By: Paulo de Matos, Chief Product Officer SYSPRO
Amid the COVID-19 pandemic, the world cannot afford for manufacturing and distribution to grind 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 of this well-oiled machine 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 the challenges of today
In response to the pandemic, manufacturers and distributors have had to pivot in a new direction, to 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 efforts of manufacturers to focus production on the much-needed necessities in times of need, from medical supplies through to necessary 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 Australian 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.
Within Canada and South Africa, distilleries have also committed to supplying alcohol, a key ingredient in 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, 6 in 10 (62%) of the respondents of the Institute for Supply Management (ISM) survey have reported that they have experienced increasing delays in 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 every country, and the lateness of the delivery is expected to increase. With the increasing shortages of parts, global manufacturers are now scrambling to identify alternative suppliers and supply chains to make up for the missed deliveries.
Technology systems, such as Enterprise Resource Planning (ERP) systems, can certainly improve the situation by giving manufacturers improved visibility of the reliable local suppliers and their supply chains. Through ERP integration, representatives from different supplier companies can interact on a single platform, improving the flow and availability of information and improving the reliability of delivery. For example, the SYSPRO Supply Chain Portal was originally launched with a Request for Quote capability, which enabled the formal invitation of suppliers to tender for the supply of goods and services. Not only can manufacturers identify local suppliers who can meet their orders in a time of scarcity, but manufacturers themselves could easily find alternative suppliers.
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, the wiping down of surfaces and spraying of 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 is imperative that the supply chain is kept open and full. The challenge that the company faces is to identify the cheapest and easiest way to accomplish this, using their own 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 function of a manufacturing organization 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.”