Re-designing the Post COVID Global Supply Chain

The global pandemic as we know it brought the world to its heels with companies facing slow down in business operations, client acquisition, the fulfilment of customer orders and service delivery. Now at first glance, these issues may look more financial than operational but the reality is quite different. The financial weakness came in as a consequence of business slowdown but one of the major factors that caused the business operations to slow down was the broken global supply chain.

You might be wondering that the virus initially originated from Central Chinese city Wuhan and slowly spread across the globe, right? That’s the problem right there. China along with developing economies like Vietnam and Taiwan form the major industrial hubs of the world for low-cost components and sub-parts manufacturing. In fact, China is touted to be the ‘factory of the world’. So, a virus led to global economies stopping any imports from China and hence all imports including various tools, components and product subparts were halted and there was no way of getting them to their required destinations. Suddenly the globalized world felt walled up.

As per a survey by The Institute for Supply Chain Management, almost 75% of companies reported supply chain disruptions in one form or the other due to coronavirus. An interesting question here would now be, given that businesses are hampered and global supply chains have failed, what should the next step be? How do businesses build more resilient supply chains?

This answer to this in broad umbrella terms is: Digitalization of supply chains worldwide

This can be achieved firstly, reducing human dependency in transportation, logistics and warehousing. What this means is the lesser the entire cycle of operations is human dependant, the easier it will be to deal with business uncertainty in the future and managers can control the supply chain remotely from wherever they are. This can be done through Industry 4.0 technologies being integrated into the supply chain systems. Smart supply chain systems with AI and ML backed demand forecasting would definitely improve lead times and take care of inventory planning even from remote locations. The use of autonomous devices like AGVs and drones would need to be used more to enable controlling of warehouse operations from both on and off-site.

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Another probable change that business analysts see being incorporated into supply chain management is the concept of modular production which means making production lines capable of communicating with each other and adjusting output capacity on their lines based on the demand of goods to be manufactured. This is part of a longer-term business strategy to shift a major chunk of critical supply chain control systems online for better access, management and optimization of factories for consumer goods and other industrial products.

Formation of a digital thread is another attempt that businesses worldwide are making to create an integrated value chain that facilitates collaboration and coordination between all activities involved in the manufacturing cycle of a product. What a digital thread basically means is that all product-related information such as design, manufacture, volume, rework and supervision will be shared both upstream and downstream with all parties involved in the manufacturing of a product. Such a mechanism is being developed with the aim of making supply chains more interactive and responsive in case of uncertainty.

Lastly, hyper customization is undoubtedly touted to be the future of manufacturing enabling customer requirements to be directly traced to the specific product’s supply chain. So, a customer ordering his favorite t-shirt is no longer just on the website of a retailer that is listing quantity or designs available at the customer’s nearest brand warehouse but rather the website allows the customer to place an order for his preferred t-shirt and the order is sourced through a centralized distribution system. The t-shirt which is to be delivered in Gujarat may be coming from the brand’s warehouse in Bengaluru due to the availability of that particular size or design there. This feature is what has empowered customers online and e-commerce platforms have leveraged their ability to operate using smart supply chain systems and thus not be as impacted by the pandemic as local retailers or linear supply chain oriented businesses.

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These are the 4 key trends that are changing the face of supply chain management as companies move into the post-pandemic era with crucial lessons learned about incorporating a digital modus operandi in their business to enable smarter, remote and uninterrupted business operations in the future. Moreover, the end goal of every business is to satisfy its customers and bag profits, right? Smarter supply chains are both efficient and customer-oriented!

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