5 Ways Businesses Are Adapting Their Supply Chains Due To COVID-19
In addition to its humanitarian impact, COVID-19 has affected businesses worldwide, including those throughout the supply chain.
With an increased need for essential goods, changes in consumer purchasing and habits resulting from isolation requirements, and full lockdowns in some regions, it’s been a turbulent few months for businesses in the supply chain field.
An open survey by Supply Chain Canada reported 70% of respondents experienced disruptions to their supply chains due to COVID-19.
Here are five broad ways businesses within the supply chain are adapting and changing their operations in light of the pandemic.
1. Taking Steps To Protect Workers
Despite many closures due to COVID-19, supply chains are still operating and are perhaps more critical than ever when it comes to necessities like food and medicine. For example, here in Canada, the government has outlined that in many cases supply chain operations are essential to Canada’s critical infrastructure throughout the pandemic.
It is vital that warehouse workers, delivery drivers, and all other employees are well well-protected as they continue to go to work.
Companies have been implementing new warehouse safety standards which include the use of gloves and masks, physical distancing, and disinfecting procedures.
2. Switching Gears To Join The Fight Against COVID-19
Manufacturers, distributors, and retailers have all adapted to fight against and prevent the spread of COVID-19.
As early as March, observers said that "not since World War II have so many companies in the business of making cars, clothes, or other items been asked to switch up their production lines for the common good."
Since then, even more manufacturers have altered their operations and facilities to create essential protective equipment supplies for medical facilities.
A recent Business Insider article outlines some well-known companies who are switching up their operations to help the common good.
- Dyson, Ford, GE, and Virgin Orbit have started working on ventilators.
- General Motors and fashion designers Brandon Maxwell and Christian Siriano have begun making personal protective equipment, such as masks and gowns.
- Perfume manufacturers and alcohol manufacturers like Absolut and Jameson have been converting facilities to produce hand sanitizers.
Experts suggest these changes occur most quickly and effectively when a manufacturer pivots within its core capabilities.
Distributors are seeing increased demand in certain areas of their centers, and retraining and redeploying staff to meet these needs.
Additionally, many distributors who typically supply businesses which are now closed have started redirecting products to consumers through online ordering or opening up their doors for curbside pickup.
This has been especially apparent in the foodservice space where the closure of restaurants coincided with an increased need for home delivery. Across North America, distributors from Sysco and US Foods and FoodMaven, to smaller niche food distributors have started selling directly to consumers who are self-isolating. Here at Routeique, we teamed up with a group of B2B distributors to create CalgaryGrocery.ca, an initiative enabling them to pivot to B2C and deliver staple foods to Calgarians at home.
Retailers in the B2B space have been making changes to their operations in light of social distancing requirements. Like distributors, retailers have adopted no-contact processes, such as online ordering, curbside pickup, and home delivery.
Management consulting firm McKinsey & Company has stated that a leading retailer they surveyed is taking measures including:
- recalibrating product orders to line up with consumer demand
- working towards securing a fast, reliable supply in areas such as food, drug, and other key categories
- redirecting resources--both funds and staff--to address the most essential and immediate needs
3. Following Preparedness Plans
Private companies typically have playbooks for supply chain disruptions in their network, which they can follow when upheavals occur. According to large manufacturers like Johnson and Johnson, it's critical to have these robust business continuity plans to prepare for unforeseen events, and to meet the needs of those who depend on their products.
"These steps include maintaining key inventory at major distribution centers away from high-risk areas and working with external suppliers to support our preparedness plans," says Kathy Wengel, executive vice president & chief global supply chain officer at Johnson & Johnson.
4. Planning For The Future: Creating Supply Chain Resilience
Those in the industry aren't just implementing existing preparedness plans, but are looking at ways to maintain strong supply chains both now and in the future.
Similarly, Tim Kraft of North Carolina State University notes that the "Triple-A" approach (agility, adaptability, and alignment, rather than a pure focus on speed or cost) to supply chains has "never felt more relevant".
In the coming weeks, businesses without a plan in place to deal with the current disruptions (in a survey by the Institute for Supply Management, this number was 44% of respondents) will likely spend time developing and deploying contingency plans, as well as putting new processes and approaches in place for the future.
- Bloomberg suggests that modes of supply chain risk modelling might change.
- These new risk models could take into account not only the effects of natural disasters and other localized disruptions, but widespread, worldwide jolts like the current pandemic.
- Supply Chain Dive emphasizes the importance of scenario-planning ("what ifs") and dual sourcing.
- They also suggest comprehensive supply chain mapping, which would allow companies to pinpoint an exact source of disruption and assess how to react accordingly.
These tactics, among others, can help businesses and supply chains remain robust as time goes on.
5. Planning For The Future: Using Technology To Create Stronger Supply Chains
Most businesses immediately turned to technology as they began adapting their operations, enabling remote workforces, and setting up online stores.
Additionally, companies and experts alike are beginning to look at how technology can be used long-term to mitigate the effects of COVID-19, as well as any future disruptions of the supply of essential goods.
- Deloitte states that "new supply chain technologies are emerging that can dramatically improve visibility (...) and support much more supply chain agility and resilience, without the traditional 'overhead' associated with risk management techniques."
- An April article from Forbes predicts that blockchain technology will create more proactive and more reliable supply chains in response to Covid-19 and beyond. They state that “this technology gives its users not only a high degree of data visibility but also a belief in transaction accuracy.”
Putting It All Together
At Routeique, we’re helping businesses build a virtualized network of their partners, track their inventory, gain supply chain visibility, and optimize deliveries as they cope with changes in customer demand and disruptions in their usual operations.
In these complicated times, we're here to provide you with updates and info you need to adapt to the current supply chain landscape.