Supply chain disruption

In the eye of the storm

COVID-19 has disrupted supply chains around the world. But they’ve also been a vital lifeline to support the response, keeping essential medical supplies, food and other key necessities flowing where they’re needed most. There’s no doubt that the pandemic has tested the ingenuity, resilience and flexibility of supply chain leaders globally, as they have sought to maintain essential operations.

The pandemic has also proved to be a real test of corporate values and purpose. Consumers, investors, governments and communities may ultimately judge companies on how they respond to this period of disruption.

Impact on supply chains

With the virus still a live threat and a number of regions and economies in lockdown, while others emerge into a very different world, the disruption to supply chains continues to be severe. As economies restart, the supply chain will be critical to supplying goods and services quickly, safely and securely.

Business leaders must make rapid decisions, and take immediate actions to sustain business operations to serve their customers, clients and communities, as well as protect and support their workers.

The repurposed and reshaped supply chains of the future will need to be characterized by both resilience and responsibility. These will help communities manage the short-term crisis and enable businesses to build around their customers and help economies rebound.

Businesses must navigate the financial and operational challenges of coronavirus while rapidly addressing the needs of their people, customers and suppliers. By taking the right actions, supply chain leaders can turn massive complexity and supply chain disruption into meaningful change.

As they respond to both the immediate impacts of the pandemic and prepare for what comes next, a continuous cycle of risk mobilizing, sensing, analysis, configuration, and operation will help to optimize results and mitigate risks:

The COVID-19 pandemic is not just a short-term crisis. It has long-lasting implications for how people work and how supply chains function. There is a pressing need for businesses to build long-term resilience in their value chains for managing future challenges.

This requires holistic approaches to manage the supply chain. Companies must build in sufficient flexibility to protect against future disruptions. They should also consider developing a robust framework that includes a responsive and resilient risk management operations capability.

That capability should be technology-led, leveraging platforms that support applied analytics, artificial intelligence and machine learning. It should also ensure end-to-end transparency across the supply chain. In the long-term, risk response will need to become an integral part of business-as-usual protocols.

COVID-19 is disrupting distribution on a global scale. Increased border controls and customs regulations result in longer wait times, and lack of capacity for long-haul and last-mile fulfillment create extreme challenges.

As a result, organizations are accelerating their digital transformations with logistics businesses starting to introduce capabilities like real-time order monitoring, end-to-end inventory visibility, and super-reverse logistics experiences.

But businesses can also use this opportunity to reset their operations with digital capabilities and renew logistics operating models to increase operational efficiency and effectiveness. Doing so will enable them to emerge stronger and with supply chains that are more resilient to future disruptions.

Five key actions to address COVID-19’s impact on logistics

1. Improve visibility - use an integrated logistics control tower to get real-time visibility into operations.
2. Increase flexibility - repurpose assets, inventory and capabilities to balance supply and demand.
3. Communicate effectively - ensure proactive communication with onsite and remote workers, suppliers, carriers and customers
4. Support the workforce - address the physical health and mental well-being of the core workforce as well as the extended logistics workforce.
5. Be a responsible steward of supply chains - think creatively and with purpose about how to support customers, suppliers and logistics networks affected by COVID-19.

During the COVID-19 pandemic, manufacturing leaders have focused on the immediate challenges of keeping their businesses stable.

They’ve formed rapid response teams (Accenture’s supply chain resilience recommendations) to gain a better understanding of their production demand changes, labor support challenges and supply chain ecosystem constraints.

They also need to focus on building a business that is as future-proof as possible, using new technology to increase resilience, protect operations, and support workers through the crisis. As well as being essential now, these future-proofing actions will also help sustain competitive advantage to accelerate business growth once economies rebound.

Five actions to build agility now and in the future

1. Understand the impact of demand disruptions - rapidly identify the products that are most critical for stabilization and growth, shore up associated supply chains, and reconcile critical skills to meet near term and future demand.
2. Manage workforce safety and flexibility - keep the trust of workforces by addressing not only their physical safety, but also their mental well-being and need to stay connected with coworkers.
3. Ensure manufacturing ecosystem viability - understand the implications of COVID-19 and contract provisions for each critical ecosystem player, including material suppliers, contractor companies, co-manufacturers and logistics providers.
4. Rebalance physical production network assets - make fast and accurate decisions on the capital investment and effort required to redeploy underutilized assets or build greater flexibility in current assets in the short term, ensuring those decisions do not inhibit future growth.
5. Leverage digital capabilities - manufacturers with digital platforms, accessible data and advanced analytical capabilities will be able to respond more quickly, accurately and successfully to COVID-19 disruptions.