How to re-design supply chains for better preparedness

20 July 2020 3 min. read

The outbreak of Covid-19 is placing industrial sectors under unprecedented pressures. While most focus now is going to continuity planning, meeting demands and supply chain control, Antonio Fois and Silvia La Civita from Eurogroup Consulting highlight that behind the scenes, leaders should already be preparing for their supply chain of the future. 

The impact of Covid-19 on global supply chains is already well documented. Some companies are faced with shortages of components and finished products due to suppliers located in critical areas or lower cross-border transportation flows, while others have been forced to downsize production due to manufacturing footprint contamination, absenteeism or people fear of the disease. 

The current crisis demonstrates that building resilience in the supply chain and being prepared for any scenario is essential. Many companies that are struggling today typically implemented single sourcing strategies over the past years, focused on inventory optimisation (JIT and low inventory levels to minimize stocks), lower-cost locations for supplies and production, and distribution hubs centralisation. But even frontrunners in the industry are feeling the impact of the crisis and can draw on lessons for the future. 

Re-designing supply chains for better preparedness

For better preparedness, Fois and La Civita – a Partner and Senior Manager at Eurogroup Consulting Italy – advise re-designing supply chains by addressing the following key elements:

  • Protected facilities: Defend the site against the virus and get your workplace ready in case it arrives, defining reinforced procedures to avoid (or at least mitigate) contamination, e.g. reviewing human traffic management with safe distancing measures, reducing high-touch areas (e.g. canteen, break areas, changing rooms)
  • People health & safety: Protect people health, reassure workers and defend sick persons’ privacy – in & out of the site – e.g. providing PPE but evaluating renewable (versus disposable) materials, managing psychosocial risks and stress of remote workers
  • Production plants: Develop volume & production mix flexibility and review manufacturing footprint leveraging on regional versus global market coverage, leveraging for example on on-demand production capacity increase (internal and third parties)
  • Transport: Build the logistics system in the kind of fast-reaction, capable to face crisis, e.g. leveraging on tools for real-time visibility and monitoring broader changes and working on “co-opetition” between competitors that have similar supply chain requirements
  • Digitisation: Keep operations running – with a mix of in loco and remote workers – minimising contacts among people enabled by digital technologies / automation and rethinking the Industry 4.0 strategy, e.g. remote maintenance
  • Inventory: Ensure appropriate safety stocks to cover different types of disruption
  • Suppliers: Ensure alternative and closer partners (short and local versus long globalised supply chain; mono vs. multi source), evaluating “co-opetition” between near competitors that have common supplies requirements
  • Processes & operating model: Review processes and the operating model matching with the new supply chain and guaranteeing that it will work with defined antivirus, e.g. back-office artificial intelligence, crew model review, remote audits (suppliers, agencies), virtual training