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Supply chain recovery post-COVID-19: Risk, disruption and tech

The coronavirus pandemic exposed the fragility of global supply chains and leaders must turn their attention to boosting resiliency. Here's how to start.

The coronavirus pandemic disrupted supply chains across the globe, and suddenly everyone is paying more attention to what was an overlooked subject just months ago.

Whether you're in the C-suite or a supply chain manager, you need to reevaluate your supply chain strategy and make sure you're applying the right technology and processes to recover in a post-COVID-19 world.

COVID-19 and the global supply chain disruption

China was the first country to be hit by the coronavirus. When it shut down, companies across the world -- including giants such as Apple -- paid the price. Some companies scrambled to diversify their supplier bases to meet surging demand. Others scrambled to find lower-cost resources or change existing orders in an attempt to address changing or decreasing customer demands. And as coronavirus outbreaks hit other countries, supply chains throughout the world suffered.

Learning from past supply chain disruptions

In the 1990s, supply chain management was a hot topic. As globalization became the new normal of the time, companies moved manufacturing to lower-cost countries across the globe. Business technology implementations were focused on integrating and providing visibility to these new global supply chains.

In the 2000s and 2010s, however, much of the world had put its attention on newer technologies. E-commerce entered the global conversation in the 2000s, while the 2010s saw the rise of cloud computing, predictive analytics, blockchain and other technology innovations. Supply chain management was largely in the shadows of these exciting new technologies.

But when COVID-19 disrupted the delivery of essential goods such as food, pharmaceuticals, healthcare and even toilet paper, virtually everyone gave the supply chain more attention.

Supply chain vulnerability shouldn't have been hard to spot. But hindsight is always 20/20. Procurement departments are constantly tracking tariffs, geopolitical, weather-related, and other catastrophic risks, but they didn't anticipate the magnitude of a pandemic such as this one.

Looking at the state of current supply chains, it is clear that companies had the intelligence to know that they had concentrated too much supply chain risk in too few areas. They failed to recognize the tradeoff between lower cost versus flexibility and adaptability. Yet most had the data at their fingertips -- either in their ERP systems, supply chain management software or other technologies.

Boosting supply chain resiliency now

The global supply chain is broken, and chances are your company's supply chain management has room for improvement.

Now is a great time to revisit your overarching supply chain management strategy. Ask yourself questions such as:

  • Do we have adequate technology and data to help us anticipate supply chain risks in the future? What other technologies might help us better prepare for supply chain disruptions in the future?
  • Are we using technology appropriately for supply chain optimization? Could our organization better adopt and embrace the capabilities of either new or existing technologies that we already own?
  • How can we better align our business processes to take advantage of some of these technological capabilities?
  • How can we better mine data and predictive analytics to provide insight on potential supply chain risks or bottlenecks in the future?
  • How can we build more flexibility and adaptability into our global supply chains?

Answering questions like these can help you identify ways to boost supply chain resiliency. When embarking on this soul-searching, don't expect that technology will provide a silver bullet. Instead, ask yourself how you can improve business processes and organizational capabilities, then look for ways that supply chain management technology can enable some of those changes.

Who is responsible for this? Chances are, it may be your COO or supply chain leader. For other companies, it may be your CIO or CFO. This is a cross-functional problem requiring cross-functional support across a variety of stakeholders within your company, so be sure to take the time to involve those that need to be part of the solution. Engage outside supply chain and transformation experts if that helps.

Engaging your suppliers is also critical. Transforming your supply chain will require as much change from your external suppliers as it will from your internal employees. When designing your change management and communications strategies for the overall transformation, be sure to include your outside suppliers in the process. This will ensure that they are partners in the process rather than adversaries.

Supply chain software options

A number of technologies can fuel supply chain transformations that will help your company compete in the 2020s.

Traditional ERP systems such as SAP S/4HANA, Oracle ERP Cloud or Microsoft Dynamics 365 can automate and integrate supply chains within the context of broader enterprise-wide integration. These tend to have broader capabilities than more niche-focused systems, but they and other ERP systems may or may not be able to handle the complexities of your global supply chain needs.

More focused supply chain management systems are another option. Software vendors such as Blue Yonder, Manhattan Associates and Infor Nexus can provide more focused and stronger supply chain management capabilities. The downside is that they typically aren't able to handle more diverse needs outside supply chain management, such as manufacturing, customer service or financials.

Avoiding future supply chain disruptions

None of us can predict the future, but we can learn from the past and better prepare for what we don't know. While it is clear now that many supply chains had become complacent in recent years, the urgency is greater than ever to create a supply chain that is conditioned for the future.

The silver lining is that we have the past history, intelligence and technology to solve supply chain disruption. You can use that to put the pieces together, create a solid strategy and execute on a supply chain transformation plan that makes the most sense for your organization.

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