When the scourge of COVID-19 started, China was the first to get severely impacted and given its role as the world’s factory, the ripples in the global supply chain were felt far and wide. This only complicated further, as the pandemic soared rapidly throughout the world. Supply Chains globally have taken a significant beating. While we don’t yet know how long it will be before we leave the pandemic behind us, what is clear is, that the global Supply Chain will see changes far and wide. we will emerge on the other side to what is now increasingly acknowledged as the “New Normal”.
Every facet of Supply Chain has been challenged by the current situation. While on one hand, concepts such as JIT and Lean are causing shutdowns in factories due to paucity of raw material, on the other, unsold inventory is incurring significant storage costs and running risks of expiry. Forecasting tools are being severely tested, with planners finding it difficult to gauge demand and plan supplies. To add to this mayhem, factories are severely limited due to mass exodus of labor.
Within this ensuing chaos, however, lie opportunities like never before. The fundamentals of Supply Chain will be rewritten to be able to cater to circumstances not envisaged before. At the heart of it would be the ability to embrace ambiguity and build agility.
Robust scenario planning will have to factor potential disruptions rather than a repeat of plain historical demand. On the supply side, redundancy will need to be built in intelligently. Too little, and the demand will not be met. Too much, and companies will run out of working capital.
Agility and transparency enabled by digitalization will assume a central role. While several traditional tools and even entire industries will see a swift demise, several new ones will rise. Winners will clearly be those who are not only embracing this change but are a step ahead of it.