your manufacturing demand and supply.
Beware the Bullwhip: rapid changes in economic conditions and sector impacts (aviation, travel, and transport delivery come to mind in particular with the COVID-19 pandemic) can create major fluctuations along the supply chain (the Bullwhip effect). Think about how changing assembly order or production schedules can help attenuate these issues.
Utilise scenario planning and the known-unknown matrix to formulate better business responses and get on the front foot to managing your response proactively rather than firefighting.
Weather the Storm
Distinguish underlying demand (as opposed to short-term reaction and shutdowns), and plan for a rebound in economic activity. Alter business activities to take advantage of any demand lull (production line restructures, installs, training), or surge (repurposing facilities, additional workforce/schedule changes). Identify strategies to manage scarce resources wisely.
Consider workplans for strategic improvements (in production process, manufacturing flexibility, manufacturing environment & new technologies/workflows) to come out of the crisis well prepared and with renewed vigour. At Acorn we’ve been upgrading our technology infrastructure for warehousing and inventory, along with implementing new remote working and collaboration platforms that increase our productivity now and in the future.
Manage information flows proactively with clients and suppliers. Additional transparency or control may be necessary to make the right business decisions at pace. Additional collaboration can increase resilience for you and your client-supplier network.
Ride the Wave
Adapt operations, learn new skills and approaches.
What can we learn from the crisis throughout the organisation. Do we need to have a resilient enough network, solid inventory, the right workforce skills and capability? Do we have the correct strategic capacity and outlook to take lessons from the crisis, adapt and grow to fulfil organisational potential?
How do we deploy resources, source inventory better, and have more manufacturing agility in light of the 'new normal', and changed business situation? Work with a supply chain expert to level up sourcing and inventory planning for additional resilience and agility.
Calmer Waters, Clearer Skies
Compete again, stronger through adversity.
As the quote oft attributed to Winston Churchill goes, 'Never let a good crisis go to waste'. With robust preparation, adept planning, and decisive action, companies can rebound decisively and with renewed purpose from hostile conditions and crises. A well-considered but vigorous business response to the crisis can pay dividends to your company and customers. Cool heads can come out the other side stronger from this adversity.
How have competitors fared? Does the sector landscape offer new opportunities? Is our strategic planning and response effective enough, and how do we embed insights?
A stress-tested company can come out the other side with a stronger, more adaptable, supply chain — with production and organisational innovations that offer future benefits. Important learnings can be cemented for better preparedness for second wave crises ("the flooding after the rain"" additional infection hotspots, economic shutdowns or additional social lockdowns).
At Acorn we are determined to come out of this crisis showing our critical manufacturing partners that they can rely on us. As an essential supplier we have proactively changed work patterns, delivery mechanisms and managed supply networks to get them through the pandemic with resilient logistics services and inventory supply.
Let us know how we can help you with supply chain preparedness, and increase your own logistics resilience.
Chris Till, MD – Acorn Industrial Components, has been involved in OEM logistics for 35+ years. Along the way, he's developed a wealth of experience setting up and running supply chains for clients from Brighton to Chung-Do, helping them not just survive, but to thrive in the global manufacturing world.