Here are five things you can be doing now to prepare your organization for the next supply chain crisis.
When politician Rahm Emanuel uttered the words “You never let a serious crisis go to waste” in the midst of the Great Recession in 2008, he wanted to help companies and individuals think about making moves that they previously hadn’t considered, or that they just may not have wanted to do. Sir Winston Churchill made a similar statement in the mid-1940s as World War II was coming to a close.
Fast-forward to 2021 and this famous quote is just as relevant and useful as it was in the 1940s and in 2008. As organizations continue to battle a COVID-19 pandemic that’s inflicted a high degree of social, economic and structural damage, many are looking ahead and planning ways to avoid the next potential supply chain crisis.
In Five Rules for the Next Supply Chain Crisis, TealBook’s Stephany Lapierre shows how companies can use the lessons learned from 2020-21 to prepare for the next potential crisis. She says businesses lost an estimated $28 trillion in 2020, and that supply chain interruption and shifts in buyer behavior left many companies in the lurch.
“Supply chain interruption is not uncommon. Natural disasters, human errors, political unrest and climate change have always impacted procurement. Typically, these issues have been localized,” Lapierre writes. “When faced with an earthquake in Japan, businesses could reroute their supply chains to another factory in India or Bangladesh. The COVID-19 pandemic, however, has forced companies to face a new challenge: disruption on a global scale.”
Five Steps to Take Now
By taking the lessons learned from the pandemic and combining them with advanced technology, data analytics and other tools that support their supply chain operations, companies can effectively prepare these vital networks for what may be coming around the next corner. Here are five steps that all companies can take now to prepare ahead:
1. Automate your data. “Relevant data is key to making good decisions when a supply chain breaks down. In times of crisis, manual data management is neither fast nor flexible,” Lapierre writes. “That’s why processes for consistent data refreshes and cross-checking should be automated. This can be done with machine learning (ML), artificial intelligence (AI), robotic process automatic (RPA) or optical character recognition (OCR).”
2. Rebalance your supply chain accordingly. This involves making informed decisions about how to optimize your supply chains. “At this stage, your focus is likely to be on ensuring you can meet demand today and tomorrow, to get through the crisis,” management consultant Omer Abdullah writes in 5 Ways To Prepare for the Next Supply Chain Crisis. “However, this is also an opportunity to make valuable long-term supply chain changes. The changes you make now may stick, and become your own new normal, so it’s worth considering their long-term implications.”
3. Improve your supply chain visibility. “The best way to deal with a crisis is to prepare ahead of time,” writes Lapierre, who tells companies to map out their supply chains in order to get clear on the details. “A good map should include the locations of your supplier’s factories, what each plant makes, their operational status, and their inventory,” she adds. “If there is trouble on the ground, this can help you spot a drop in quality or identify ‘fake’ products.”
4. Reevaluate your supplier base. The early stages of the pandemic and the subsequent raw material shortages taught companies a lot about their suppliers’ resiliency during difficult times. Now, companies are using this intel to make better supplier selection decisions going forward. “This is a great time to look at which suppliers have remained strong, which haven’t been able to adapt, and which standout stars have delivered consistently, without any changes to price or contract terms,” Abdullah recommends. “It’s also a good idea to look at how other suppliers in your categories have fared. More resilient options that you’ve previously overlooked may emerge and can play a vital role to help you ensure continuity during the next crisis.”
5. Plan ahead. As we all learned from the COVID-19 pandemic, companies also have to plan for shortages for when a supply chain breaks down. If two products use the same part but it’s in short supply, you want to know which product takes priority ahead of time. “When customers expect an item and don’t receive it, the result is a negative experience that can affect your brand down the road,” Lapierre points out. “New and unexpected crises are inevitable. The best way to create a more flexible and resilient supply chain is by developing contingency plans and managing data through automated processes. By establishing a plan of attack and relying on reliable data, companies can thrive even when their supply chains are disrupted.”
With many organizations still reeling from the economic fallout of the pandemic, looking ahead to the “hypothetical crises” of the future might not be too high on your agenda today, but Abdullah says it should be. “We don’t know what the next crisis will be. We don’t know where it will happen. And we don’t even know how it will affect supply chains,” he writes. “What we do know is that it’s coming—and current trends suggest it may come sooner rather than later.”
We’ll Help You Prepare for the Next Disruption
IntelliTrans’ Global Control Tower provides high levels of supply chain transparency; aggregates, completes, and enhances data from a variety of sources; offers visibility into and execution of different aspects of the supply chain; and generates data-driven alerts and analytics that ask deeper questions and deliver meaningful insights.
By leveraging tracking information, the Global Control Tower provides analytics that measures key performance indicators (KPIs) like fleet cycle time, origin/destination dwell time, lane and hauler performance, back orders, freight spend, load optimization, and more. With their rate, equipment, lease, tracking, and invoice data in a central repository that’s accessible 24/7, companies can position themselves for success in any market conditions.