Ramp-up of supply-chains,
Prepare your organization and supply chain for this
The corona crisis has a major impact on the current supply chains. Many see demand drop very sharply and others have to pull out all the stops because of the extremely high demand. There are shifts in volumes between different modalities in the supply chain.
The industries that have to process extra volumes because of the corona crisis have to go from sprint mode to marathon mode during the crisis, this transformation will continue for many, to "the new normal". The branches that have had to deal with a drop in demand must now prepare for a ramp-up of the demand after the Corona crisis.
Vulnerability of the current supply-chains:
Corona has demonstrated the vulnerability of current supply chains. Organizations now need to think about how they can improve the strength and response time in their supply chain, in order to be less vulnerable to another crisis. That is why many companies will revise their supply chain now. Nothing is the same as before the Corona crisis, that's for sure!
Revision of the current supply chain:
There needs to be a better understanding of the integral supply chain of companies. This can be achieved by drawing up the so-called Bill of Supplier. This is an overview where from source to final customer all involved "parent-suppliers" are mapped and from which "component supplier" they are sourcing. This insight prevents lead times from being unnecessarily long in chains, and also immediately shows the impact on a special situation in certain countries on the total supply chain.
It also means that better insight must be provided into who the key partners are in the Bill of Supplier. And subsequently determine and limit risks through dependence. In this way it becomes visible if a supplier uses parts which come from a risk area, crucial information that might not be available now.
The need to be able to intervene quickly in the supply chain has become even clearer, and with it the need for real-time information has become more important. That is why digitization of the supply chain will be accelerated.
When reviewing the supply chain, the focus will be on designing a more robust supply chain. Local-for-local and supplier spreading/Dual Sourcing are concepts that will then come into play.
The companies that have had to deal with an extreme increase in demand as a result of Corona will have to determine and organize the "new normal". For them it is important to search for new suppliers. In addition, it might be essential to organise physical goods flows in a different way, for example, (re)designing warehouses and processes.
The companies that have had to deal with an extreme drop in demand will experience an accelerated start-up of their supply chain (ramp-up) after the Corona crisis. This might result in:
- High pressure on the performance of the current organisation.
- High pressure from customers to meet the demand, which makes managing customer expectations crucial.
Managing the change through the ramp-up, this requires different management skills and different mindset of the organization than in the stable situation.
In order to get through this ramp-up properly, preparations need to be made now!
This article is written by Maarten Bongaerts and Thijs van Stuivenberg, both working as senior consultants for WeY Strategy Realisatie BV (www.wey.nl). Since 2003, the agency is specialised in managing changes in supply chain and operations for multinationals and large SME’s. WeY is for many companies the fire brigade for supply chain challenges.