Four key ways to boost your supply chain resilience in a post pandemic world
September | 2020
There have been significant disruptions in supply chains due to the COVID-19 crisis. If we look at the past six months, we can see extreme cases of supply and demand shocks. The International Monetary Fund has estimated that the global output will shrink by 4.9 percent in 20201. The uncertainty over COVID-19 prevails and the global economy is yet to show signs of recovery. Clearly, we have failed the COVID-19 test – an ultimate test of ‘supply chain resilience’.
Our design choices failed us
A common practice in the supply chain is to consolidate supplier base for key items. While consolidation helps secure better contractual terms, it also makes the chain more susceptible to break downs. Another common practice is to maintain a low buffer across the supply chain, which lowers the capacity to absorb supply shock even for a couple of days. Essentially, supply chain was optimized for a steady flow. Moreover, to optimize this steady flow, manufacturers relied on ERP systems that could only provide post event data with limited context and visibility.
Fundamentally, the foundation for systemic failure lay deep in the design principles that evolved over a century.
Boosting your supply chain resilience requires a multidimensional approach
While there is consensus on the importance of resilience in supply chains, very few firms prioritize it over cost reduction initiatives. The COVID-19 test made it obvious that the current system cannot handle crisis; and investment in boosting resilience is required to respond optimally to similar situations in the future. A multi-dimensional approach is recommended below that can help prepare supply chain for uncertain times –
Manufactures will shift gears post COVID-19. However, the learnings we had during this phase will affect the future design considerations. Going further, cost centric initiatives will not always get precedence over resilience initiatives. Technology and trust building will have a strong play in helping firms boost resilience.
Reference
Prashanna Kumar Jha
Principal Consultant in the Manufacturing Digital practice at Wipro.
Prashanna has more than 11 years of experience in the business development function across Manufacturing and IT firms. In the current role, he is primarily responsible for driving market traction leveraging connected themes. He also engages with analyst firms to position Wipro’s credentials in the digital and cloud space.
Wipro Looking Glass platform helped a construction equipment OEM increase service revenue and decrease cost of service operations by leveraging the power of machine data.
Wipro helped a power equipment OEM generate service revenue leads from their fragmented installed base in multiple geographies.
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