Vito Calabretta, senior vice president of global operations with Tecsys, relates how supply chains are adjusting to the coronavirus pandemic, and how they might be permanently changed when it's over.
Not surprisingly, the COVID-19 pandemic has had an especially big impact on health and hospital supply chains. They were caught by surprise by the surge in demand for personal protective equipment, while operating rooms experienced demand in the opposite direction, given the virtual moratorium on elective surgeries during the lockdown period.
Don’t expect things ever to return to normal, if that means the previous state of affairs. The pandemic represents a turning point for supply chains, Calabretta says. Many will realize that single-sourcing strategies are no longer sustainable. They’ll be seeking a better balance of supply and demand, through a mixture of long-distance and local sourcing. The goal is to create more resilient supply chains in the face of any number of possible disruptions.
The change in philosophy will entail a shift from efficiency to resiliency. Global supply chains are learning that cost, important though it might be, isn’t everything. “If you can’t supply,” says Calabretta, “you don’t make any money.”
Whether companies will absorb that lesson or return to the old way of doing things remains to be seen. Still, they can’t help noticing that those businesses that were better prepared for the pandemic are in relatively better shape today. The key lies in achieving visibility of product from procurement through production and final consumption. Those who can glean potential problems in their supply chains can take proactive measures to mitigate their impact. In some cases, that might mean having some safety stock on hand to meet immediate needs.
Warehouses, too, must adjust, as the volume of direct-to-customer shipments increases.
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