COVID-19: What lessons can we learn for supply chain resilience?

Within supply chain management, a distinction is drawn between efficient supply chains that emphasise cost and agile supply chains that emphasise speed. To determine the appropriate supply chain for an organisation’s product depends upon the nature of demand for it.

But why is this relevant now? You are almost certainly aware of stock outs in supermarkets for certain products such as toilet paper and flour and the shortage of personal protective equipment (PPE) due to COVID-19. If we map these types of products against Fisher’s supply chain matrix, we can start to gain an understanding as to why we are seeing this.

A number of manufacturers use single sourcing strategies either for strategic reasons or simply for ease. However, as we have witnessed during the pandemic, if a manufacturer single sources from one supplier or one region, they are at particular risk of stock outs if their supplier’s production halts. Given the risks of single sourcing COVID-19 exposed, we might see manufacturers move toward multiple sourcing from different suppliers and regions to mitigate any future risk.

Finally, will we see manufacturers invest in advanced technologies such as additive manufacturing (3D printing), blockchain and robotics, on top of the IoT mentioned earlier. During the pandemic, we have seen industry with access to these technologies use them to respond to unforeseen changes in their markets with greater agility. Some examples of this can be found here.

Whilst fragilities exist in existing supply chains, advances in technology provide routes through which manufacturers can build resilience into them. Whether we see any of the three approaches described here implemented in the future, only time will tell, but certainly the movements and signals from companies that we are seeing taking place, coupled with existing political tensions, suggest there may well be a shift in how supply chains of the future are managed and what the key objectives of those are.

References:

Slack, N., & Brandon-Jones, A. (2018). Essentials of Operations Management. Pearson.