The coronavirus epidemic is wreaking havoc on the world’s health systems and economics, causing millions of businesses to close.
Covid-19 has revealed the vulnerability of all sectors’ supply networks. The automobile, electronics, pharmaceutical, and consumer products industries have been hit the hardest. This is because, during the last 20 or 30 years, Vietnam has become one of the world’s major industrial hubs.
This Asian country provides the majority of the world’s processed components and raw resources. However, it is not only Vietnamese manufacturers who are facing the difficulty of resuming their production capacity; the rest of the globe has also seen a significant decrease in the number of items in their manufacturing lines.
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What are companies doing to face this scenario?
Companies have always considered cost, quality, and delivery to be critical indicators in their value chains; but, they have discovered that catastrophes like the Covid-19 epidemic, natural disasters, climate change, and geopolitical conflicts may also significantly disrupt the supply chain.
We must bear in mind that supply chains are built up gradually; they cannot be established quickly. As a result, changing them rapidly to react to unforeseen occurrences like the one we are witnessing now is difficult. Nonetheless, numerous firms throughout the world are working hard to develop other alternatives, such as the following:
- Hiring third-party services to compensate for the downturn in deliveries from their main suppliers.
- Providing complete visibility of the supply chain to access data on critical components as quickly as possible.
- Redefining their inventory strategy to make sure they can meet the demand.
- Restructuring production systems to manufacture completely different products (diversification). In fact, some companies have put their efforts into manufacturing products to mitigate the spread of this virus.
- Taking advantage of technologies like the Internet of Things, Artificial Intelligence, Robotics and 5G, with DSN designed to anticipate and face future challenges.
This pandemic has served as a reminder to CEOs of the importance of creating new commercial diversification and supply chain design strategies. In the future, Logistics Key Performance Indicators must incorporate, in addition to cost, quality, and delivery, the Three Rs: resilience, response capability, and reconfiguration.
Furthermore, businesses must develop more prediction models to schedule demand, and these models must take into account risk variables and use sophisticated technology to provide transparency and perform scenario simulations.
ONE OF THE BEST ALTERNATIVES FOR OVERCOMING THIS CONTINGENCY IS TO BE FLEXIBLE AND ADAPT.
It is a fact that the situation we are going through will force many companies and complete industries to rethink and transform their logistics model. Companies that invest in mapping the supply networks to avoid operating in the blind will be better equipped to endure a crisis since they will have better visibility of their logistics structure.
