PASIA: Pandemic strains the supply chain, how companies should respond

Team doing strategic planning

Moving a product from point A to B right now has never been easy than it was due to the coronavirus pandemic. What if that product is critical for our survival? Then we need to eliminate anything that constrains the movement of goods from the very source to the consumer so we can get it on time to survive. However, it will not happen until we transition from silo or fragmented operation to an integrated end-to-end supply chain.

We can assess and measure things better when we get a hold of a bigger picture than focusing on our own department.

During the webinar on Thursday, the Procurement and Supply Institute of Asia (PASIA) offered some actionable insights on resiliency companies can adopt to respond better to pandemic disruption now and beyond.

PASIA has been focusing its advocacy to saving lives by ensuring the availability of critical supplies; maintain peace and order; get the economy moving by helping SMEs and industry players stabilize their operations.

“The COVID-19 pandemic is causing major disruptions globally and will continue to do so unless we act immediately. This must be looked at from a supply chain perspective”, said PASIA.

CURRENT ISSUES

Charlie Villasenor, CEO of PASIA, outlined some of the current supply chain issues facing the outbreak:

  • Longer average lead times
  • Manufacturers operating half of their capacity at the minimum
  • Companies practicing lean supply chain were most vulnerable to disruption
  • Upstream suppliers had been grappling to get afloat financially
  • Bullwhip effect to surface as a result of hoarding or stockpiling
  • Lower demand for non-essential goods due to lockdowns

He also cited the supply chain environment as one major relocation consideration for foreign companies moving out of China. But unfortunately, the Philippines was not the top destination choice for production due to supply chain concerns.

“The Philippines is a very challenging country when it comes to logistics… our [logistics] costs are significantly higher than many of our respective countries beside us”

For the nation to make a strong business case to investors, Charlie suggested the country should improve its lagging World Bank’s logistics performance index.

STRATEGIES TO RESPOND TO DISRUPTION

Charlie has categorized recommendations into three phases – people, process, and enablers. He recommended companies to;

People

  • Make health and safety as the top priority by initiating practices to mitigate risks of transmission.
  • Improve supply chain skillsets by training people and stress test capacity.
  • Collaborate with stakeholders and suppliers.
  • Secure augmentation support and services. Be open to outsourcing supply chain activities.

Process

  • Ensure demand-driven materials requirements planning (MRP) for longer horizon planning (e.g. 18-24 months).
  • Be strategic in sourcing activities. Gain tiered supplier risks visibility by mapping out the supply chain.
  • Optimize logistics network planning through integrated logistics capacity.

Enablers

  • Initiate demand data and information visibility to use in forecasting.
  • Digitize procurement and supplier relationship management (SRM) processes.
  • Integrate logistics planning, warehousing, transportation, and distribution.

Tonet Rivera, former Sr. VP of Global Supply Chain of Mead Johnson Nutrition, said organizations should;

  • Utilize general aviation or non-commercial airlines to transport critical items
  • Use intermodal transportation and remove roadblocks to make logistics move freely
  • Incorporate supply chain with any business continuity strategy

According to Rey Aguilera, mentor and coach of Kanban Logistics, said the firms should have systems in place to prepare for such crisis.

  • Predict and assess potential risks
  • Create a supply chain preparedness index (SCPI) to determine the readiness of supply chain capability to ensure unhampered flow of goods.

NEW WORLD SUPPLY CHAIN

PASIA said the post-pandemic supply chain would be different as companies have started localizing or diversifying their supply base, a move that reduces reliance from China. The crisis pushes countries to be self-sufficient to respond to disruption quickly. Moreover, supply chain professionals will play a crucial role in providing expertise to companies to augment and scale their capacities.

Companies that invest in supply chain education on their people, utilize the right technology, and operate with an end-to-end supply chain mindset are more prepared to withstand during the crisis than those who stick to their old way of thinking.

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EVENTS

Manila, Philippines

July 9-11, 2020

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