As supply-chain managers begin working toward a new normal after the COVID-19 crisis, they’ll be trying to understand dynamics they haven’t encountered prior to this pandemic — not the least of which is how their vendors and customers are handling their restart, and how the marketplace is going to rebound. Will demand be recharged, or are we looking at a slow start that grows in momentum more deliberately?
In either case, there will be pressure to think ahead and quickly process those variables, as companies struggle to recalibrate and return to profitability. Planning will require greater precision, and supply-chain managers will need to process data in real time, to align the business with the supply chain. Once demand picks up, businesses will have to be agile enough to respond to a quickly changing environment.
With so many variables to account for, here are five suggested steps for stabilizing supply-chain operations, optimizing throughput, and maximizing profits in the coming weeks as the economy reopens.
Get a head start in planning. First, assess both inbound and outbound supply chains, and understand your inventory and work in process. Do you believe your tracking data is correct, or do you need to conduct a physical inventory? Imagine two weeks after the COVID-19 restart, when you discover pick orders that didn’t get entered or processed in the last week before the shutdown. If you had work in process at shutdown, did it go through the appropriate quality check before the shift ended? Further, don’t consider just the material aspects. Look at the time and cost of international shipments, as they might be different than pre-crisis. Since many pockets of the country are going through the curve at different rates and times, global commodities are likely to see a whiplash effect as stockpiles of raw materials head to new markets.
Also, set aside time to develop an alternative sourcing strategy, and push for 100% transparency in supply-chain tracking. After that strategy is developed, risk-assess it by asking questions, such as what happens if the U.S. and China implement new tariffs? And what financial risks do I have with currency translations?
Understand desired talent skills. Identify the critical skills and roles in your manufacturing process, and consider reassessing those jobs whose functions were redefined by the crisis. Develop a depth chart for these roles, and evaluate the weak points. Next, create a training plan to fill in skills gaps, but also consider augmenting your team with people who have proven expertise that matches your business’s critical needs.
Recruiters should look across industries for skills that align with your new needs and can increase the team’s overall strength. For a start, look at program managers, supply-chain leaders, and support roles. Staff augmentation can be a boost to the bottom line, with direct support or even as a team function with coaching by a seasoned veteran.
Connect to the supply chain with increased engagement. Chances are that pushing for 100% transparency in your supply chain is an immensely challenging task, but you can get there with a plan and by improving your processes. With new stresses and unknowns being faced daily, it makes sense to add methods and tools to gain visibility. Work with your upstream vendors and downstream customers; they’re facing the same changes and challenges as you. Talk to them frequently, and ensure that the entire process works seamlessly toward establishing an achievable schedule, every day for every shift.
Put the emphasis on safety. A successful restart is going to require adapting your production and inventory-management practices for the impacts of social distancing, guards and barriers, as well as sanitizing workspaces, people, tools, inventory and finished goods. Any time you re-engineer a workflow or production space, add safety into every step. We recommend applying a 5S review to operating a facility, while keeping people safe from common injury vulnerabilities and the coronavirus. Also, safety walkthroughs are critical, especially if changes have been made on the plant floor and people are in new roles. Look at new traffic patterns and areas where new work-in-progress stocks are created. Further, consider what will happen to personal protective equipment (PPE) supply and demand as industries restart around the world.
Understand investment-tradeoff effects on the supply chain. Lastly, understand risks of capital debt versus reinvestment. Can your post-COVID-19 supply chain grow to meet this incremental addition of capacity? Throwing in additional production capacity requires diligence in and of itself. Some industries deal with great tools and methods and have detailed playbooks. Some of these could help your team not only meet the challenges of a COVID-19 supply chain, but also grow stronger.
As businesses start planning for the restart, they have only one chance to get it right. Consider these steps to get your business back to normal.
Bill Currence is president, managing partner and founder of Cornerstone Consulting Organization.
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