How can we better formulate to minimize the jeopardies that mitigate present and ease their impact? Here is how to build a more elastic and agile supply chain, shares Subrata Ghosh, Director - Global Fulfilment and Supply Chain Operations, Enphase Energy (Solar Energy Company).
The year 2020 has had an evil and uneven start. With COVID-19, we have seen the domino effect of disruption on global logistics and supply chains. And we know similar risks are being posed by natural disasters like the bushfires in Australia, economic factors like dropping stocks and tariff wars, political disruption like Crimea and Ukraine, and labour factor like driver shortages worldwide. These events confirm how interconnected we all are—irrespective of geography.
While it's difficult to predict the short- and long-term impacts of these types of supply chain disruptions, we can learn from the impacts of past events (Brexit, Hurricane Katrina, SARS outbreak, the earthquake and tsunami in Japan, etc.) to better prepare for future events and build contingency plans—especially as we recognize disruptions of all types seem to be happening more frequently.
Most companies' supply chains operate very lean today, and it makes them more vulnerable to disruptions. How can we better prepare to minimize the risks that disruptions present and mitigate their impact on our supply chain and logistic? How can we make supply chains more dynamic in order to respond to changes such as a loss of supplier or a logistics service provider?
Regardless of your business or vertical, there are ways to build a more flexible and agile supply chain:
PLANNING: Strategic planning, simulations, and optimization exercises should identify and evaluate contingencies IF NEEDED so they can be implemented WHEN NEEDED. Building various types of disruption scenarios into supply chain modelling is key—especially when needing to identify routes for carriers outside your preferred network, reposition inventories of available resources/product, or reallocate limited or constrained capacities.
READINESS THROUGH RECREATION: Practicing contingency responses delivers perspective and the ability to make informed, data-based decisions—not reactive ones. The ability to perform strategic, tactical, and dynamic planning using real-time, current-state data is essential to minimizing the impact of disruptions to supply chains.
APPROACHABLE FREIGHT WINNING: Responding to supply chain disruptions may require sourcing new carriers. In the case of the coronavirus, China suppliers are impacted. As a result, companies need to rely heavily on secondary suppliers and source transportation accordingly. The skill to build a new preferred carrier network or analyze different modes of transportation is looked-for to ensure the most cost-effective options are on the board. Spot bidding capabilities allow access to alternate carriers if contracted backup carriers are not enough to meet current needs.
Supply chain disruptions pose great risks to corporate bottom lines but can also be used to uncover real opportunities to effectively mitigate the impact of these events. Conducting proper analysis in advance can help companies better prepare for what lies ahead. Is there an overdependence on a finite set of suppliers or carriers? Would near-sourcing or second sourcing a subset cost more but incorporate more resiliency into the supply chain—which could cost less long term?
By building flexibility and balance into supply chains, companies can minimize their weakness and decrease the impact of the next challenge we will face. Do not let the prospect to learn from present disruptions passing through world.
About the Author
Subrata Ghosh possesses over 20+ years of rich experience in Logistics and Supply Chain in FMCG, Mobiles, Telecom & Telecom Project, Professional & Consumer Electronics Industry, Medical Equipment and Renewable Energy. His areas of expertise include strategic sourcing; procurement / purchase; contract management; warehouse /inventory control; vendor management; strategic planning, to name a few. He is a B.Com Graduate from Burdwan University and has completed MBA in (Dual Electives) Logistics & Supply Chain / Material Management from NIBM and MDP – Business Communication & Presentation from IIM Calcutta.