the Supply chain restart after Corona.

Restarting the supply chain after the corona crisis is one of the biggest challenges for many organisations. What are the prospects at the moment?

Asian population

For a short while it seemed that Asia could reboot its economy. Recent outbreaks and lockdowns again threw a spanner in the works. Yet it is already clear what Asia is up against.

The biggest problem is getting the labour force back to work. There is a high drop-out rate due to death and chronic illness. As a result, the total labour force is too small. Another consequence is that many of the newcomers are new and still have to be trained. This can cause a next wave of disruption and backlogs. This is especially true for high-quality components that are also labour-intensive. As a result, assembling the final product will still prove difficult. The effect on other parts of the final product is obvious.

Another problem is capital. Many companies in Asia have gone completely under. They do not have the ability to restart on their own. Capital injections from the government or from customers [multinationals] may prove necessary.

Integral recovery.

One of the first steps that companies can take is to organise the various disciplines around an integral approach. So production, purchasing, planning, sales, logistics. Identify and analyse the supply chain for the size of disruption. The greater the transparency, as deep as possible in your Tier chain, the better.

Breakdown each component and determine the potential risks, delays and impact on your own production and deliveries. Once you have this insight, all upcoming sales and [sales] actions need to be adjusted accordingly. After all, you do not want to make your backlog even bigger or worse than it already is. Do keep in mind that recovery will take a long time. Months rather than weeks. It will take some time before all the bullwhips have disappeared from the international chains. Also take into account that new lockdowns may occur in the meantime.

Demand and supply.

The mistake that many companies make nowadays is that they translate the overstrained demand on the market into their production planning on a one-to-one basis. Het lijkt logisch maar is fataal voor uw operationele herstel. Een bullwhip in een supply chain begint al bij de vraag. Deze whip dient U zelf uit de vraag te filteren.

Enerzijds hebben klanten de neiging bij leveringsachterstanden, te gaan overvragen. Anderzijds hebben planners en verkopers de neiging de vraag in een te korte periode te drukken. Overbelasting van de productieplanning, inkoop, logistiek etc is het effect. Een nieuwe bullwhip is geboren.

Er zijn een aantal fundamentele vragen die U moet stellen:

  • Wat is nu de werkelijke vraag van de klant over een bepaalde tijdsperiode?
  • Welke vraag kunnen we aan voldoen, gegeven de eerder genoemde supply analyses?
  • In welk mate kan onze interne organisatie maar ook leveranciers realistisch meebewegen?
  • Welke productie prioriteit hanteert U?

Naast dat klanten de neiging tot overvragen hebben. Zullen ze ook maximale druk op uw organisatie uitoefenen om hun orders prioriteit te geven. If you are not in control of that process, you will automatically build a new backlog with customers who are not on top of the list. A vicious circle is the result.

Crisis management

In addition to the current crisis management of organisations, it is now time to look further. As said, it is not excluded that new dips, lockdowns can occur. All your crisis plans can then be consigned to the wastepaper basket. So how are you going to make your supply chain corona shock-proof?

Again, you need to determine with a broad group of disciplines what is necessary to meet your future demand. What buffers are you going to maintain, where are you going to put them, what are your priorities in terms of strategic sales but also strategic purchasing. How do you spread the risks in your supply chain [reshoring, resourcing, multisourcing]?
Relevant articles
Managing disruptions