June 1, 2020
If board rooms weren’t talking or panicked about their supply chain before the COVID-19 pandemic, that was a sign their supply chain worked well. Or well enough. The supply chain took on new importance during the crisis, for more than just hospitals seeking PPE. Factories in China and other hard-hit countries slowed or halted production of items ranging from pharmaceutical products and iPhones, to raw materials like resin, cardboard and steel.
It wasn’t just factories closing. The pandemic impacted transportation. Passenger planes no longer ferried people between China and the U.S., and nonessential travel to other countries was also banned. Given that air cargo often hitches a ride in passenger airplane bellies, this was a huge hit for e-commerce companies and factories needing products from abroad. Airlines eventually started flying only cargo on their passenger planes, but at increased prices. In the meantime, ocean carrier reliability dropped, with blank sailings and lower container volumes, making what was already a month-long process, even longer.
The view from the C-suite
A sign that supply chain worked well before was the lack of relative concern in the C-suite with how the supply chain operated. With some retailers and manufacturers relying on just in time inventory models, a lot rode on product delays. The finance department looks at the downside of supply and demand, with increased costs to procure needed items. A manufacturing shut-down is expensive, and it only takes one missing component to throw off the whole line. Without items to offer, the sales and marketing team are in a quandary. They can’t sell what they don’t have, and customers could permanently move to the competition if they have the goods. Customers rely on these parts and products to keep their own businesses alive. Some IT departments are learning the hard way that a lack of data visibility means they can’t answer basic questions about their own supply chains. They don’t know product quantities, locations or transportation status – or they have to consult multiple disconnected systems to piece it together. It’s hard to work with customers if you don’t know details about your own business.
The pandemic brought the supply chain to the forefront of many business operations, but also to boardrooms and C-suites, in a way unseen before at this level. The supply chain has always rippled across all departments, but now it’s more obvious.
Time to look forward
Board rooms should take this opportunity to examine their supply chain to see where it experienced challenges and where it succeeded. Though the pandemic is far from over, there will be future disruptions from natural or manmade disasters, supplier failures, transportation strikes, labor shortages or other reasons. Some e-commerce companies are realizing that they are better off spreading their merchandise across multiple warehouses, to be in closer reach of clients for that last mile of delivery. Or retailers see that improving visibility would help them better understand product on hand, to find the most reliable transportation and track its movement.
Supply chain executives likely have ideas and wish lists for investments that can improve its resiliency, which will pay off during any such hiccup, or even pay off during normal business practices. The time is now to dive into your company’s supply chain, and make plans and improvements based on lessons learned from this pandemic.
Networked Distribution is one such improvement, connecting fragmented supply chains to provide that end-to-end visibility. Contact us to learn more: https://www.stord.com/get-started