Six months ago, the general public did not give a lot of thought to the state of supply chains. To many people, it was just an abstract concept that kept goods—and Amazon deliveries—flowing to where they needed to go. But, as COVID-19 swept across the globe, these lines were disrupted to a degree never seen before. Suddenly, supply chains were at the forefront of people’s minds.
Unprecedented Supply Chain Awareness
“Prior to the pandemic, I’m not sure a whole lot of people really understood what supply chains were,” said Abe Eshkenazi, CEO of the Association for Supply Chain Management. “People didn't understand the mechanisms nor the synchronization required to deliver a product from a raw material state all the way to the consumer.”
At this moment, supply chains are at the forefront of the minds of logistics professionals and consumers alike. The disruption caused by COVID-19 was a wake-up call. As the pandemic broke vital supply chains around the world, companies have taken steps to not only survive the current crisis, but also to prepare for future black swan events.
“All of these big companies set up emergency committees and have developed their initial COVID-19 response, but structural supply chain issues take time to resolve,” said Richard Sandall, chief supply chain evangelist at Innovapptive, a mobile supply chain and plant maintenance solution provider and SAP partner. “Suddenly supply chains are one of the most important issues that companies need to address.”
A Digital Bridge to Heal Supply Chains
In order to keep products flowing and projects on track, many companies are reevaluating their technology and software environments. Digital solutions can make the process of maintaining supply chains, tracking materials, and monitoring products both easier and safer.
“We’ll see a focus on digital transformation,” said Eshkenazi. “Or we’ll see organizations that have already invested in digital transformation begin accelerating and using this as an opportunity to double down on their digital transformation.”
Over the past few months, we’ve seen technology companies pitching their software as solutions to any current or future supply chain issues. During SAPPHIRE NOW, SAP consistently made the case that its products and intelligent enterprise can help companies thrive during these difficult times. The online conference saw some new announcements, including expanded capabilities to SAP Data Warehouse Cloud.
Increasing Supply Chain Agility and Resiliency
COVID-19 also has inspired organizations to make their supply chains more agile and resilient. According to Eshkenazi, organizations have adopted a “lean mentality” to their supply chains that was harmful when the virus first broke.
“We were not as agile as we should have been,” he said. “I think this is one of the learnings we need to take away from this situation: Efficiency at what costs?”
According to Eshkenazi, the level of disruption in supply chains varied by industry. For example, the food industry experienced some shortages, while other industries were less affected. These shortages were due to the fact there were safety concerns in the production, transportation, and consumption of some food products, not an actual shortage of materials.
“Each industry has to assess what the impact of this disruption was on them and their suppliers,” Eshkenazi said.
Moving forward, supply chains need to become more agile and resilient to large-scale events with the potential to slow or stop the flow of materials or goods.
Evaluating Supply Chain Risk
The past few months have also inspired companies to rethink the way they evaluate the risk associated with their supply chains.
“I think you’re going to see quite a bit more attention paid to risk mitigation strategy that enables organizations to respond to different situations to their vendors,” Eshkenazi said. “This is where supply chain professionals need to embrace scenario planning.”
Eshkenazi highlighted that supply chain professionals also need to prepare for various theoretical disruptions, understand how these disruptions will affect their company and its business, and evaluate how to best source materials during times of crisis.
“Understanding the risk you have in your supply chains is vital,” said Chris Haydon, president of SAP Procurement Solutions. “These things are changing every single day. A consistent look at those risks so you can have more real-time feedback on what’s going on is important.”
Building Better Supply Chains
COVID-19 has completely changed the way professionals evaluate their supply chains. The outbreak posed a great threat to the lines used to transport vital products and materials.
“This really caught us off guard as an economy,” Eshkenazi said.
Yet this event has inspired companies and their supply chain professionals to work on ways to maintain, bolster, and—most importantly—improve supply chains so that when the next black swan event happens, we’ll be ready.
ASUG members can log in to watch both days of the ASUGFORWARD Supply Chain and Manufacturing sessions on demand.