Covid-19 – where next for supply chain?

COVID-19 – where next for supply chain?

Beyond the human tragedy of Covid-19, the first half of 2020 taught us all a lot about ‘agility’ within our supply chains.   The rolling impact of manufacturing and retail shutdowns combined with travel and consumer restrictions, impacted consumer demand and disrupted the channel mix.  New requirements for PPE and social distancing created sourcing and operational challenges that will remain with us in the coming quarters.

For many companies, the first half of the year is traditionally quieter and as we prepare for the ‘Holiday’ season there are several areas that may require attention:

• Assess operational capability and consider actions to manage capacity and diversify risk – particularly in areas such as eCommerce and final mile delivery. Parcel demand rose by over 60% between March and June 2020, which will put pressure on the entire chain in managing a seasonal peak on already inflated demand.
  • Adding additional delivery options can improve consumer choice and create opportunities if individual partners run into difficulty
  • Improvements to order status visibility can proactively manage customer communications and expectations at peak times
• With uncertainty remaining, planning will need to accommodate a range of demand scenarios
  • Managing a slightly reduced product portfolio can allow for more flexibility in inventory policy without increasing overall exposure
  • Reduction in range can also drive operational efficiencies and can assist in managing social distancing requirements.

• Develop Covid-19 impact scenarios on key in house and partner operations.
  • Most companies have already taken precautions to minimise the risk of infection. Consider extending this to include contingencies in the event of the need to temporarily close key operations in the case of infection.
  • Engage with partners to understand their policies and how decisions would be managed and communicated.

Thinking beyond the short-term impacts, companies will want to consider how their supply chain reacted to the disruptions caused by Covid-19.

• The scale of disruption to global supply chain operations from Covid-19 is beyond what many would have anticipated within previous risk planning.  In many respects the scale of the pandemic tested the limits of existing risk plans and many will have been found wanting.
  • Companies may need to develop a more systematic approach to risk and resilience planning within supply chain operations and there are several useful frameworks that can be considered in that approach.
  • A refreshed assessment of supplier and customer risks may be required to understand the financial toll taken in many sectors from the pandemic
  • There may be some capabilities, developed to deal with the uncertainty of Covid-19 that companies will want to take forward into future supply chain processes.

• 2020 has seen an acceleration in a shift towards digital channels – much of which may continue beyond the immediate impact of Covid-19.
  • This will require an alignment channel strategy and operational capabilities to meet this demand.
  • There have been several casualties within high street retail and a rethink of role of retail within the customer purchase experience will need to be developed.

• The changed economic landscape is likely to drive a more urgent need to accelerate transformation to improve cost to serve or to take advantage of emerging market opportunities