Addressing Supply Chain Crisis Problems During Covid-19
COVID-19 is a global epidemic affecting hundreds of thousands of people, with major economic consequences that will last for months. “Manufacturing, retail, services, and wholesale account for more than 75% of firms in the afflicted region of China”, according to current data from Dun & Bradstreet . On a global scale, 51,000 organizations have “over one Tier 1 or direct sourcing agents” from regions that have been affected, while another five million companies have Tier 2 suppliers from the region, with 938 Fortune 1000 companies among them.
There are two effects on the supply chain. For one thing, enterprises must keep a careful eye on short- and long-term demand and inventories to compensate for output losses caused by plant closures and the economic downturn. Furthermore, shops face inventory depletion as customers stock up in anticipation of possible quarantine or prolonged works from home. Consumers who don’t want to go to the store have become more interested in delivery choices, which allow merchants to reduce fulfillment while also keeping personnel safe.
Developing A Proper Contingency Plan Organizations should begin with scenario-planning methods, according to Nitin Dsouza, director of the strategy and transformation, Publicis Sapient, London, where multiple demand environments are evaluated across the entire supply chain. Focusing on sourcing freelancers is necessary since it can help reduce the overall capital investment
While Various Organizations Confront Distinct Risks, Businesses Should Prepare For Both Optimistic And Pessimistic Scenarios. This Is Defined As Follows In The Instance Of Covid-19:
Reduce The Risk Of Supply Disruption Companies should collaborate with their existing suppliers to develop a business continuity plan in the short term. Companies should collaborate with their existing suppliers to develop a business continuity plan in the short term. Meanwhile, firms should seek sourcing agents from various areas to diversify their supply chains and avoid shortages, particularly for products with longer supply cycles.
Organizations having exposure to China, according to Anshul Acharya, vice president, management consultancy, Publicis Sapient, New York, generally find greater gaps between demand signals and delivery, with delays of 30, 60, or 90 days. Many retailers were already thinking about how to balance sourcing robustness and flexibility with cost. With the quest for more original, customized items, and faster delivery, opportunities for near-shore and offshore sourcing arise. Data from third-party partners can be gathered to get visibility into a stock movement across the supply chain network and to identify potential bottlenecks. For example, if inventory is delayed when crossing the border, businesses can implement contingency plans to solve the problem and speed up the process.
Control Demand Fluctuations Stopping promotions, prioritizing products, and building inventory reserves are some other short-term techniques for managing demand when supply is constrained. In response to coronavirus fears, sales of first-aid kits, surgical masks, oat milk, and other non-perishables increased in late February, according to reputed sourcing freelancers. As supplies become more restricted, these “panic purchasing” scenarios – in which some commodities experience a surge in demand – can lead to price gouging both in-store and online.