Supply Chain Management in the Post-Pandemic Period
A supply chain is defined as the entire process of making and selling commercial goods, including every stage from the supply of materials and the manufacture of the goods through their distribution and sale.
This is also known as logistics. It is essential to any company in the competitive world of business to manage supply chains. The process of supply chain also includes company policies, company personnel, customer behaviour, operations, resources and tech systems.
The pandemic affected all aspects of life but supply chain activities were seriously hurt during the pandemic. Rising costs, competitive work environment, delays and losses in transportation activities and decreasing productivity in manufacturing are some of the negative results of this period. In order to minimise the impact of the negative aspects, a new planning for supply chain operations have now become fundamental.
The supply shock started in China when the pandemic first hit then followed by a demand shock with the global economy shutting down. It was a display of the vulnerabilities of the system, mainly in the production strategies. As time went on, trade restrictions and shortages of critical supplies (medical or pharmaceutical) exposed the weaknesses of these production strategies. All of a sudden, meeting the customer demand became an ordeal. As a result of this, manufacturers all over the globe felt the pressing requirements of increasing their domestic production and growing employment in their native countries. This was necessary to reduce their dependence on risky sources. As they re-evaluated all the factors, they also ended up minimising the amount of inventory held in their global supply chains. Inventory management in this aspect was, still is, quite significant. Despite the shift, many things continued to stay the same. Needless to say, especially in a recession, consumers want low prices. However, companies will not be able to charge more but their manufacturing costs will be higher. How do you get out of a situation like this without harming anyone?
Well, companies have to make sure that their supply chains are more resilient but at the same time, they shouldn’t weaken their abilities for competition. The competitive advantage is useful especially in times where things are being re-organised.
Supply chain management targets to solve several aspects of the generic process. Creating a rapid cycle of production, balancing the costs, evaluating the necessary work force and establishing a connection between the manufacturers and the customers. Production was interrupted during the pandemic and transportation was obstructed. Lockdown procedures were in place which made both manufacturing and transportation difficult. Logistics and transportation are vital aspects to supply chain management as well as inventory management. Hence the need to optimise and improve the post-pandemic supply chain procedures. Here are some areas to cover:
Supply and Demand Balance, Stock Management
Supply chain includes many steps which are original surveys, choosing, analysing, planning, stock check, purchasing, transportation, final product, inventory check, products and services ratio, delivery of the products or the services to the customers and getting feedback. Now that the pandemic is over, supply and demand sheets need to be balanced and stock management needs to be optimised according to current circumstances. Demand for some products is higher while some other products are demanded less in the post-pandemic period. That is why feedback collected from your customers matters for you so that you have to update your planning according to data analytics and optimise stock management. That way you’ll be able to supervise the entire supply chain process from purchasing to transportation and organise everything according to post-pandemic circumstances.
Solving Workforce Problems
Different fields of operation and branches of industry have a part in the supply chain. Some of them are product development, plant management, marketing, operations, logistics, customer relations and finance. The pandemic had a major impact on the workforce because of the economic volatility caused by the lockdowns. Travelling was banned and employees went through physical and psychological problems. This of course, created a workforce crisis. Each and every component of the supply chain needs to be conducted methodically in order to solve the work force problems. All service units need to be coordinated properly to overcome the work force related issues.
Investing in Technological Infrastructure and Integrated Information Systems
Despite its rarity, the pandemic became a global crisis quite rapidly and took hold of the world. It changed almost everything at work starting from the supply chain and affected many things in a negative way. At this point, with the impact of the pandemic, there are a few steps to take in order to tackle the effects. Technological infrastructure and systems integration are essential in order to increase operational productivity, to handle digital transformation, to provide data security and to optimise the digital interaction between different components of the supply chain. Technological infrastructure makes it easier to analyse all the procedures involving stock inventory, raw material, sales numbers and transportation. Instant access to frequently updated reports becomes easier and this allows the company to develop strategies according to post-pandemic conditions and annual inflation.
Devising Raw Material and Production Costs
Under the big umbrella of the supply chain, there are manufacturing facilities, factories, warehouses, retailers and distribution centres. The pandemic caused delays and cancellations in getting raw materials and/or products originating from production facilities abroad. It showed us how important it is to access raw materials and how sensitive and vulnerable production costs are. Access to raw material and production costs should be very well examined when planning a new supply chain.
There are a few bullet points we would like to address before completing the article. Planning the post-pandemic operations is important in the companies. Supply chain management is one of the most important aspects in planning. Here are a few additions to help with making the company’s supply chains more resilient without weakening the competitiveness of the company.
Understanding and Addressing the Hidden Risks
Most products today are made of components that are highly sophisticated. The manufacturers have to obtain them from different sources which force the manufacturers to depend on separate suppliers. This is not necessarily a bad thing: remember you are more vulnerable when you depend on a single supplier for your product. Flexibility allows you to reduce disruption costs.
Diversifying Your Supplier Base
Companies must consider a regional strategy of producing substantial key goods within the region they are consumed.
Holding Intermediate Inventory or Safety Stock Companies must also decide how much extra stock to hold although it has its risks, (obsolescence and tying up cash) it is still better to have a plan to reduce disruption costs and lost revenues.