A survey by researchers at WMG, University of Warwick, saw 249 mid to large manufacturers from food and beverage to automotive, and pharmaceuticals to electronics equipment industries respond about their supply chain resilience in the current state, and future potential.
They found several impacts from the COVID-19 pandemic, including:
· 58% of firms are still experiencing a decrease in demand three months post lockdown
· 66-73% of firms have been effective to responding to increases and decreases in demand
· Buffer management, multi-sourcing and visibility were favored over agile production networks
· Cash management and securing supply were critical initial responses to the covid-19 crisis
· 84% of firms found their planning systems were effective, but still required human intervention
· The most apparent bottlenecks to their supply chain were people issues, such as warehouse staff being in quarantine at home.
The researchers then assessed manufacturers supply chain resilience in three different times, business as normal, during COVID-19 and preparation for Brexit. For each time period they identified six supply chain resilience practices that could be used proactively (pre-disruption), reactively (during and post disruption) or both. These included:
1. Supply chain planning – demand forecasting and contingency planning (Proactive)
2. Visibility – Having access to real time data (Proactive)
3. Collaboration – Working with SC partners to deliver customer value (Proactive & reactive)
4. Buffer management – Utilizing inventory and production capacity to enable material flow (Proactive and reactive)
5. Flexibility – Establishing multiple sourcing options (Proactive and reactive)
6. Adaptability – Transforming the SC in responding to dynamic business environment (Reactive ).
In normal operation firms found their practices to generally be effective. However, there were opportunity for improvements in visibility and collaboration to support improved supply chain planning. Firms also said they have been effective in managing buffers during normal operation.
During the Covid-19 pandemic, firms utilized supply chain planning as a response to the pandemic, with effective planning systems reported by 84% of manufacturers. However, this still required a high degree of human intervention. Buffer management and flexibility were found to be less effective than in normal operations.
The survey found that 55% of manufacturers used inventory as their primary buffer against disruption, with only 32% utilizing flexibility within the agile production systems of suppliers. Inventory buffers whilst effective if the disruption creates an upturn in demand, can be catastrophic to cash flow if demand drops.
Similarly to COVID-19, when it comes to Brexit, they’ve found that an increase in collaboration has led to improved supply chain visibility and planning. However, the uncertainty of Brexit is a cause for concern in terms of supply base flexibility with firms unsure of what type of response will be required.
The COVID-19 pandemic has affected many people across the world, and it was the same for manufacturers, who suddenly had to change their strategies to ensure their supply chain during the pandemic.
There have been many challenges in the past for the manufacturing supply chain, such as the 2001 recession, SARS, 2011 Tohoku earthquake, 2016 oil crisis, and Brexit. Although there have been other pandemics such as swine flu and Ebola, the COVID-19 pandemic was nothing the modern world had ever seen before, says the university.
[Image courtesy: University of Warwick]