First there were delivery bottlenecks in China. Then changes in consumer behavior. Then lockdowns across the globe. The coronavirus pandemic has exposed vulnerabilities in the supply chains of organizations worldwide. In response, many are reviewing their strategies – and looking for ways to make their operations more resilient and future-proof.
Lean inventories, just-in-time production, and as few suppliers as possible: these have long been the default approach to supply chains. Above all, the search for the best price has been the key priority. However, this can lead to dependencies on individual suppliers, factories and regions. And it was precisely this that tripped up companies when the COVID-19 pandemic hit.
Ready for the unexpected
Especially in the early stages of the pandemic, some sectors saw demand soar – particularly for food, hygiene and cleaning products. Manufacturers had to ramp up production of certain items to meet changing consumer requirements as quickly as possible. Yet many existing supply chain models were too inflexible, and unable to overcome these new challenges at the speed needed.
Even in industries where demand patterns did not change, there were other hurdles: in many cases, production had to be shut down because regional lockdowns hindered deliveries of vital components.
Identifying weaknesses, diversifying supply
Some serious restructuring is needed. Many businesses are taking a long, hard look at their supply chain to identify risks and vulnerabilities. And it is revealing that, in times of crisis, the best-placed organizations are those with a broad network of suppliers. That means, for instance, not only working with multiple suppliers, but also with suppliers in multiple regions.
Supply chains can grind to a halt at local level for a variety of reasons: political and economic developments, and natural disasters, to name just a few. Finding the right supplier does not necessarily mean looking in far-off countries – time and again, regionally made and sourced goods have proven resilient.
In other words, being prepared means taking the steps to ensure flexibility.
More direct, more transparent, more flexible
Monitoring existing supply chains from end to end is time-intensive yet remarkably effective. It enables businesses to identify at an early stage what impact, for instance, a shortage of raw materials could have on essential components. An alternative, according to 3D Hubs’ Supply Chain Resilience Report 2020, is to establish close relationships with tier-one suppliers, i.e. companies that deliver directly to OEMs. This makes it easier to detect potential issues in the supply chain early on.
In any case, it is clear that the ongoing coronavirus pandemic is presenting companies with a variety of challenges – that will, in turn, shape tomorrow’s supply chains.
Find out in the second part of our Supply Chains and COVID-19 series how state-of-the-art technology can help streamline supply chains and make them more resilient.