Strategy & Consulting

COVID-19: Repurpose your supply chain for resilience

April 14, 2020

RESEARCH REPORT

In brief

The COVID-19 impact on supply chains means that business leaders must respond rapidly to improve supply chain resilience.
As the humanitarian crisis unfolds, supply chain leaders need to ensure their supply chain strategies are socially responsible.
Seven priorities are identified with a set of pragmatic actions for repurposing supply chains to increase both resilience and social responsibility.
The objective is to help societies manage the COVID-19 crisis, while building more resilient and more purpose-driven supply networks for the future.

An extraordinary test for supply chains

COVID-19 is disrupting supply chains like few crises have before. Business leaders are required to act quickly to protect and support their workers and sustain the operations that are vital lifelines for their customers and communities. There is an urgent need to mobilize a rapid response and build greater responsiveness and resilience into supply chains.

The crisis is also a test of corporate values and purpose. It illustrates how critical supply chains are on a humanitarian level. Consumers, investors, governments and communities may ultimately judge companies on how they respond to this period of disruption.

The solution? To repurpose and reshape supply chains for the future by increasing both resilience and responsibility. This will help communities manage the short-term crisis and provide businesses with the greater resilience and customer-centricity that will be vital to growth as economies rebound.

Seven priorities for supply chain leaders

To combine resilience and responsibility in supply chains, we recommend companies use their rapid-response command centers to address seven priorities:

1. Preserve the extended workforce

Promote the health and wellbeing of supply chain workers, supporting their mental health and emotional needs as well as their physical safety.

2. Repurpose your capabilities

Look for ways to repurpose supply chains to help societies manage the urgent challenges of COVID-19.

3. Think local

Think creatively about how to reallocate resources to support local communities across the whole supply chain.

4. Secure the supply base

Strengthen the security of supply networks to enhance overall resilience and support areas of the supply base at risk from operational and/or financial disruption.

5. Respond with confidence and insight

Use analytics, automation, digital platforms and digital twins to model disruption and test out potential responses.

6. Learn and evolve

Capitalize on a once-in-a-generation opportunity to identify points of supply chain failure, their root causes, and how they can be strengthened.

7. Design for resilience

Keep planning for the investments needed post-crisis building a core digital infrastructure including analytics, that includes the purposeful and responsible features developed during the pandemic.

1. Preserve the extended workforce

COVID-19 has put both the core and extended supply chain workforce in an unfamiliar, fast-changing, and often highly stressful environment. They need their leadership’s support to keep well and stay productive. Our recommendations include:

Building a flexible working culture and reskilling for areas of high demand
Keeping track of employees to maintain a healthy talent pipeline
Deploying tools for elastic collaboration with suppliers, employees and customers
Ensuring the network is secure and can support new ways of working.

2. Repurpose your capabilities

Businesses have a vital role to play in helping societies manage the COVID-19 crisis. In so doing, both they and the communities they serve can come out stronger the other side. Our recommendations include:

Simplifying product lines and streamlining planning to release capacity and balance supply with demand
Understanding what new products and services society urgently needs and collaborating creatively with other companies to meet new demand
Exploring how underutilized assets or new technologies can support the fight against COVID-19.

3. Think local

Businesses can help societies both directly, by supporting immediate healthcare needs, and indirectly, by supporting local communities across their supply chains. Our recommendations include:

Helping the communities the business serves directly (by prioritizing vulnerable customers, donating food and other supplies, or hiring local people to meet extra demand)
Supporting the roles employees want to play in their own communities (by being flexible about working patterns or providing premises or resources to the community).

4. Secure the supply base

The supply-side challenges created by this pandemic highlight the need for a deeper understanding of both known and unknown risks to the supply base. They also amplify the importance of predictive modelling and applied intelligence. Our recommendations include:

Mobilizing a rapid-response center and identifying and prioritizing risks and blind spots
Expanding risk frameworks and automating response protocols
Being a force for good by staying true to smaller suppliers who may be struggling financially.

Securing the supply chain

5. Respond with confidence and insight

Today’s digital platforms, analytics and automation capabilities enable supply chain leaders to quickly get visibility across the supply chain and respond to COVID-19 with speed, certainty and safety. Our recommendations include:

Prioritizing customers, products, geographies and/or channels to ensure products are available to those that need them most
Keeping assets utilized and staging inventory strategically to meet shifting demand and support medical needs
Using digital twins to run simulations and develop purpose-driven responses.

6. Learn and evolve

This crisis is an opportunity for businesses to uncover previously hidden weaknesses in their supply chains and ensure they come through stronger than before. Our recommendations include:

Understanding root causes and failure modes to pinpoint where to make lasting improvements to supply chains
Bringing the organization together under a common cause and focusing on end-customer outcomes
Identifying ways to use data to make better and faster decisions.

7. Design for resilience

As the immediate emergency passes and economies rebound, businesses have a unique opportunity to create intelligent supply chains with a redoubled focus on agility, resilience, social responsibility and human-centric needs. Our recommendations include:

Pivoting to the customer-centricity that will ultimately fuel growth post-crisis, using micro-segmented supply chains to increase agility and responsiveness
Using a zero-based mindset to increase short-term liquidity and manage costs and resources intelligently
Building trust with customers through sustainability, social responsibility and radical transparency.

Manage supply chain resilience and responsibility

These seven priorities, and the practical actions we recommend for each, will help companies respond to extraordinary disruption in the most effective way, both now and in the years to come. The primary objective is to reshape for the future by building greater agility, responsiveness, and resilience right across the supply chain. But it is essential to complement this with purpose and responsibility in response protocols and supply chain strategies. This combination of resilience and responsibility will not only help societies manage the challenges of COVID-19, but also create a foundation for future competitive advantage and business growth.

Companies that can do all this with a focus on responsibility will be differentiated as leaders in the future.