Five steps to restart your supply chain amid COVID-19 disruption
Whether your business has continued to operate through these turbulent times or is planning a restart, there are several actions to consider to make sure your supply chain is prepared, has managed vulnerability, and is ready to ramp up activity.
We’ve developed a five-step supply chain “restart guide” to help you evaluate your existing supply chain network, triage critical activities, and prepare an action plan that can be deployed immediately.
These are the five action areas to restart operations:
1. Demand planning and management
As our economy restarts and businesses steadily resume production, the demands for products to fuel growth is expected to increase dramatically. Having a robust plan in place to meet your customers’ evolving demands will be the difference between success and falling short of expectations.
Having a robust plan in place to meet your customers’ evolving demands will be the difference between success and falling short of expectations.
- Establish an executive committee to oversee the alignment of customer demand with supplier capacity and operational capabilities.
- Implement a process that’s tailored to your business to conduct a continuous review of customer releases to verify stated volumes and need-by dates are accurate.
- Identify key indicators for customer shifts in demand and the impacts these shifts will have on downstream suppliers, then proactively implement risk mitigation initiatives.
- Provide the daily finished goods backlog and communicate revised order fulfillment timing to customers. Call attention to critical suppliers and process bottlenecks as necessary to improve the flow of material.
- Prioritize customer shipments with a focus on order fulfillment rates while minimizing costs by reducing LTL and expediting shipments.
2. Supply base readiness
Before you can restart your plant, several supply network infrastructure and process updates require your focused attention. Understanding your supply base readiness and capabilities will be critical in determining what your operations can produce and when. Developing an understanding of who your key suppliers are and ensuring you have a strong relationship will be a top priority — as your customer demand has changed, so has your supply base capabilities. You must identify the new challenges your supply base is facing and create a plan that allows you to balance your supply base so that you can add resilience and continue to fulfill your customers’ needs.
- Identify the raw material suppliers and service providers that are critical to your operational and demand requirements.
- Assess raw material in transit, on hand, and WIP inventories to identify key material shortages that threaten the restart activities.
- Determine which suppliers pose risks to operational startup supply continuity.
- Create a meeting cadence to frequently communicate your needs and assess their capabilities.
- Establish a feedback loop with demand planning to assess changes in market conditions that impact supplier requirements in this rapidly evolving environment.
3. Risk mitigation
As you learn more about the changes to your customer demand and your suppliers’ capabilities, start thinking about how you can mitigate your supply chain risks while restarting your operations. Risks will be present with external suppliers and service providers, as well as with internal processes. It’s very easy for processes to become out of control when restarting operations in a crisis. Errors and quality concerns will become distractions and stop your progress in fulfilling your customer requirements. Externally, you’ll be competing against other organizations for their limited products and services, as not every company will be ramping up at the same pace. Managing your risks will be critical as you restart your operations.
It’s very easy for processes to become out of control when restarting operations in a crisis.
- Identify areas of supply risk, prepare sourcing efforts, and execute contingency plans for supply and service provider disruptions.
- Develop and implement a cross-functional supplier and service provider risks assessment team to mitigate potential risk to ongoing operations.
- Identify short-term and long-term potential alternates for your raw material and service provider sources.
- Identify opportunities when incorporating new suppliers into the logistics network during the resourcing process.
- Establish new processes and procedures to promote robust, flexible operating conditions that maintain control of the overall process.
- Recalibrate material requirements planning (MRP) throughput calculations to account for supplier lead-time adjustments that negatively impact production floor lead-times.
- Develop a daily finished goods backlog and communicate your revised order fulfillment timing to customers.
4. Performance management
We encourage monitoring and managing supplier performance as a critical component to the ongoing success of any plan. Focus on these critical activities for a performance management structure that gives your team real-time visibility into your supply network.
- Identify key suppliers throughout the supply network and reinforce the need to continue to build strong relationships and partnerships.
- Create a baseline of important business requirements and develop supplier key performance indicator (KPI) metrics that give real-time, bilateral visibility to your teams and to your supplier.
- Implement a protocol for the continuous collection and communication of meaningful data between your teams and your suppliers.
- Monitor activities to ensure effectiveness and compliance to all of the health, safety, quality, and receiving practices deemed necessary by your company and your customers.
Keeping each participant in the supply chain informed promotes an environment of partnership and mutual success. Work with your teams on these activities to develop a professional communication plan for your suppliers, customers, and internal teams.
- Create a “restart war room” staffed with a team dedicated to identifying and resolving issues related to restarting your operations.
- Establish an executive committee responsible for aligning all strategic customer and supplier communications.
- Assemble a team to address tactical communications with suppliers focused on immediate supply continuity issues and concerns.
- Initiate an intercompany, cross-functional communication plan to keep each area of your business informed.
No doubt about it, the rebound of the economy is reliant upon a strong supply chain network. The restart will begin in waves, and you’ll need to be agile enough to not only ramp up your production, but to survive.
The restart will begin in waves, and you’ll need to be agile enough to not only ramp up your production, but to survive.
As always, if you have any questions, feel free to contact us anytime.