For all the effort it has taken to navigate your supply chain through the turbulent seas of the pandemic, daunting new challenges are on the way. The road to a post-coronavirus world will make new demands upon businesses as we progress towards a redefined normal that will affect markets and consumers around the globe.
Your supply chain has made it to year two of COVID-19
Congratulations are in order! The dramatic and comprehensive challenge faced by today’s global and highly intricate supply chain networks has been unprecedented. Yet, it’s essential to keep in mind that there will be no clear-cut, easily-identified line between “pandemic” and “normal.” And, your process of getting there will be anything but linear.
The demand and supply uncertainty that you faced during the last year will not, at one point, simply vanish. Demand in vaccinated geographic areas may go back to normal, but perhaps not all the way – and not quickly. On the supply side, similar questions apply. How much transportation capacity will be available on the critical lanes on which your business depends?
Model, visualize and evaluate your supply chains, from sourcing to manufacturing to distribution, across regions.
The COVID-19 pandemic has clearly shown that even the most well-conceived supply chains, designed to extract maximum value from investments in production and distribution, were more vulnerable than you would have ever believed.
“If nothing else, the ongoing coronavirus outbreak should cement the need for robust analytical risk management as part of a supply chain strategy.”Steve Ellet, Senior Vice President, Supply Chain Design at Chainalytics
Without a data-driven approach to risk management, supply chain leaders, deprived of accurate models and the environment they provide, cannot explore scenarios that allow them to evaluate their network and make informed decisions. It’s an essential tool to mitigate risks going forward.
Reducing costs to shore up next quarter’s balance sheet might look good in the short run. However, the resulting over-concentration of resources might jeopardize your network when the next epidemic, natural disaster, or cargo-ship-stuck-in-the-Suez-canal “shoe” drops.
Use live data feeds containing the latest information. In addition to demand, carrier capacity and pricing may also vary on a daily or weekly basis.
Recently-updated data is no match for live data. Live data contains the latest information on carrier pricing and availability and allows you to see trends as they develop and anticipate delays, and make alternate arrangements before your competition does. An investment in live data access throughout your supply chain network will pay dividends beyond early access to actionable data. That access itself leads to developing the real-time analysis capabilities of your team. These abilities will soon become a force-multiplier in your organization as your team gets better at finding patterns and correlations that point the way to even more timely responses.
Perform rapid scenario analyses evaluating numerous demand and supply options.
An integrated approach to rapid scenario analysis will give your organization the capability to make fast, optimized decisions quickly enough to address the current emergency and position you to deal with the disruption just over the horizon. The longer it takes to find a solution to an issue, the more likely it will become an even bigger problem further down the supply chain.
Some companies focused on a smaller section of their product portfolio during the pandemic. What is the cost of complexity for adding some sidelined products back in?
Like many organizations, yours probably trimmed back some SKUs during the pandemic to focus on fulfilling higher priority products. The time is coming when you’ll ask yourself when to bring back some of those lower-margin yet in-demand products. Measuring cost-to-serve across your product line will determine which SKUs deserve another chance and which ones need to stay on the bench.
Determine the value of supply chain flexibility in terms of risk mitigation
The way forward for supply chains amid COVID involves balancing costs against a quantified “risk index.” As infection rates ebb and flow worldwide, that risk index will change in value, altering the cost equation and redefining acceptable costs in light of the observed degree of risk. Crucial here is the knowledge that returning to the status quo ante is not an option, and some degree of risk mitigation expense will be part of your best practices going forward.
Developing your organization’s skills to deal with supply chain disruptions quickly is a goal worthy of pursuit. Reach out to us and see how Chainalytics can help sharpen your team’s analytical toolset. Using one-of-a-kind tools and approaches like digital assets and managed analytics services, we consistently deliver actionable insights and measurable outcomes to our clients.
Erik Diks, Managing Director, Europe at Chainalytics, has been a supply chain management adviser for over 20 years. Throughout his career, he has supported multinationals such as Coca-Cola, Heineken, and Bayer with large-scale transformational projects that better align their supply chain and business strategies throughout his career. Currently, Erik manages the sales and delivery of Chainalytics’ end-to-end supply chain consulting services in Europe.
