There is no doubt – our world has changed, perhaps for good. Here we look at the impact of COVID-19 on supply chains and how this may affect you. Of course, this is only good if you have reliable solutions to deal with them. So, to that end we look at a few ways companies are adapting to this virus ‘ impact as well.
It may be obvious, but our supply chains enable the critical linkage between suppliers, manufacturers, businesses, and consumers. Without this functioning properly, we are sent overnight into a hunter gatherer period of life. While this may not be so gloomy, there will be major impacts felt (if not already) across the entire supply chain. Below are a few of the major issues currently being faced, and a few that will likely rise up in the coming months.
Employees Out of Work
Certainly, one of the biggest disruptions to the supply chain will be the number of people not working. With social distancing measures in full swing, many factories, warehouses, truckers, and beyond are not working. Of course, this trickles down into fewer people doing the work, and so fewer things get made. Another factor is that some companies will have significantly reduced sales volume which leads to employees being furloughed and laid off.
The ancillary effects of people out of work means fewer buyers for many goods as well. With most supply chains running as close to just-in-time delivery as possible, this is an area that supply chains have a hard time predicting. Lead times get messed up, oversupply and a ‘bullwhip’ effect can begin to take hold without good forecasting measures. For large enough firms, it may be worthwhile to invest extra time to get your demand curves right.
What to do
Keep an eye out for the payday protection program (in the United States) and other programs throughout the world provided by different governments. This can provide the essential money you may need in the short term to make it through.
Unreliable Supply Chains
While some firm’s demand has flattened, others have surged 200%-300% or more. With this unpredictable demand curve, its more difficult to find high demand raw materials and finished goods. If you have suppliers you’ve worked with closely over the years, it’s a good time to talk with them to be sure of the supply that is available. In this scenario, you’ll likely need two or more vendors to help fill your supply. In your WMS, oftentimes there are rules or multi-vendor support to deal with different supplies from different vendors, be sure these are set properly so your lead timing and supply deficits are covered.
What to do
Take a moment to sure up those relationships. The impact of COVID-19 on supply chains is unpredictable but if you can only get a part of the supply, make sure to secure the rights and the contract earlier than later.
Cross-Border Supply Chain Interruptions
With different restrictions being placed all over the world, you may have trouble with import/export just as with overall supply chain issues from factories closed and operating at reduced capacity. The impact of COVID-19 on supply chains is felt worldwide, so while one area may be having the worst of its peak at one point, another country may have difficulty a few weeks later. Again clear communication and software to help manage the disruptions will be about the best scenario you can hope for. Is this a good time to search for new vendors? Perhaps. Many companies are realizing their supply chain reliability was not that reliable all along. Perhaps only during the best of times could they keep up, and now it’s time to search elsewhere. Having contingencies in place will help you keep a strong supply chain moving. You’re WMS may help you with managing vendors and ordering product distributed across the vendors to keep the supply coming.
What to do
There is no denying the supply chain is going to face a lot of shifts, one of which is where suppliers are located. More companies will shift to local/nationally sourced goods than to go across oceans. Now may not be the worst time either.
Dramatic Demand Increases
This is a wonderful blessing when it happens. It can also add a level of strain on the systems like you’ve never experienced before. If you don’t have a mobile WMS in place, this will be harder than usual. That being said, there are things that universally will help you be sure you are ready to cover it.
- Take a moment to evaluate and understand lead times from suppliers better since this is probably not a normal cycle. The problem is if you can’t keep supply, you won’t be able to keep up.
- Look at your top 20% of items and be 100% sure they are easy to pick (have replenish-able bays for product), easy to find, and easy to ship. Most often these 20% of items will be 80% of your volume, so keep them always available.
- Talk to employees so they know whats going on. Allow them overtime or weekend shifts if this will help solve some of the challenges. You may even need to hire an extra person.
- Look to invest in a new software system and/or warehouse layout. It may not seem like the best time to plan a new warehouse layout or software implementation but a week of inefficient activity can then come back as 2x-5x more efficient by doing so.
These are weird times for sure. It’s time to think critically about your business, the solutions your are using, and how you can mitigate the risks that may be associated with this. Take the time to handle your vendors and have other vendor options in place. Be sure you can handle the movement of items fast enough with your systems. Take a moment every day or at least every week to talk with employees, see who is available, who will be able to run extra shifts etc. Having this plan in place for when demand surges, or your original supplier can’t supply will go a long way to create a prosperous period of time for you.
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