When the pandemic hits the world the supply chain was exposed to many changes.Some of the changes were are good so that even after the pandemic subsides the world will live with these changes. The supply chain shock started in china in the month of February and the whole world was experiencing changes in the terms of production strategies, manufacturing strategies, supply chain of the company etc. Temporary trade restrictions and shortages of pharmaceuticals, critical medical supplies, and other products highlighted their weaknesses. Those restrictions and the us china trade war has made people more into nationalism which had triggered the companies to do the production domestically. Even when they are planning to start the production domestically the thing to be kept in mind is that they should decrease the cost of production as the people will not be willing to buy these products at a high cost as the economic recession is on its verge. The challenge for companies will be to make their supply chains more resilient without weakening their competitiveness. To meet that challenge, managers should first understand their vulnerabilities and then consider a number of steps—some of which they should have taken long before the pandemic struck.
Uncover and Address the Hidden Risks
Modern products often incorporate critical components or sophisticated materials that require specialized technological skills to make. It is very difficult for a single firm to possess the breadth of capabilities necessary to produce everything by itself. An example is a group of chemicals known as nucleoside phosphoramidites and the associated reagents that are used for creating DNA and RNA sequences. These are essential for all companies developing DNA- or mRNA-based Covid-19 vaccines and DNA-based drug therapies, but many of the key precursor materials come from South Korea and China. Manufacturers in most industries have turned to suppliers and subcontractors who narrowly focus on just one area, and those specialists, in turn, usually have to rely on many others. Such an arrangement offers benefits: You have a lot of flexibility in what goes into your product, and you’re able to incorporate the latest technology.
Identify your vulnerabilities
The companies should understand their risks so that they can protect themselves, the companies should map their full supply chain model from distribution channels, facilities, transportation hub etc. The goal of this mapping process is to classify the risk faced by the company into low, medium high risk.to do this effectively we should apply some of the specific metrices. It is always vital to understand how long your company could move forward if a supply shock hits and how can it recover and how faster it can rectify it. The answers to those questions depend, in part, on whether your manufacturing capacity is flexible and can be reconfigured and redeployed as needs evolve. Once you’ve identified the risks in your supply chain, you can use that information to address them by either diversifying your sources or stockpiling key materials or items.
Diversify your supply base.
The obvious way to address heavy dependence on one medium- or high-risk source (a single factory, supplier, or region) is to add more sources in locations not vulnerable to the same risks.
Hold intermediate inventory or safety stock.
If alternate suppliers are not immediately available, a company should determine how much extra stock to hold in the interim, in what form, and where along the value chain. Of course, safety stock, like any inventory, carries with it the risk of obsolescence and also ties up cash. It runs counter to the popular practice of just-in-time replenishment and lean inventories. But the savings from those practices have to be weighed against all the costs of a disruption, including lost revenues, the higher prices that would have to be paid for materials that are suddenly in short supply, and the time and effort that would be required to secure them.
Take Advantage of Process Innovations
As firms relocate parts of their supply chain, some might ask their suppliers to move with them, or they might bring some production back in-house. Either course—transplanting a production line or setting up a new one—is an opportunity to make major process improvements. This is because as part of the change, you can unfreeze your organizational routines and revisit design assumptions underpinning the original process.
Conclusion
The economic turmoil caused by the pandemic has exposed many vulnerabilities in supply chains and raised doubts about globalization. Managers everywhere should use this crisis to take a fresh look at their supply networks, take steps to understand their vulnerabilities, and then take actions to improve robustness. They can’t and shouldn’t totally back away from globalization; doing so will leave a void that others—companies that don’t abandon globalization—will gladly and quickly fill. Instead, leaders should find ways to make their businesses work better and give themselves an advantage. It’s time to adopt a new vision suitable to the realities of the new era—one that still leverages the capabilities that reside around the world but also improves resilience and reduces the risks from future disruptions that are certain to occur.
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