Supply Chains Disrupted by Corona Virus
Supply chains have been disrupted by the Novel Corona Virus due to flaws in the design, lack of planning and inflexibility. This disruption could have been avoided or at least mitigated if supply chain managers were more proactive and had a vision of the future rather than focusing on the bottom line regardless of the practices.
By definition, supply chain involves the management of the three most important resources of an organization: Inventory, Money and information. When key information pertaining to the Corona Virus were not conveyed to parts of the supply chains, there was no viable reaction to the spread of the Corona Virus. No preparations made to continue shipping products by protecting shippers and manufacturers.
Factories could not have enough raw materials or components brought in from other regions or countries to start production since International freight Forwarders were crippled by the Corona Virus. There was a long-term impact on the Shipping Companies. Many freight forwarders have permanently closed their doors especially the smaller ones with the personal service to its clients.
Not having raw materials to produce finished products because there were not people to work in the factory combined with lack of failure to deliver the finished product, if available, to the end user resulted in shortages in many commodities. Even when the finished products were available, they could not be delivered reliably to the end user. No to mention that most of non-essential products were not being shipped as more preference was given to PPE products. Amazon is a perfect example. They focused on Personal Hygiene products and stopped shipping other items even if they are available which prompted some of their third party sellers to use 3PL companies to fulfill their orders. This has revitalized the regional Fulfillment Centers.
How to design better supply Chains
- Information is key. Had information about the corona virus and the ways to mitigate the spread used in the design of the supply chains, we would not have witnessed such shortages.
- Emergency plans should always be in place to combat any disruptions just like we have emergency plans in the case of hurricanes. These plans might involve adding extra locations or using different shipping routes or changing the procurement practices.
- Design smart Supply Chains with more flexibility and transparency.
- Locate and utilize multiple sources for products, do not put all eggs in one basket.
Impact of Corona Virus on many producers
During the height of the Corona Virus infections, many milk producers had to throw away the milk because they did not have enough storage facilities. Instead they should have plans to make cheese instead of throwing it away. Produce loaded on export containers had to be discarded as vessels did not ship. Excess produce could have been distributed to communities or even frozen and canned.
This is all due to improperly managing the information which is essential for the effectiveness of supply chains. Some businesses have closed down permanently unnecessarily. Which will impact the economy.
Supply Chain consultants better learn from this experience and design ethical supply chains that focus on efficiency and sustainable practices and not only the bottom line .
Resources:
Outsourcing means going out to find the source of what you need. These days many business outsource for what they need to serve their customers, both internal and external. An external customer is the entity that ultimately purchases a company’s product or services, while an internal customer is the company’s own employees or shareholders. Business can obtain both products like machine parts, and services like payroll, through outsourcing.
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