Managing the supply chain challenge posed by COVID-19

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Systems such as ERP, can improve visibility of reliable local suppliers and their supply chains.
IMAGE: THINKSTOCK

Turn disruption into a competitive advantage through technology and ingenuity

Amid the COVID-19 pandemic, the world can’t afford manufacturing and distribution grinding to a halt. From food on our shelves, to medical necessities, these sectors are at the heart of our economy and must keep going at all costs.

Although the global supply chain is usually a well-oiled machine consisting of a system of organizations, people, processes, information and resources, disruption has become the new reality. According to a new survey released by the Institute for Supply Management (ISM), 75% of companies worldwide have reported supply chain disruptions as a result of COVID-19. Added to that is the increasingly unpredictable demand caused by panic buying and consumer stockpiling.

Reinventing the supply chain to face today’s challenges

In response to the pandemic, manufacturers and distributors have had to pivot and turn the supply chain challenge into a competitive advantage through ingenuity.

The US recently invoked the Defense Production Act to allow American manufacturers to suspend their normal production schedules and begin manufacturing materials such as ventilators, which are needed in this time of crisis. The act, which was originally passed in 1950, was a war mobilization effort. It allowed the government to direct manufacturers to focus production on the much-needed necessities, from medical supplies to disinfection products.

Australia has applied a similar approach through the implementation of ‘wartime’ manufacturing. Due to a shortage of necessities like ventilators and hand sanitizers, the government is offering financial packages that incentivize factories to manufacture critical supplies. For example, one of Australia’s biggest packaging companies, Pact Group, is converting production lines at three of its Sydney plants as it starts making hand sanitizer for the first time, instead of industrial cleaners.

In Canada, Ontario has created a $50 million fund for businesses to retool to make medical equipment. To help fight the pandemic, manufacturers across Canada have pivoted in an effort to offset shortages of critical medical supplies, churning out equipment  such as ventilators, face shields and masks, as well as hospital gowns, gloves and hand sanitizer.

Using technology to ensure long-term resilience

Until recently, China has consistently supplied global manufacturers with the bulk of their required components, raw materials and or processed materials. Presently, six in 10 (62%) of the respondents of the ISM survey have reported increasing delays receiving orders from China. This is of course just the tip of the iceberg, with the pandemic now impacting almost every country in the world; delays are going to begin affecting deliveries from everywhere, and the lateness of deliveries is expected to increase. With shortages of parts, global manufacturers are now scrambling to identify alternative suppliers and supply chains.

Technology such as Enterprise Resource Planning (ERP) systems give manufacturers improved visibility of reliable local suppliers and their supply chains. Through ERP integration, representatives from different supplier companies interact on a single platform, improving the flow and availability of information and improving the reliability of delivery.

ERP also has the added advantage of reducing document handling and other manual activities and facilitates cross-functional collaboration by enabling an online process for engaging with customers and suppliers. What’s more, planned receiving and manufacturing process steps can be amended temporarily in your ERP system to include additional quality assurance; for example, wiping down surfaces and spraying goods with appropriate chemical or detergent cleansers and adding waiting times before issue or delivery.

In times of unforeseen scarcity – as the world is currently experiencing with the COVID-19 pandemic – it’s imperative the supply chain is kept open and full. The challenge is to identify the least costly and easiest way to accomplish this, using a unique combination of technology and ingenuity. If there is surplus stock in the supply chain, the surplus could easily be sold onto neighboring organizations – after all, the manufacturer’s function is to fulfill whatever is identified as a shortage in the economy.

Managing disruption in the long-term

The World Economic Forum has suggested that moving forward after this pandemic, there will be a “new normal”, a need to manage disruption by developing predictive models for proactive scheduling, and dynamic planning of supply with careful consideration of the uncertainties and risks. This change will most likely usher in the next level of digital transformation, based on the collection and analysis of data from various disparate applications.

Ultimately, having the right combination of technology and dynamic ingenuity will allow manufacturers to weather the storm and navigate the unknown, bringing with it the success of discovering “the new world.”

Paulo de Matos is chief product officer at SYSPRO.  SYSPRO Canada is based in Mississauga, Ont.