Supply Chain force majeure- Corona Virus
This virus caught us all by surprise. It has put a stop to production therefore interrupting the supply chain in a way the world has not seen in recent history. Many businesses will be crippled if not shut down completely. This impact will be ever so severe for businesses that do not have transparent, agile or robust supply chains.
Transparent supply chains are very difficult to establish but once in place they offer efficiencies that benefit everyone in the supply chain. From anywhere in the business you can see where the disruption is and react appositely in time. By the time most executives learn of a disturbance, they are caught off-guard and the problem has escalated and caused too many ripples within the business. Transparency aids in accurate and timeous dissemination of information within the supply chain. This will result in better risk management and response, minimizing the impact of incidents.
Transparency has an added benefit of making businesses more agile. This is amplified by having digital systems in place. Despite the advances in technology to the point where forecasting and scenario planning can now be done by AI, a lot of businesses still have manual supply chains. These have too many faults, inefficient and are prone to breakdowns.
They are also time consuming and leave no chance for analysis or strategic planning of any kind, so you are always putting fires out. Therefore, when an event like this happens, the wheels take too long to turn. By the time you have finished, your competitors are eating your lunch.
Investment in a good digital system may seem excessive for a business as the benefits cannot be completely quantified upfront, but it is those businesses with the best scenario planning or anti-fragile systems that will come out better. These ensure that the business is more flexible and will point out trends with suppliers or regional disruptions and give alternatives reducing or ultimately averting any adverse impact to the business.
This event also highlighted the flaws of the JIT system. The system works well to reduce costs across the supply chain but as many businesses import their products from China, this has left a lengthy gap in supply. Many businesses have established supply chains that work fluently without disruption and have done so for years.
These businesses consequently do not even have contingency plans or alternative supplier locally or in a different region of the world. Some business will only carry buffer stock enough to cover their lead times and when major disruptions occur there is not enough time to react.
If your business makes it past this, interrogate your supply chain. Ensure that should an event similar in magnitude or greater happen upon us again your business is prepared.
This virus caught us all by surprise. It has put a stop to production therefore interrupting the supply chain in a way the world has not seen in recent history. Many businesses will be crippled if not shut down completely. This impact will be ever so severe for businesses that do not have transparent, agile or robust supply chains.
Transparent supply chains are very difficult to establish but once in place they offer efficiencies that benefit everyone in the supply chain. From anywhere in the business you can see where the disruption is and react appositely in time. By the time most executives learn of a disturbance, they are caught off-guard and the problem has escalated and caused too many ripples within the business. Transparency aids in accurate and timeous dissemination of information within the supply chain. This will result in better risk management and response, minimizing the impact of incidents.
Transparency has an added benefit of making businesses more agile. This is amplified by having digital systems in place. Despite the advances in technology to the point where forecasting and scenario planning can now be done by AI, a lot of businesses still have manual supply chains. These have too many faults, inefficient and are prone to breakdowns.
They are also time consuming and leave no chance for analysis or strategic planning of any kind, so you are always putting fires out. Therefore, when an event like this happens, the wheels take too long to turn. By the time you have finished, your competitors are eating your lunch.
Investment in a good digital system may seem excessive for a business as the benefits cannot be completely quantified upfront, but it is those businesses with the best scenario planning or anti-fragile systems that will come out better. These ensure that the business is more flexible and will point out trends with suppliers or regional disruptions and give alternatives reducing or ultimately averting any adverse impact to the business.
This event also highlighted the flaws of the JIT system. The system works well to reduce costs across the supply chain but as many businesses import their products from China, this has left a lengthy gap in supply. Many businesses have established supply chains that work fluently without disruption and have done so for years.
These businesses consequently do not even have contingency plans or alternative supplier locally or in a different region of the world. Some business will only carry buffer stock enough to cover their lead times and when major disruptions occur there is not enough time to react.
If your business makes it past this, interrogate your supply chain. Ensure that should an event similar in magnitude or greater happen upon us again your business is prepared.
