4 Supply Chain Management Takeaways from China to Survive Coronavirus

April 20, 2020

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China to Survive Coronavirus

The onset of the COVID-19 or the Coronavirus pandemic has exposed the vulnerabilities in the way Supply Chain Management traditionally functions.

Those who were prepared for any disasters have been able to keep their heads above water for a while. But the situation has forced every organization that plays a role in the Supply Chain Management cycle to take a hard look at the way they run and what steps they need to take to emerge out of this crisis.

The Supply Chain Management Crisis

Some of the common challenges the SCM industry is facing are as follows.

Increased demand

The demand for a variety of goods has shot up as consumers across the world continue to stock up on the necessary supplies.

This demand prevails, not just for essential medical supplies like face masks and sanitizers, but also for the day-to-day commodities.

Broken SCM links

While the demand is high, there is a shortage in the supply of these goods. This is because of the restrictions imposed on the manufacturing and distribution side of things.

From the gathering of the workforce to the movement of raw materials and finished goods, any aspect that is seeing a constraint is a creating break in the entire SCM chain.

Non-essential status

Certain businesses, which formed the lifeline of the economy, have now been deemed non-essential and have had to stop manufacturing altogether. These include automobiles, luxury goods, electronics and lifestyle, among others.

While the SCM processes have entirely stopped in these respective industries, they have percolated issues, such as underutilized warehouses, in other sectors.

What about China?

Amid the chaos of local and global SCM operations, all eyes of the world are on China as it strives to emerge out of this crisis. There are two reasons for this:

  • The pandemic started in China and has now gained a degree of control there too. This gives the SCM players a chance to foresee how the situation can play out in their respective countries.
  • China, being one of the leading global exporters for many industries and a technological giant unto themselves, have tried and tested a variety of models in striving to keep their SCM functions running.

As you try to make sense of the situation in your country, we have collated for you four key takeaways in managing the supply chain management crisis as learned from China:

Takeaway #1 – Rethink your SCM framework

This is the time for adapting and extending your models of manufacturing and delivering goods to your consumers. If remaining relevant is of any importance to you, it calls for a transformation in at least one aspect of your supply chain management.

The change you may need to bring in could be at the manufacturing end where you produce goods that meet the current demands. Alternatively, if there exists a need for your products or services, you need to re-strategize how you can assure continuity of the supply.

For instance, the automobile manufacturer, Shanghai-GM-Wuling (SGMW) rearranged their production line to make medical face masks. Not only did this move meet the need of the hour and helped many lives, but it also rewarded the brand with both revenues and reputation.

In another case, an instant noodle company called Master Kong, which used to work strictly on an offline large-scale retail model, switched to an O2O (online-to-offline) framework. They did so by continuously reviewing available channels and ensuring supply to e-commerce and small retail stores, thereby mitigating the effects of the standstill significantly.

Takeaway #2 – Review on-ground challenges every day

In light of the pandemic, it is time for all the top leadership to be equally engaged in the day-to-day running of the businesses. The leaders need to be involved in making and authorizing on-ground decision.

Alternatively, they can also empower certain key members of every group to do so. The hotels’ group, Huazhu, did so by creating a task force that convened on a daily basis to review processes and issued top-down instructions for all the hotels in the chain.

As there is a daily change on the ground, there has to be a mechanism in place to continuously monitor which transportation routes are cut off, how much workforce is available after a lockdown, etc. Technology plays a significant role in collating and analyzing this information, which brings us to our next takeaway.

Takeaway #3 – Maximize the use of technology

From social media to AI-driven systems, technology is playing a big role in streamlining the solutions to the current challenges. You need to optimize the technology available to you in order to cross the on-ground hurdles.

As “contactless” is becoming the new norm, some Chinese firms utilized new forms of technology to impart training to the workforce who have hopped from other industries. Other Chinese companies used the WeChat social media platform to coordinate with employees and partners alike to keep all stakeholders involved.

Huazhu also utilized their internal platform, Huatong to pass timely information to all the franchisees. The more technologically advanced companies used predictive analysis and simulations to anticipate area-wise demands, available distribution channels and workforce trends.

Takeaway #4 – Plan for recovery

As China is slowly resuming a hint of normalcy, planning for the post-lockdown world has become a priority for many firms. Some Chinese companies that came to a standstill utilized the time to prepare long-term strategies and how to handle any future adversities. As they resume function, they need to balance the safety and continuity of the operations.

Strategies for disaster management and recovery can no longer be put in the back burner and need to be given their due attention. To this effect, technology-based companies also have started to look into more automated forms of executing SCM processes.

Continuity for Supply Chain Management

Supply chain forms the basis of our day-to-day living, and its continuity is vital to our existence, despite the magnitude of any impending global event. Assuring this is, however, easier said than done.

  • For one, SCM processes are such that they become rigid over time, not allowing for quick reconfiguration in the times of crises.
  • Secondly, there are many moving parts to a supply chain management system, each of which needs to be treated separately. Not every aspect can be solved with policies or planning.

However, to the extent possible, business in supply chain management should look into safe, automated operations and optimum use of technology to plan for the future.

At Vinculum, we develop, adapt and offer a host of technological solutions to give your business the edge it needs to remain relevant in the times of change.

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