Practical tips and guidance
This article explores seven ways to improve your supply chain. The unique aspect about these suggestions is that they have been tried and tested in the industry. This article is pertinent in the post-Covid 19 era in which the logistics industry faces multiple challenges. Two years ago, few could have accurately predicted the depth of impact that the pandemic would have on daily and business life. As a result, hundreds of millions of people are dealing with the effects of this seismic event.
Logistics and the aftermath of Covid-19
The supply chain will never be the same following the pandemic, and some experts argue that it could take years, if not decades, to stabilize completely. Meanwhile, the globe is dealing with several challenges, including geopolitical conflicts, high inflation, and disruptions in the supply-demand dynamics of international trade. All companies are required to adapt and change with the new reality. Only the more robust supply chains will withstand the pressure. Indeed, the best build resilience in case another similar challenge emerges someday.
One of the lessons from the Covid-19 era is the ripple effects of supply chain disruptions. We are now genuinely appreciating the complexity and interconnectedness of the supply chain. It is not a case of merely manufacturing, supplying, selling, or buying merchandise. Instead, a sophisticated value chain takes form when a customer expresses a need (want, desire, or preference) and when they are satisfied with their purchase. In between are deliveries, sales, marketing, ordering, forecasting, inventory, supply replenishments, packaging, production, and materials. A collapse in any of these contributors will adversely affect the entire supply chain.
e-Commerce has a new lease of life
During the Covid-19 pandemic, there was renewed interest in the possibilities of e-commerce. In some instances, that was the only way of ordering goods and services. Hence, the supply chain had to contend with the demands of e-commerce. Manufacturers had to meet urgent orders from far away. Ships, ports, and logistics companies were overwhelmed by the demand and the limitations in a pandemic during which staff was scarce, falling sick, or even dead. Web retailers that once operated as a side business were now the mainstream, and many were caught off-guard.
Amazon is an example of an online retailer that worked well prior to the surge in demand and logistical challenges heralded by the Covid-19 pandemic. As people were forced to or opted to stay at home, e-Commerce demand shot up. That is why shipping times increased in many instances. Popular items were being listed as being out-of-stock. As part of the adjustments, Amazon created safe working spaces for order fillers to curtail the rise of cross infection.
Radical and practical measures to deal with increased demand
Online sellers like Amazon increased their use of private cargo ships to ensure the timely and safe delivery of merchandise. This was essential if such companies were to sidestep the overcrowded ports in places like California. Apart from using leased plans, there was a strategic constructive of between 5000 and 10,000 shipping containers. Suppliers strengthened their relationship with Amazon as a reliable partner even as the pandemic raged. A two-way relationship was established with suppliers, which could act as a model for anyone wishing to keep their supply chain ticking during crises.
Other major companies like Tesla reported record demand in the first quarter of 2022. However, the lingering supply chain concerns were not being allowed to disrupt purchase and supply. This came at a critical time when there was a shortage of essential semiconductors for vehicle manufacturing. According to Yahoo! News, Tesla remained an example of overcoming obstacles in the supply chain. For instance, Tesla removed one electrical control in the steering rack of some of its models manufactured in China. In this way, semiconductor shortages were avoided. Other vehicle manufacturers have used similar tactics with an IOU to install any missing non-critical semiconductors. Once the supply is back on track, the necessary components will be installed.
Keep abreast of supply chain kinks
Reports of increasing demand following the easing of restrictions mean that these supply chain challenges will likely remain a feature of the industry. Labor shortages were not complete since people who had stayed at home were not always willing to return to work. China still had a zero-Covid policy which created new lockdowns. This was a critical factor given the status of China as a key manufacturer and exporter in the global supply chain. These are vital actions you can take to avoid becoming a victim of supply chain crises:
- Anticipate disruptions: Crises are part of logistics, so it is better to anticipate them rather than getting unpleasantly surprised. Nobody can be sure that the crises in the last 24 months will never arise again. Indeed, the interconnectedness of the global supply chain means that nobody is ever completely safe.
- Plan and execute: It is imperative to always have a plan. This must be a dynamic plan that can change depending on the circumstances. Document the plan, so everyone in the team knows their role and impact. Some of the key issues in the plan may include creating waitlists, altering products, using alternate suppliers, shifting logistics, and raising prices.
- Demand forecast: Try to keep on top of your demand patterns by accurately forecasting them. This has already been done using the just-in-time (JIT) approach and lean management for inventory levels. This will help keep overhead costs in check. At the same time, it will reduce your need for large warehouses to cover endless inventory. Larger orders can be leveraged to cover supply interruptions. Use big data to bring predictability to your operations. Information helps you make educated assumptions and guesses. Be kind to your suppliers by making larger orders in time or earlier.
- Diversification: Your resources should be as diverse as possible within the market ecology. Now we are dealing with a pandemic, but it could also be a natural disaster. These events affect every production stage, including raw materials and finished goods. There is much risk associated with single sourcing. Even if a secondary supplier is slightly more expensive, it may be better than having no product. Your customers are more likely to stay with you if you are a reliable supplier, especially during a crisis.
- Stateside suppliers: You should seriously consider the option of utilizing stateside suppliers in your business. Onshoring is becoming a critical business component in the USA because entrepreneurs enjoy its proximity and flexibility. Reshoring may imply costs, but they are made up using the benefits from a reliable supply chain. Look for suppliers close to your home office and warehouse distribution network. The implication is that you have better control over your lead time and production costs. Highly automated manufacturing can also be of help.
- Relationships: Invest in and strengthen business relationships with your current suppliers. This can be done by avoiding last-minute and emergency orders that put unnecessary pressure on them. Instead, order early or in time to give them the space to meet your needs. Communication and high levels of visibility will ensure that things are moving along. You are building partnerships as opposed to merely purchasing relationships. For returns, supplies will try not to let you down.
- Customer care: Prioritize your customers because they are the backbone of your business. Communicate with them regularly, even if the news is not what they want to hear. Honesty and integrity are significant competitive advantages in business. For example, out-of-stock notices should be clear and available before ordering. Otherwise, retrospective regrets may give the impression of incompetency or a lack of concern for the customer. Complaints should be taken as a learning opportunity rather than a relationship breakup. Train your workers to develop and cultivate the highest standards of customer care.
There is broad agreement that the Covid-19 pandemic has significantly changed the logistics industry. Some even argue that such changes can potentially become permanent. Responding appropriately means planning and executing in a flexible and sure-footed way. Resilient and robust supply chains will survive and prosper in the new era. Those that are traditional and inflexible will crumble. This article has provided seven tried and tested means of strengthening your supply chain.