Closer to shorter supply chains?

Supply chain management: the next normal

Radical events such as the current COVID-19 pandemic create involuntary disruption capable of triggering a transformational period within your manufacturing company. Specifically, they can motivate you to rethink and change your existing lean management methodologies like Just-in-Time (JiT) or Kanban, as you may find these approaches are no longer effective in the current climate.

As part of this process, you'll find yourself reevaluating your current supply chains, both in terms of purchasing (supply or sourcing), and sales and distribution. This in turn will likely lead you to adopt new supply chains, which better prepare your business for the future.

We outline all the core components and potential issues you need to consider when reviewing your supply chain below.

Re-thinking your supply chain: purchasing

On the purchasing side, you might find that cost is no longer your main focus. Instead, you may need to focus more on the benefits of dual and multiple sourcing alternatives, and a smarter approach to regional and economic-political distribution.

This might also be an opportunity to implement new monitoring and information systems, which (along with increasing digitalisation) are vital to modern supply chain risk management, making it possible to receive real time information on supply and the estimated arrival time. Then there's the issue of warehousing to consider – do you acquire more warehousing via vendor or customer managed inventories going forward? 

Ultimately, though, your key priority here should be pivoting your supply chain as required, and risk resilience in global value chains.

Re-thinking your supply chain: sales and distribution

Turning to the sales component of your supply chain, your focus here will again be the decision between vendor or customer managed inventories. But you'll also need to factor in other concerns, such as weighing up the logistics of consignment and commission agreements, which may see sales risks shift.

If you're a distributor, you'll be giving more consideration to these consignment and commission aspects, while if you're a retailer, centre management (eg shop-in-shop, concession etc) needs to be front of mind, as responsibility for long and large-volume flow of goods is often unfavourably biased against you.

Read the full article.