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How Past Disruptions Offer Lessons for the Future

When it comes to disasters or Acts of God such as a pandemic, they expose a wide variety of flaws in a plethora of systems. You could be part of the transportation ecosystem, or the water supply ecosystem or even the retail system. The fact of the matter is that when an unforeseen disaster strikes, it forces entire economies to revisit and evaluate the obvious and overriding flaws of the system. Sometimes these systems have deep-rooted problems that require large-scale overhauls and sometimes it is about making minor adjustments that will help in adapting to the current situational needs.

Right, so what are some of the problems that were previously caused by such a disruption? While the difficulties faced were global and local in nature, a wide array of difficulties faced were just too obvious. You could have seen the problems arising but since the system was already in motion and companies were operating within that system, it was hard to push for necessary and innovative changes as they required an injection of fresh funding. The source of the funding would also be a subject of much discussion and debate as there would be at least some responsibility on the government to intervene and provide requisite support to the supply chain system (SCM).

Reliable Partnerships

Most businesses operating in the country depend on partnerships with freight transport companies, domestic transportation companies. This means that most businesses have some form of partnership with Supply Chain Management companies to meet their timely supply chain goals. In the case of smaller businesses, they are not in a position to add supply chain operations in-house and this results in heavy dependence on a third party to handle operations. When disruption strikes, such a company will be at the mercy of the supply chain operator. It is important to strike a partnership with an experienced and reliable logistics SCM partner that will be able to adapt and deliver on timelines even during strenuous circumstances in order to soften the impact of a disruption. Choosing reliable partnerships matters.

Predictive Analytics

While traditional SCMs already bring value to a business operation, with changing business needs, we see a clear and obvious need for a shift towards intelligent data-based Predictive analytics. While a natural disaster is not predictable, the effects and disruptions caused by it can be mitigated with better use of predictive, data-based analytics. The predictive analysis can help identify potential bottlenecks in a supply chain after a disastrous disruption and also map alternative routes that would provide a minimal change in supply and operations.

On-the-go Adaptability

While businesses do not operate in silos, there is a big need for teams to be able to operate relatively smoothly even in times of disruption with on-the-go adaptations to the situation at hand. Well-informed decision-making comes to the fore, and having an adaptable supply chain system will make a major difference to businesses. A competently adaptable supply chain will make the necessary changes to respond to the disruption and make the best long-term and current choices for the businesses.

When disruption of the magnitude of a pandemic hits, you are left with a lot of repercussions. These repercussions create challenges that can be looked at in two different ways - short-term and long-term. In the short term, they will create a critical impact on:

Workforce Management

After the initial blow of disruption in supplies is felt, the biggest impact is on the workforce. With most supply chains hiring workers that are migrants, the workforce will begin to shrink as the workers begin to migrate back to their native cities, towns and villages. If the supply chain’s workforce becomes critically lean, the disruption in daily supply chain operations can be crippling.

Ensuring that wages are managed well and the workforce feels a minimized impact of the disruption, especially monetarily, is absolutely critical.

Develop Trusted Networks

As the impact of a global disaster like a pandemic is felt, there is an urgent need for governments to play an active role in supporting the system. As there will be adjustments made in reaction to such a large-scale disruption, government policies will have to ensure a smooth supply of essential goods. A trusted network of government officials, all competing suppliers and consumers will have to be active participants in this network. Suppliers have to trust the government has a plan that will not be restrictive to the supply chain, and consumers have to trust that suppliers will deliver on agreed goods and quantities. Sharing of risk management data and visibility of network risks is also necessary.

Risk Management

In the scenario of an uncommon disruption, the suppliers are often burdened with all of the risk management. Not only are they left with a limited inventory because of the modern leaner operating methods, but they are also required to be responsible for smooth supply chain management despite on-the-go policy changes.

It is important that risk management is prioritized and evolved on the basis of importance in the future and the need for immediate improvement. Vendor compliance policies, industry benchmarking and legislative compliance should assume lower importance when compared to scenario planning, risk quantification metrics, business continuity planning and data and information sharing.

Inventory Management

Due to the impact that a massive disruption has, there can be panic amongst suppliers and consumers which can cause unusual demand spikes. It is important to smooth out these spikes with smart inventory management as reacting immediately will result in massive inventory shortages in the near-immediate future. Creating a leaner supply till stocks can be replenished keeping in mind changes in policies and new restrictions in transportation and logistics is recommended.

Ensuring Lowered Supply Chain and Transport Risk

When a disruption triggers changes in government policies, it affects the entire supply chain. With states closing borders and new regulations and checks in place, the additional burden on transportation can create a bottleneck in the supply chain. Ensuring that the supply chain and transport risks are assessed as part of procurement, management and governance processes is essential in order to lower the strain and disruption on the supply chain.