Post-COVID-19 Supply Chain Considerations
July 17, 2020 josh
What are some considerations for your supply chain post-COVID-19?
- Focus on lower-tier suppliers
- Shifting of inventory away from lockdown areas
- Diversification of supply base
- Investment in low-value items
- Supply chain digitization
COVID-19 has undoubtedly created wide-reaching disruptions in the logistics industry. During the early stages of the pandemic, strict movement restrictions were put in place, forcing the closure of many major logistics hubs and warehouse locations. Though restrictions have already begun laxing, you cannot underestimate just how much COVID-19 has enabled companies to rethink their supply chain risk management strategies. Post COVID-19 supply chains should begin understanding the need to arm themselves against these kinds of potential disruptions that may take place in the future. Continue reading to learn more.
Focus on lower-tier suppliers
The global supply chain was affected and still continues to be affected by COVID-19. Locations in which top-tier suppliers were housed have had to impose strict quarantine procedures, which subsequently affected the level of logistics activities.
In this kind of situation, top-tier suppliers like original equipment manufacturers, for example, have been left blindsided. Factories have had to implement a number of cost-cutting procedures such as laying off workers and the shutting down of operations for an indefinite period.
To avoid this in the future, the focus should also begin turning towards the lower-tier suppliers which provide the materials for primary suppliers. Empowering them through improving their capacity minimizes the unwanted effects of a primary supply chain disruption.
Shifting of inventory away from lockdown areas
The effects of the pandemic cannot be generalized in terms of large-scale thinking. Particularly, some locations are more equipped to deal with the health crisis compared to others. Some areas may still be in lockdown, while some locations where cases of the virus are free from mishandling and mismanagement have been able to greatly ease physical movement.
Supply chains should also begin considering moving their inventory away from lockdown areas. This helps minimize instances of delayed procurement, shipment, as well as delivery of goods. The presence of multiple hubs in safe locations also creates for more efficient processes which will inevitably be evident in the experiences of both customers and end-users.
Diversification of supply base
Say for example you’re a small business owner. You still have the financial capabilities of keeping yourself afloat after the pandemic, but you understand the need for such changes to take place. It’s no longer viable to simply rely on a single supplier that will be able to provide your business’s products. After COVID-19, diversifying your supply base will allow you to more effectively adapt to similar disruptions that may eventually come your way.
Finding alternative supply bases means that a sole supplier does not determine the success of whether a product is successfully shipped to the final points of distribution. Having a pool of suppliers also offers you with many cost-beneficial outcomes — you would be able to expose yourself to a variety of services at cost-competitive prices. The limitless number of options to choose from may also allow you to venture into a market that you weren’t able to tap into in the past.
Investment in low-value items
Sanitation and social distancing are two concepts that need to be taken to heart, in the new normal of logistics practices. Though there has been a movement towards automated systems, assembly lines, and digital platforms, manual labor still plays a considerable part in day-to-day logistics operations.
Cost-cutting in logistics does not mean compromising the health and safety of your employees. While some of them may be left with no choice but to work fewer hours in your warehouse, for example, you should ensure that you’re not exploiting the labor that they’re providing you with. There should still be an active investment towards low value, but critical items for the safety of workers.
These low-value items simply refer to personal protective equipment like face masks, face shields, high-visibility outfits, respiratory protection, body protection, and a variety of other safety equipment. In your warehouse, you should also have in place other kinds of hygienic products that serve as low-value items. These may range from hand sanitizers to disinfectants that can be used to sanitize high-touch surfaces and other frequently used warehouse equipment.
Supply chain digitization
Without pondering too much over it, digitization brings out a wave of positive effects for a supply chain model. Investing in software like warehouse management systems, for example, is one way of meeting the needs of digitization.
Digitization offers unprecedented efficiency at virtually all levels of the supply chain. The ability of these digital systems to provide you with data-based analytics helps you better anticipate potential sources of risk in your operations. For example, you would be able to limit instances of misplaced items, parcels sitting too long in the warehouse, and transport-related issues. Post-COVID-19 supply chain risk management is all about anticipating unexpected situations. Rectifying these issues through digital methods can improve your strategies.
Mitigating future risks that may affect your post-COVID-19 supply chain means having to make many kinds of modifications in the way logistics practices are currently conducted. It’s no longer a choice to simply rely on a single supplier to respond to the demands of your business. In much the same way, finding alternative suppliers and empowering underutilized sectors are also some things that need to be done in the aftermath of a large-scale disruption.
Many in the logistics industry, from manufacturing, production, procurement, and many more, will undoubtedly become warier in the future. Assessing their considerations and already-existing strategies are keys to minimizing negative impacts brought about by future interruptions.