The COVID-19 pandemic challenged many assumptions we had about how businesses should operate. As employees were forced into their homes to reduce the spread of the virus, companies had to find new and innovative ways to allow their employees to continue working or risk going out of business. One of the biggest challenges came as people were forced to order more products for delivering, making the already stressful situation even harder on key links in the supply chain. As we move out of COVID-19, we must be sure not to forget the lessons we learned, lest we be taken by surprise by the next unforeseen event.
Understanding How COVID-19 Impacted Supply Chains
To learn from the mistakes of the past, you must start by analyzing what went wrong. COVID-19 was a perfect storm hitting our supply chains. There has been plenty of analysis done on how the pandemic affected the transportation of goods, but largely it boils down to supply and demand. Producing goods, and shipping them, both require workers in close contact with one another. The pandemic made that impossible and reduced labor. At the same time, more people were ordering goods for delivery, and those who went out were stockpiling non-perishable items at higher rates than before.
Evolving Supply Chains to Better Handle Disruptions
Like many other aspects of running a business during a pandemic, there were lessons that were learned on the fly the hard way: adaptations that were made to readjust to the temporary new reality. Other lessons come from the failures that led to that reality: steps that can be taken to mitigate the effects so things aren’t as bad should another worldwide emergency hit the globe.
1. Centralize Your Supply Operations
Ensuring maximum supply chain agility means ensuring maximum supply chain transparency. Before COVID-19 hit, the supply chain at many businesses was fragmented. It required repeated reviews and approvals from several people, each who may or may not have had access to the data that the others were using. Using a centralized supply chain management tool like StockIQ is vital to providing the type of supply chain visibility and flexibility required to make quick decisions in rapidly changing circumstances.
2. Make Better Demand Forecasts
Inventory-based businesses often struggle with keeping the right amount of stock on hand even in the best of times. This leads to space being taken up by some products in warehouses that could be put to better use, and other products being unavailable to fulfill consumer demand. Understanding these fluctuations requires accurate stock levels forecasting. While these features can’t predict the unforeseeable, they can help ensure you aren’t starting from a disadvantage when it does, and help you manage your stock levels efficiently as the situation unfolds.
3. Put Risk Management Front and Center
Risk management is all about looking at trends that are happening and predicting how negative factors will play out before they become a big problem. While no risk management solution is a crystal ball, having one in place will allow you to plan for unforeseen events before they happen so you’ll have an action plan in place ready to follow when they do. Risk management will also give you a heads-up when warning signs begin to show, so you can begin putting your plan in place early.
4. Implement Tabletop Exercises
Schools don’t wait until a fire hits to teach children how to safely exit the building. Nor do they rely on verbal instruction alone. Fire drills are an important part of every schoolchild’s life. Tabletop exercises, are what FEMA calls the steps a business takes to practice putting their own emergency action plans into place. While they are often much more involved than fire drills, the concept is the same: to keep your staff on their toes and prepared for when the unthinkable happens. They make an effective addition to any risk-management strategy.
5. Switch Focus from Cost Savings to Revenue Assurance
Few businesses are willing to sacrifice quality to save money, but cost saving has always been a close second concern to quality. The problem is that maximizing for cost savings isn’t the same as maximizing for revenue assurance. In an insightful post by Futurum Research, they point out the need to place supply chain reliability and stability ahead of cost savings in the priority list. This is beneficial for ordinary ups and downs, but an absolute requirement if your business is going to have the best chance of weathering the next big disruption.
6. Regionalize Your Supply Chain
As stated in this article from MIT, globalized supply chains are beginning to fall out of favor, for exactly the reasons highlighted by the pandemic. The further a product has to travel to get to its destination, the longer it is going to take and the more people it will require getting there. In times of severe supply chain problems, these problems are only amplified. Pulling your supply chain closer may cost more money in the short term, but it will provide you with the exact type of stability we discussed in the cost savings versus revenue assurance section above.
7. Diversify Supply Chains
Regionalizing your supply chain is like bringing your basket of eggs closer to you. But you still have the problem of having all your eggs in one basket. It’s important to supply chain agility for you to branch out and expand your number of suppliers, so when problems with one arise, there are others already in place to take up the slack. This can prevent minor hiccups and minimize the impact of major ones.
8. Communicate More Closely with Suppliers
Ideally, your suppliers are coming to the same realizations as you are and will be taking steps to perform their own risk management. By staying in close communication with suppliers, you can see what plans they have in place for if something goes wrong, but you can also get a heads-up when things may go wrong, allowing you to adapt on the fly. A platform like StockIQ will allow you to get an at-a-glance overview of how suppliers are performing and provide you with the tools you need to manage those relationships.
Building a More Efficient Supply Chain with StockIQ
While we all hope that COVID-19 and its unprecedented impact on our lives was a once in a lifetime occurrence, we can’t count on that. Nor can we continue to operate our businesses in a way that will disadvantage its future generations of leaders. The pandemic has made it clear that it’s time to change the way we approach supply chain management. These are precisely the types of issues that StockIQ was designed to help you deal with. Contact us to learn more.
