China has become a world production center over the last three decades. Recently the pandemic impacted the Supply Chain in numerous industries including automotive, electronics, pharmaceuticals, medical equipment and supplies, consumer goods, retail, and other industries.
The medical supply chain expects major shortages of laboratory supplies and reagents. There are shortages needed to carry out COVID-19 tests like swabs and testing capabilities with inconsistent results produced. Prescription drug shortages may occur as China is the source of raw materials and India produces most of the generic drugs. Retail products such as electronics, wearable fashion, etc. were hit hard and stuck at ports during COVID-19. Manufacturing is expecting material and labor shortages. Transportation will impact the delivery of materials. Many global manufacturing OEMs have been working to find alternative solutions due to primary suppliers missing deliveries. The balance between supply and demand is fragile, and due to COVID-19 both sides were hit, it revealed deep issues in the right product – right price equation. With so many potential shortages an action plan should be established.
What should your action plan include?
- First priority needs to be making sure safety is first. This is critical to who you are and your brand. Make sure the suppliers are following through on safety during COVID-19. Are they following through on the CDC recommendations and have the appropriate gear for keeping employees safe? For example, a medical facility should be taking temperatures before people enter the building, providing masks and if appropriate gloves for the people to wear.
- Reevaluate your multi-tier supply chain, define critical components, address the origin of supply, and determine alternative sources.
- Understand available inventory in the supply chain which includes spare parts and after stock. Keep production running and delivering to customers is a priority.
- Assess realistic customer demand and respond to shortages and needs defined by buying customers.
- Optimize production and distribution capacity to ensure employee’s safety, engage in communication to share updates on safety and risk levels with COVID-19, define work from home options, and return to work procedures. Keep leaders informed about workforce and the above issues addressed as well.
- Identify and secure logistics plus be open to alternatives for transportation when needed.
- Manage cash and net working capital and understand where supply chain issues will cause a financial impact
- Establish a short-term plan to manage issues and accelerate overall supply chain for business. Determine the long-term plan for your supply chain to be flexible in meeting your companies needs and utilize technology that drives you ahead of our competition.
- Change means opportunity. Use this time to differentiate your supply chain.
Executive Advisor -Supply Chain