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Resources and guidance for supporting employees, customers, and partners during this unprecedented health crisis.

  • July 17, 2020

Addressing Your Disrupted Supply Chain

Peter Armaly, and Vijay Virmani
This is a syndicated post, view the original post here

This article was co-written by Peter Armaly and Vijay Virmani. Peter heads up training and enablement for the North America Customer Success organization and Vijay is his peer in the same org. Vijay's role as a supply chain management SME (Subject Matter Expert) is to create and execute strategies for improving the ability for Oracle's customers to achieve their desired business outcomes through Oracle SaaS applications.

 

Consumer spending choked, business travel hobbled, restaurants trying and often failing, and sporting events operating with no semblance to their previous forms. These are Covid-19 business outcomes. And although less visible, weakened supply chains are arguably experiencing the biggest impact of all. Demand for some goods and services has sky rocketed creating shortages while demand for some goods and services has declined as stores struggle to adapt to the need to sell in an environment where you cannot conduct business in person. 

As the pandemic plays out at different speeds and ferocity around the globe, companies find that suppliers may not be available or are only able to supply at much lower capacity. Trade tariffs and the constraints of established trade agreements have complicated the ability for businesses to respond. 

The flip side

A hockey mask manufacturer diverts resources to make protective medical shields. A running shoe manufacturer converts a factory to making non-surgical grade masks. An athletic apparel manufacturer goes all out and makes masks, face shields, medical fanny packs and protective gowns. A couple of automobile manufacturers start manufacturing ventilators. A toy company redirects resources and supplier capability to manufacture disposable surgical masks. Distilleries and craft breweries start making hand sanitizer.

How to approach societal challenges if you’re a business

Should these real examples inspire businesses to transform their products and services as a way to survive the pandemic’s significant disruption? Should companies transform not simply for the survival of their business but, also, for a greater societal good? And if they decide they should change, for whatever reason, would they know how to start?

First, they should ask themselves the following questions:

  • Am I able to quickly analyze my product mix to identify what is working? And for what isn’t working, does it mean I need a change in strategy?
  • Am I able to offer my goods or services on line but am missing vital and appropriate technology to support that commerce model? 
  • My approved suppliers do not have enough capacity to keep up with surged demand and I need to quickly qualify and approve new suppliers.  Are my people trained and using the right features available in our systems?
  • Am I able to quickly explore if I can use our current resources to create goods and services that are in short supply?
  • I might have raw materials, sub-assemblies and finished goods items in stock that are not moving. Raw materials may be easy to diversify for something that is in demand but converting sub-assemblies and finished goods items into new items can be more challenging and require more creative thinking and collaboration with customers & suppliers. Do I have the resources I need to carry out this type of analysis?
  • Am I able to look into short term and long term demand with the recent changes and identify changes that are required in the supply plan to meet the demand?
  • How quickly can I source required new products or services? Sourcing includes qualifications, request for information or proposals, bids and awarding a contract. 
  • Am I able to check goods availability in different locations if not on hand at my location for the requested items? Can I answer questions regarding the length of time it will take me to procure out of stock goods and commit to promised delivery dates?      
  • Am I up to date on logistics status of all shipping ports, shipping networks and related costs?  My existing preferred pre-negotiated shipping methods and carrier may not be available and that might require me to source new carriers.   
  • Tariffs and trade restrictions have been changing fast.  Am I able to analyze how they are impacting my suppliers, customers, costs and margins?

A robust supply chain software application should be capable of addressing all the changing requirements for such challenging times and help prepare a company for the future. 

Short, Medium, and Long-term

Start with a supply and demand evaluation using the application. It should help company executives identify the shortages and overages in the next 4-8 weeks for short term action plan and a further 8-24 weeks out for a medium term plan. Anything outside of 24 weeks out can be treated as a longer term plan. 

The short term action plan would include:

  • Substitution for items in short supply
  • Conversion of items into something else or back into components using a feature of an application that manages a product’s lifecycle
  • Accelerate the plan for offering products and services online
  • As part of an order management best practice, use built-in functionality to promise the order shipping dates
  • Use order management and trade management functionality to make sure all customs and regulatory requirements are covered for executing and shipping the order
  • Use transportation functionality to optimize shipping for shortest routes and best price 
  • Identify supplies from different locations to meet demand

For the medium term plan:

  • Develop new qualified suppliers for the short supply items or get ready for transforming existing items into new products  
  • Set up new initiatives to develop supplier qualifications, RFI/RFP/RFQs, bid evaluations and awarding the contracts. 
  • Make item transportation-related engineering changes and get change approvals on product structures, bill of material and routing changes
  • Transform existing items in inventory into new items or convert finished items back into components  

In the long term plan:

  • Look into future demand by using collaborative planning features based on corporate revenue/margin plans
  • Make decisions on product plans using financial analysis
  • Develop new suppliers and ready internal workforce skills and equipment for the upcoming new product requirements
  • Focus on improving planning, budgeting, strategic modelling, enhanced narrative business & tax reporting, and account reconciliations

Is this operating rhythm the new normal?

The supply chain is both a wondrous and fragile apparatus. Normally, it delivers efficiencies and lower cost but our normal way of conducting business has been disrupted. The supply chain’s fragility has been exposed. Things may not be the same again and if you’re a business leader, you must now move fast to survive and to hope to meet customer expectations in the same way you effortlessly managed to do before the pandemic.

But some things are true outside and inside of a pandemic. You can still plan. You can still choose how you respond. You can execute with intelligence if you assess and leverage your strengths. Consider those flip side examples mentioned earlier, the companies that pivoted and managed to transform their business to varying extents in response to the crisis. They didn’t wait for things to clear and get back to normal. They moved.

Want to learn more about Supply Chain Management? Check out Oracle's industry-leading application.

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