Supply chain disruptions create scary and uncertain times for businesses. Sometimes, these disruptions are small and localized, it may affect only a few business or industries. But when the supply chain is disrupted by local events like natural disasters, global events (like pandemics), suddenly the magic seems like it was all smoke and mirrors.
A supply chain management could be defined as- “It is any sudden change or crisis which negatively impacts any process”.
The COVID-19 global pandemic has caused a major upheaval in the supply chains of many businesses in the world. “In a study, almost 75% of the 628 businesses surveyed had experienced supply chain disruptions as a result of the COVID-19 outbreak. In this same survey, 57% of respondents said they were facing longer lead times for orders with suppliers in China. (Institute for Supply Management)”
The spread of COVID-19 has become a top risk for supply chain managers which is now being felt across the multiple industries and businesses. This impact has become global in nature ad is very challenging for the managers to model and evaluate.
So, here some measures should be taken by HR Managers to manage the supply chain:
Recommending some short actions-
Material criticality- To focus and to understand the material criticality in order to assess how production process may be impacted and made more efficient. Material criticality is going to be an essential factor in the industrial production process.
Transportation mode and supply demand balance- By evaluating using other modes of transportation to reduce replenishment times. Focusing on balancing of supply and demand by building buffer stock as necessary.
Supplier- Centric Procurement- Moving towards a supplier centric approach to procurement, hence, this practice drive 26% more savings than focusing solely on price reductions. This will allow integrate towards environment, contribute to business, product and category innovation.
Supplier diversification- Diversifying the sources can be the safety net that will ensure cutting edge products and service availability. Another benefit is being able to have a database of qualified suppliers, enabling opportunity in a variety of scenarios.
By analyzing the prices, location, and range of goods provided by each supplier. It just not about to have multiple sources. It encourages businesses to connect with smaller suppliers. Considerations should be given to dual sourcing for critical components.
Supplier stabilization- Support suppliers, contracts and relationships with manufacturing closer to the point of purchase. Explore the strategies to “buy where you make, and make where you sell.”
Supply chain risk monitoring- Utilizing the risk evaluation and monitoring tools that use machine learning techniques to predict patterns that indicate the exposure to various risks.
Recommending some long actions-
Identify and repair broken links in the supply chain- Companies need to maintain regular contact with suppliers regarding their capability to deliver goods and services. Most companies are likely to experience significant disruptions and throughout the duration of the COVID-19 crisis.
Reimagining the supply chain model, leverage digital ecosystems and market networks, and enable newer forms of collaboration to work around disrupted supply chains.
Conduct a scenario planning and develop action plans- Once the initial impacts of the crisis are mitigated, it’s all about foreseeing the next ‘when’. The leaders and managers can take a proper planning and develop all the actions which are to be performed. Organization routinely complete financial plans to ensure they achieve organizational goals.
For example, coordinating assets to optimize the delivery of goods, services from supplier to customer and balancing the demand and supply. Proper collaborative planning which should include forecasting and replenishment
Most important to make the move to real time supply chain planning, anticipate the demand of the end customer. Example, based on the previous year’s numbers, a company can estimate the number of products it will sell in the next quarter. But what is a disruption leading to too little supply on the shelves? So, with a proper real time solution, it can be created scenarios and plan more effectively so the one is ready for any disruptions.
Tackle strategic and concentrated supplies- So, tackling strategic and concentrated supplies with the high value of risk where internal risk capabilities to absorb, such as alternative sources, routes, inventory and cash reserves which aren’t sufficient to mitigate any disruption. So, being fully prepared there might open new opportunities when the next disruption comes around.
For Example, in a company there is a HR strategy with HR mission statement with vision and some disruption caused while not keeping those points in mind and also not maintaining a proper conduct with the suppliers so, by keeping these words in mind a manager have to concrete with high level actions about how to execute and tackling the situation and creating a proper conduct with the suppliers.
Keep expenses in check and have backups for budget deficits- Firstly, determine how the crisis affects budgets and the business plans. If the impact is material and former budget assumptions and business plans are no longer relevant, remain agile and revise them properly. Secondly, keeping proper records so that afterwards there is no problem and if there is any disruption there should be a proper back up plan for future.
Where the business is significantly impacted, consider minimum operating requirements , including key dependencies of workforce, location and technology. At the same time, review overall operating costs and consider slowing down all nonessential expenses.
For a lot of organization, the highly impacted regions are at the heart of many global supply chains. Although it is very difficult to predict the exact consequences of COVID-19, organizations have to plan for material shortages which are routed from logistical hubs impacted areas.
To survive the business even in the event of crisis HR managers have to kept these points in their mind so that there is no problem in the future or any crisis is there. One should addresses employees well being too.