Tag Archives: covid

The future of supply chain risk management

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The COVID-crisis has prompted a period of introspection as organisations question how to best structure their supply chains and manage their risk

Trends towards global sourcing, mobile warehousing, just-in-time production and lean manufacturing have created supply chains that are highly optimised, but also increasingly complex. When things are going well, this means cost-effective operations, less waste and companies can react flexibly and in an agile way to customer demands.

However, these trends also expose the supply chain to new, sometimes hard to recognise risks. And when there is interruption, the complexity of these supplier systems and the immediate nature of production can mean businesses are suddenly facing significant disruption with immediate impact to bottom lines, or even market share and reputation.

For instance, when governments imposed lockdowns to curb the spread of coronavirus, many firms found that manufacturing ground to a halt as the transportation of goods was interrupted. Where once a business was likely to have spares and back-ups in warehouses, just-in-time practices mean that many businesses are now left without access to the services or parts they need to operate.

Shifting sands

The uniquely volatile business environment of the past year has brought to the forefront of the business agenda the supply chain vulnerabilities they face. For some, this could signal a change in practices in the future to increase supply chain resilience – whether that’s looking at near shoring and onshoring, reintroducing back-up stock in warehouses or installing alternative production sites.

Kocher said: “What’s changing is how risk managers, management and insurers alike recognise and factor supply chain risk into their decision-making. With more and more severe supply chain interruptions materialising, businesses have started to reconsider certain aspects, such as having suppliers nearby to eliminate certain risk factors from their business activities.”

The role of risk engineering

As organisations continue down the path of introspection and question how to best structure their supply chains and manage their risk, it becomes ever-more crucial that risk managers understand the full extent of the vulnerabilities in their own production process. Kocher believes that risk engineering plays an increasingly key role in this process.

“One of the key value drivers is to understand your supply chain and the assumptions you are making about it in case of disruption. This may sound trivial, but it is a fundamental condition to be in place before conducting impact assessment, quantification, deciding on the mitigation strategy and implementing mitigation measure. A structured approach to ensure adequate understanding in sufficient depth is critical. ”

Empowering better decisions

Often, when a company considers key or critical suppliers, it is examining its supply chain with a financial lens, or with a strong focus on individual business sections. A realistic company-wide, impact-oriented view, underpinned with decades of actual loss experience, supports the identification of key exposures which may otherwise go unnoticed.

Kocher concludes: “There is no one perfect way of managing supply chain risk. The risk engineer brings to the table a wealth of experience of what the process could look like, and is able to pick up the individual client where they stand in their supply chain risk management journey, with the goal of bringing them further towards a comprehensive supply chain risk management adapted to their specific needs.”

Read more at The future of supply chain risk management

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Why decision intelligence is essential for overcoming supply chain constraints

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The current supply chain disruption is one of the many types of crises the marketplace has faced over the years. Even before COVID-induced challenges had cargo ships anchored off of ports across the globe and store shelves barely stocked, supply chain leaders have been in a race to keep up with changing consumer demands, a shifting competitive landscape, and technological advances.

Yet, as the development, reach and success of businesses has become highly dependent on tightly linked supply chains, the structure of those connections has become increasingly fragile and intricately connected.

Over the last two years, an unprecedented supply chain crisis has unfolded. With networks spanning multiple continents, global supply chains have broken down. From COVID-19 and the war in Ukraine to a sideways freighter that blocked the Suez Canal for a week and a growing list of environmental disasters, the upheaval has created a new benchmark for business-as-usual. A survey from the UK Office for National Statistics showed that 40% of businesses in the wholesale and retail trade industry reported global supply chain disruptions at the end of the first quarter this year.

This disruption is closely tied to a failure of foresight and planning built into supply chain systems.

Asking the right questions

Many companies tackling supply chain disruption see themselves as “data-driven,” when in fact, most are not. A Gartner report shows that less than half of organizations have actively started to build a roadmap for supply chain digitization transformation, despite it being a key priority for most leaders. Another survey showed only two-thirds of supply chain organizations felt the strategy and execution of their supply chains were well aligned.

