Jeff Jorge, principal with Baker Tilly, lays out five critical ways in which supply chains must adapt in the wake of the coronavirus pandemic and economic downturn.
To meet the difficult challenges of the present day, supply chains must transform in multiple ways. First is the need to “inject flexibility.” Jorge calls it “yoga for your supply chain.” Suppliers that are regionally concentrated expose buyers to a high degree of risk. “If there’s a choke point in your supply chain and you don’t have a lot of flexibility elsewhere,” he says, “it becomes very difficult to operate.” Companies need to take a hard look at potential points of rigidity within their supply chains.
American manufacturers that have based production in China and other offshore locations should consider the case for onshoring back to the U.S. — but the decision shouldn’t be an automatic one. Those with labor-intensive operations might find it necessary to stay offshore in locations that offer cheaper production. Those that are capital-intensive and highly automated, by contrast, could discover that relocating operations to the U.S. is a sound move.
“Put the unknowns to work,” Jorge advises, so that challenges become opportunities. Companies should take adverse events as a chance to strengthen the organization, possibly discovering new markets and production strategies to serve them.
For those with complex, multi-country supply chains, it’s especially important to increase visibility over every stage of the process. With such information in hand, they can move from being reactive to anticipatory, able to get around disruptions that would cripple other organizations.
Finally, Jorge advises companies to “decentralize and empower” their organizations, so as to respond more quickly to any disruptions. In-house teams that are empowered to make key decisions can more readily adopt the necessary measures for survival.
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