Covid-19 brings supply chain management into spotlight

Supply chain management

The pandemic is a wake-up call for executives to focus on their supply chain resiliency. When supply chain collapses, other functions follow because their operation is tied up to supply chain performance.

Personal protective equipment, medical supplies, and hygiene products are in short supply in most parts of the country facing Covid-19. Aside from the pandemic being the reason for the shortage, the basic cause is demand for products far exceeded the supply.

This is where supply chain management comes in as it deals with the flow of products and information from the supplier to consumer. What is happening now is the Covid-19 disrupts the flow of goods across the supply network. That means the capacity to produce adequate supply is insufficient to satisfy the surging demand due to travel bans, limited work force, lack of raw materials, and other bottlenecks choking the production and movement of goods.

The supply chain is the network of companies that manage the efficient flow of products from product development to conversion to transportation to consumption to product returns to sustainability. Almost everything. Most supply chains today are global and complex as raw materials are sourced overseas, therefore, any disruption in one network has a ripple effect on the entire supply chain.

The concept of supply chain management remains unfamiliar in the Philippines because it is not widely promoted by academics and businesses, unlike in developed countries where universities and industries have come together in developing curriculum and talent. No wonder their supply chains are more innovative than ours. The Philippines has a lot of work to do.

Supply chain processes within procurement, production, and logistics are often viewed as support services rather than strategic enablers to run an efficient, profitable business. With the pandemic ravaging the world, many have realized the uninterrupted flow of goods is the source of economic health for the company and the nation.

The pandemic disruption to the supply chain is unprecedented. We have never seen this before. It brings massive obstruction to normal business operations such as longer lead times due to travel ban or canceled production because of the lack of raw materials or workers. Companies are reeling from the effect of the virus as demand drops while struggling to get the materials from overseas.

The crisis amplifies which priority generates income for the company that needs attention and protection by which resiliency must be built upon. Aside from preserving employees’ health and safety, which must always come first, companies will immediately revisit their inventory, suppliers, demand, and any constraints that put their supply chain at risk.

By looking at the current situation, it is clear the pandemic is directly crippling transportation and production capacity causing economic impact not just within the company but also on a national level. Companies should make the supply chain the center of the business because it is the revenue-generating and a major cost-saving driver for the company’s financial health.

Covid-19 calls for innovation and resiliency among companies to mitigate the impact on their cash flow. That means firms should take a serious approach and pay close attention to how their supply chain will respond to risks and what resources are available to help stabilize existing processes. Visibility across supply networks is key. Mapping out the supply chain is one common practice to gain visibility as it exposes location and other information of tiered suppliers.

Companies that innovate and invest in their supply chain are well prepared for the next disruption than those who just watch and see and do nothing or little in their supply chain.

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