Business intelligence (BI) and analysis tools were the promised future, where business users could easily access and transform huge volumes of corporate-wide data to predict business outcomes and future demand. However, the reality is that traditional BI solutions and ERP systems are static and can only provide a snapshot of the present or past.

Decision intelligence rests on prescriptive analytics

Such foresight comes from adding a prescriptive analytics layer to a firm’s supply chain management. This layer answers the question “what should happen” and becomes the basis for generating decisions, not just insights. This approach elevates the level of analytic inquiry, using machine learning and optimization models to propose a course of action based on data, analytics and business models.

Ultimately, this can dramatically transform how companies manage the flow of goods throughout their supply chains because it resolves the question how to proceed to achieve the targeted outcome.

Decision intelligence and the future of the supply chain

Taking a new approach to supply chains relies on a new vision for data in an organization. Data is the engine of growth and the source of intelligence that will allow businesses to get a grip on their supply chains.

This means drawing on data from a wider variety of sources than ever before. Businesses need more actionable, real-time data from across their supply chains. They need to quickly and securely access multiple data sources across on-premises data centers and multiple clouds. To plan for future shocks, businesses need to learn from this historic moment and feed this information into predictive and prescriptive analytics modeling.

A new tomorrow

Supply chain management solutions based on decision intelligence and real-time prescriptive analytics models are potent instruments in the fight against the supply chain crisis. Such systems can improve overall processes throughout the enterprise and build resilience into demand forecasts. They can reduce costs associated with overstocking, inventory stockouts, and product obsolescence — even in the face of widespread crises.

Read more at Why decision intelligence is essential for overcoming supply chain constraints 

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The USC Marshall Center for Global Supply Chain Management stages “Covid-19: What’s Next?”

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The USC Marshall Center for Global Supply Chain Management stages “Covid-19: What’s Next?” live webinar on Wednesday, April 8, with the intention of bringing a new perspective to the crisis.

Webinar series part 2 features Jonathan Rosenthal, CEO of Saybrook Management, along with Chris Cookson, EY’s leader of U.S. West Supply Chain Operations.

The first session of “Connecting the World Through Networking Education and Advanced Research (NEAR) convened on March 4th, one of the most compelling presentations was made by Noel Hacegaba, deputy executive director of administration & operations at the Port of Long Beach.

He noted at the time that blank sailings in the transpacific with 20 percent of scheduled carrier calls curtailed, was having a negative impact across the supply chain.

“This led to concern that with a higher concentration of ship calls coming as a consequence, would lead to a mini-peak season every time,” he said.

Hacegaba, added that Long Beach was anticipating “a boomerang effect” – a surge of cargo that would create new challenges for the port’s supply chain partners.

That has yet to be realized, however, as the port continued to feel the economic effects of COVID-19 in March with more canceled sailings and a decline in cargo containers shipped through the nation’s second-busiest seaport.

Terminal operators and dockworkers moved 517,663 twenty-foot equivalent units (TEUs) last month, a 6.4% decline compared to March 2019. Imports were down 5% to 234,570 TEUs, while exports increased 10.7% to 145,442 TEUs. Empty containers shipped overseas dropped 21% to 137,652 TEUs.

Overseas health concerns over the coronavirus caused 19 canceled sailings to the Port of Long Beach during the opening quarter of 2020, which contributed to a 6.9% decline in cargo shipments compared to the first three months of 2019.

“The coronavirus is delivering a shock to the supply chain that continues to ripple across the national economy,” said Mario Cordero, Executive Director of the Port of Long Beach. “We’re definitely seeing a reduction in the flow of cargo at San Pedro Bay, but the ports remain open and operating, and we are maintaining business continuity.”

The frequency and intensity of cleaning efforts have been increased on the docks, at port offices and other common areas, in order to maintain the health and safety of dockworkers, truckers, terminal operators and others.

Read more at The USC Marshall Center for Global Supply Chain Management stages “Covid-19: What’s Next?”

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