5 Operational Actions Shippers Can Take to Build Resilience
As the COVID-19 crisis and focus spreads, specifically in the United States—leading the world in reported confirmed cases north of 124,000 as of March 29, 2020—businesses and supply chains continue to come under increased pressure and are put to the test on a daily basis. As shippers apply current lessons learned from the pandemic to rapidly establish proactive safety measures to protect their employees from the virus, they are also trying to stay afloat and operate their supply chains under the new normal.
At this point, many shippers have adopted and implemented new supply chain processes and tools from what we at Kearney called the “survive” phase, and begin shift to the “operate” phase, applying a more strategic lens. This translates into not just how to efficiently operate in the new business environment, but also how to make smart decisions and tradeoffs in the first few months and prepare for the next phases of the crisis.
Five operations-focused actions are recommended to build resilience and pave the way for success within this “operate” phase:
- Rethink your physical supply chain and decentralize as needed to offset critical risks: Identify the weakest link in your supply chain, as this will increasingly become your pivot hinge for success or failure as shocks and subsequent waves continue. Evaluate redesign and build of regional supply chains that can sustain full operations under severe economic stress by enabling sense and pivot and early triggers/alerts capabilities that can increase responsiveness, agility, and flexibility to proactively deflect risk.
- Accelerate your demand-planning and forecasting capabilities: Rapidly enable capability to constantly simulate demand-planning, forecasting, and inventory management and deployment what-if scenarios and reset of flexibility/efficiency cost-benefit tradeoffs and associated impact to sourcing, manufacturing, warehousing, and distribution functions. Shippers will need this to be close to reality and efficiently monitor cash, liquidity, and stress test capital requirements.
- Sharpen your performance metrics: Expand metrics beyond the traditional cost, quality, and delivery to include the 3 R’s: resilience, responsiveness, and reconfigurability.
- Prepare for increased e-commerce adoption and impact of new supply requirements: Reassess the reliability, transparency, and strength of your Tier 1 and 2 supplier relationships and reshuffle as needed to build more strategic partnerships that can reduce dependency, secure raw materials and components flexibly, and protect supply lines.
- Enhance automation and digitization: Prioritize investments that enable or increase 360-degree connectivity and visibility across materials, logistics, inventory, production, and capital within your supply chain, as well as automation within your factories and warehouses.