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supply chain disruption

Blue Ocean Academy has conducted a free webinar on the topic ‘Managing supply chain risk and disruption’. Around 100 professionals attended the webinar.

Following are the important points discussed in the webinar:

COVID-19 was an unprecedented crisis that affected the supply chain management of several organizations. Earlier, companies considered that the flow of raw materials will be continuous if they have contracts. However, the crisis has proved that the contracts and agreements are of no use when a global disruption occurs. The event has forced many companies, and industries, to rethink and transform their global supply chain model. It has also exposed the vulnerabilities of many organizations, especially those who have a high dependence on China to fulfil their need for raw materials or finished products.

How can organizations respond to the immediate change?

For companies that operate or have business relationships in China and other impacted countries, steps may include:

  • Educate employees on COVID-19 symptoms and prevention
  • Reinforce screening protocols
  • Prepare for increased absenteeism
  • Restrict non-essential travel and promote flexible working arrangements
  • Align IT systems and support to evolving work requirements
  • Prepare succession plans for key executive positions
  • Focus on cash flow

For companies that produce, distribute, or source from suppliers in China and other impacted countries, steps may include:

  • Enhance focus on workforce/labor planning
  • Focus on Tier 1 supplier risk
  • Illuminate the extended supply network
  • Understand and activate alternate sources of supply
  • Update inventory policy and planning parameters
  • Enhance inbound materials visibility
  • Prepare for plant closures
  • Focus on production scheduling agility

For companies that sell products or commodities to China and other impacted countries, steps may include:

  • Understand the demand impact specific to your business
  • Confirm short-term demand-supply synchronization strategy
  • Prepare for potential channel shifts
  • Evaluate alternative inbound logistics options
  • Enhance allocated available to promise capability
  • Open channels of communication with key customers

Supply chain actions

Organizations must do the following to secure the supply chains and ensure business continuity during the crisis:

Optimize production and distribution capacity

  • Organizations must assess the impact on operations and available resource capacity including the workforce.
  • Ensure employee safety and clearly communicate with employees
  • Conduct scenario planning and assess the impact on operations, based on available capacity
  • Optimize limited production, according to human-health impact, margin, and opportunity cost/ penalty

Assess realistic final-customer demand

  • Work with sales and operations planning to get demand signal to determine the required supply
  • Leverage direct-to-consumer channels of communication
  • Use market insights/external databases to estimate for customer’s customers

Estimate available inventory

  • Estimate inventory along the value chain, including spare parts/ remanufactured stock
  • Use after-sales stock as a bridge to keep production running
  • Identify and secure logistics capacity
  • Estimate available logistics capacity
  • Accelerate customs clearance