Plan for now and the for the future.
How to respond on this in an efficient and proactive way?
Even as the immediate toll on human health from the spread of Coronavirus, which causes the COVID-19 disease, the economic effects of the crisis are coming into sharp focus and attention. Businesses must respond on multiple fronts at once: at the same time that they work to protect their workers’ safety, they must also safeguard their operational viability and adapt their Supply Chains.
Many businesses are able to mobilize rapidly and set up crisis-management mechanisms, ideally in the form of a war room. The typical focus is naturally short term. How can supply-chain leaders also prepare for the medium and long terms—and build the resilience that will see them through the other side?
Where to start today and how to prepare for the future?
1) Create transparency on multitier supply chains, establishing a list of critical components, determining the origin of supply, and identifying alternative sources.
2) Adjust the demand history so that the decrease in sales has a minor effect in demand planning. A crisis may increase or decrease demand for particular products, making the estimation of realistic final-customer demand harder and more important. Supply Chain should question whether demand signals they are receiving from their immediate customers, both short and medium term, are realistic and reflect underlying uncertainties in the forecast. You have to develop a demand-forecast strategy, which includes making risk-informed decisions beside the use of forecast techniques. Make sure you ensure dynamic monitoring of the forecasts in order to react quickly to inaccuracies in a war room session or in your S&OP meetings. For sure you will have regular changes.
3) Based on the adjustment of your demand forecast, you should optimize production and distribution capacity. Scenario analysis can be used to test different capacity and production scenarios to understand their financial and operational implications.
4) Estimate required inventory along the value chain—including spare parts and after-sales stock—to make sure you can produce and deliver. You will have to change some of your planning policies and/or inventory parameters which enables your MRP planning and other Supply Chain Planning.
5) Identify and secure your critical supplies. Be aware that you will suffer from the Bullwhip effect, but that your suppliers will also be hit by the Bullwhip effect. This will impact your supply for the coming months. Anticipating, acting, and communicating properly will be key.
6) Identify and secure logistics capacity, estimating capacity and accelerating, where possible, and being flexible on transportation mode, when required. Share the information with your logistics stakeholders.
Where can we, Xeleos Consulting and Optimact, help you?
Based on our knowledge and experiences in the domains of Supply Chain Planning and our Cloud based tool Optimact we can help you for sure. We already do this for our existing customers were we have built scenario’s in Optimact to run, monitor, react on the above mentioned topics so our customers can move very quickly based on the updates in relation with the COVID-19 disease. On a regular base we have conference calls with them where we bring all knowledge together to react to the changes supported by our tool Optimact.
Of course we can offer the same services to other companies not using Optimact. We will use the same principles as explained above.
If you need more information on our approach and what this could mean to your business please contact us: firstname.lastname@example.org.