COVID-19: Shaping the Supply Chain in manufacturing sector post-COVID era

The need of Covid o’clock

If the uncertainty in manufacturing marked by trade wars, Brexit, the advent of 5G, regulatory pressures and digitization wasn’t enough. COVID-19 came on the scene to be the final nail in the coffin. A lot of industries were forced to stop production due to exponential decrease in global demand, and many have tried re-purposing their facilities in order to remain operational. With logistical routes taking a hit, distribution of products is going through certain unique challenges such as staffing of warehouses, a need for direct distribution and more intelligent use of resources. Supply lead times have increased exponentially owing to the closing of manufacturing.

Retailing has also taken a hit in a peculiar manner. The lockdown scenarios across the world have led to a situation where there is demand as far as essential products are concerned and subdued demand in certain niche area but the non-essentials such as luxury segment has taken a huge blow with several retailers putting their shutters down and many others severely challenged on operating margins.

On the consumer side, hoarding/stocking of essentials commodities and over-the-counter medicines has led to an unusual stress on the supply chains. It is not unusual for consumers to panic stock food and other essential commodities during times of crisis; however, industries are rather unprepared for an uncertain situation such as this. While this leads to stress if the stockpiling goes beyond a few weeks, it is natural for consumers to be anxious about availability and resort to this kind of behaviour. These unnatural spikes in demand and the required supply fluctuations are extremely difficult to handle and together create a bullwhip effect in the entire supply chain. often leading to artificial shortages.

The imperative of a new Supply Chain

Supply chains have become highly sophisticated and vital to the competitiveness of many companies. But their interlinked, global nature also makes them increasingly vulnerable to a range of risks, with more potential points of failure and less margin of error for absorbing delays and disruptions.

The new era Supply chain technologies are emerging that can dramatically improve visibility across the end-to-end supply chain and support much more supply chain agility and resiliency, without the traditional “overhead” associated with risk management techniques.

Divining and shaping the post-crisis reality

Rise of AI Powered Platforms
AI-enabled platforms will help companies better simulate live work environments & create on-demand labour. AI optimizes detection of new consumption pattern & allow for hyper-localization. It will build redundancy while minimizing cost.

AI tools will enable companies to use predictive analytics to more precisely forecast sales, operational challenges & supply disruption. With focus shifting on recovery for most companies, AI enables solution can reignite top-line.

Improved cost-optimization models
As most companies have been out of operation for a significant period of time, post-crisis their major short-term course would be cost-optimization. New models such as ZBB (Zero Based Budgeting) & Cost-to-Serve models to be deployed to enhance savings.

Looking at which new pattern reduce friction such as delays, overheads & maverick cost that goes on hidden in supply chain operations.

Remote way of working will become the new normal
VR/AR/MR is bringing employees pretty close to this new normal. The fully immersive environment of VR can make you feel like you’re actually there. Understanding client briefs, explaining specs, working together in real-time won’t ever pose problems in distributed teams again.

With its application in almost every sector as; retail with IKEA’s ARkit, travel with Discovery TRVLR & many other such as healthcare, education & construction. Many companies have initiated providing AR/VR services such as Mimeasy, Spatial, Connec2 & Meeting VR which can provide virtual workspace for meetings, brainstorming & collaborate search.

Key elements for re-development

• Intelligent procurement: To help organizations understand where and when to source using advanced machine learning algorithms based on past purchases, commodity pricing, agro and industrial trends, among others.
• Supply chain control tower: A single source of truth from sourcing to delivery for all trading partners to see and adapt to changing demand and supply scenarios across the world.
• Supply chain data management with intelligent automation and analytics: End-to-end information management, taking the form of a data vault of sorts to capture supply chain transactions accurately with high consistency and minimum redundancy. This will help supply chain organizations gather insights around supplier performance, supply chain diagnostics, market intelligence and risk management.
• Supplier risk management: N tier risk management helping organizations model cost structures, trend performance data and visibility in to extended value chain to keep abreast of any supply disruptions and secure capacity. This could help companies avoid sudden disruptions in supply chain and deal with lack of information, something that many major global companies including Sony, are facing today.
• Supply chain simulation: Modelling new supply chain strategies based on business/operating model change, current and/or future supply/demand/logistics constraints. Helps to validate and identify the best cost-efficient network to achieve the necessary service level across the value chain.

Re-purposing

In times of COVID-19, one of the key priorities for most companies is to protect their own workforce while keeping operations running as long as possible. However, re-purposing does not only help companies to protect their own workforce while serving the greater good, it also helps them to keep production lines up and running in times of low demand, generate moderate revenues, and positively impact their reputation.

Not all sub-segments of an existing manufacturing process are relevant to the product type that is essential during these times. The key is to focus on the sub-segments that are most relevant, such as sound insulation manufacturers that share the same raw materials and similar production processes with respirator mask manufacturing. Motor vehicle OEMs possessing large and flexible machines with deep automation engineering expertise and highly qualified labour should also be considered for production of ventilators.

The important issue that needs to be considered is how easy or difficult it is for manufacturing companies to actually repurpose. It is crucial to understand that there are different levels of repurposing, with the time required to execute increasing from each one. These are: production of simple hygiene and protection products (e.g., masks and disinfectants); production of standard medical devices (e.g., standard ventilators); and production of more advanced medical devices (e.g., complex ventilators).

While developing the required designs and production process is not too complex for these products, receiving regulatory approval is the key challenge here. With pressure for companies to share design information across business sectors, intellectual property issues are another hurdle the Covid-19 outbreak has seen put aside. Organisations are sharing resources and open-source tools to help businesses make vital healthcare products. Experts believe the urgency and scale of the Covid-19 response could change the way collaboration is done in future paving the way for a more open supply chain.

• UK-based Dyson and Grey Technologies (GTECH), two manufacturers known for vacuums and other motor-driven airflow tools, have answered the government’s call to quickly design and produce ventilators.
• Rum producer Bacardi’s distillery in Puerto Rico shifted to making ethanol needed to manufacture hand sanitizer. Eight Oaks Farm, a veteran-owned craft distillery in Pennsylvania, is converting operations to make alcohol-based disinfectant.
• Michigan-based office furniture company Steelcase is using its factories to make protective health-care equipment such as masks, face shields, and partitions for hospitals.
• Beauty and luxury giants such as Germany-based Beiersdorf and France-based LVMH and L’Oréal are pivoting production from face creams and perfumes to medical disinfectants and sanitizer gels.
• In Japan, electronics maker Sharp Corporation is making surgical masks using a plant that usually manufactures electronic displays.
• Ford is assembling more than 100,000 plastic face shields per week and is leveraging its 3D-printing capability to produce medical equipment parts. The company is collaborating with 3M on a “powered air-purifying respirator” (PAPR) mask design that leverages off-the-shelf parts from both companies, using fans from its F-150 truck’s cooled seats and HEPA air filter, as well as portable battery packs that 3M already makes.
• Mahindra & Mahindra has offered to use its manufacturing units to make ventilators.
• Maruti Suzuki has tied up with AgVa Healthcare to scale up production of ventilators. The automaker intends to manufacture 10,000 ventilators per month.
• MSIL subsidiaries, Krishna Maruti and Bharat Seats, will provide two million masks and protective clothing.