Tag Archives: covid19

Transforming Supply Chain Management with Intelligent Software

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Robotic Process Automation (RPA) technology to automate business tasks with AI. Concept with expert setting up automated software on laptop computer. Digital transformation and change management.

Supply chain project management has evolved, shifting from a focus on efficiency to navigating a complex landscape influenced by globalization, technology, and changing consumer preferences. The vulnerabilities exposed during events like the COVID-19 pandemic underscore the need for adaptability. The pandemic posed challenges, disrupting production, leading to closures, and causing delays and increased costs in global transportation.

Additionally, unpredictable shifts in consumer behavior created demand fluctuations, impacting industries differently. Inventory management became more challenging, resulting in shortages or excess inventory. Supplier reliability and labor shortages further strained production capacity.

The crisis highlighted the necessity for digital transformation, remote work, and technology adoption in supply chain management. Regulatory changes and economic downturns added complexity to cross-border supply chains. Financial strain emphasized the importance of robust risk management, leading to a renewed focus on building resilient and agile supply chains. Businesses now invest in technology, diversify suppliers, and reassess inventory strategies.

Intelligent software enhances decision-making and risk management, facilitating collaboration throughout the supply chain. For instance, during sudden demand changes due to lockdowns, the software swiftly analyzes data, enabling real-time adjustments to inventory, production, and distribution. This adaptability ensures a responsive and agile supply chain, surpassing traditional approaches for efficiency and customer satisfaction.

The promise of intelligent software

In the current technological realm, intelligent software signifies more than just automation; it melds advanced algorithms, artificial intelligence, and machine learning to emulate human cognitive abilities. Unlike its conventional counterparts, this software learns, adapts, and autonomously recommends actions, excelling in data analysis and trend prediction. Its continuous adaptation based on feedback refines its performance over time.

How intelligent software could make a difference in specific situations

1. Demand volatility amidst global events.

The COVID-19 pandemic triggered significant demand shifts, straining supply chains. Intelligent software, with real-time analytics, could have monitored consumer behaviors, identified disruptions, and gauged inventory levels. Such insights would have refined demand forecasts, allowing organizations to adjust production and prioritize shipments, mitigating stockout risks and excess inventory costs.

2. Supply chain disruptions due to geopolitical tensions.

Geopolitical uncertainties can disrupt supply chains. Intelligent software could pre-emptively identify vulnerabilities, highlighting dependencies on specific regions or suppliers. Through simulations and alternative sourcing evaluations, it would have enabled organizations to devise resilient strategies, ensuring uninterrupted operations amid external disruptions.

3. Quality control and recall management.

Product recalls pose financial and reputational risks. Intelligent software, with advanced analytics, monitors production for deviations from quality standards. Using predictive analytics, it could anticipate issues, facilitating timely interventions, minimizing recall extents, and preserving brand reputation.

4. Transportation and logistics optimization.

Efficient transportation is crucial for supply chain success. Intelligent software, leveraging predictive analytics, would analyze factors like traffic and weather to optimize transportation strategies. This would reduce delays, enhance resource use, and boost supply chain effectiveness.

5. Inventory management in seasonal industries.

Seasonal industries face inventory challenges due to fluctuating demand and product perishability. Intelligent software, utilizing machine learning, analyzes sales trends and market dynamics to offer precise demand forecasts and inventory recommendations. This ensures optimal inventory levels, reduces holding costs, and capitalizes on market opportunities.

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Five tips and five questions to ensure supply chain finance success

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Supply Chain Finance (SCF) can, and should, be a force for good in ensuring much-needed liquidity reaches all suppliers, regardless of their size and meets the objectives of buyers.

However, many suppliers, particularly SMEs, struggle to access necessary working capital, and buyers lack the motivation to set up or expand these programmes.

Wayne Mills, founder and managing director at Atom Advisory, shares his top five tips for buyers and five questions for suppliers to ensure SCF fulfils its potential to accelerate growth and underpin robust supply chains.

Five tips for buyers thinking about Supply Chain Finance

The importance of building and maintaining resilient supply chains has been well-understood for decades, but COVID-19 brought into sharp focus the need to reassess and reimagine supply chains, including supplier relationships.

The importance of building a resilient supply chain has been known for decades, but the impact of COVID-19 highlighted the need to reassess modern supply chain structures.

These five tips are a good starting place when setting up or expanding a SCF programme.

1. Define the programme objectives

2. Ensure business-wide stakeholder engagement

3. Actively support supplier understanding and onboarding

4. Review the changing external landscape

5. Align physical and financial supply chains

 

Five questions for suppliers to ask themselves

Whilst certainly not true in all cases, there is often an imbalance between the size and financial strength of buyers and suppliers. Careful consideration and individual assessment of SCF can deliver significant benefits to suppliers, but these five questions can help ensure positive outcomes.

1. Which buyers run a SCF programme?

2. Is SCF the right solution for me?

3. Is my working capital optimised by using SCF?

4. What is the best use of my time?

5. Which solution offers the most flexibility?

 

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Future-proofing the supply chain

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Future-proofing the supply chain

Future-proofing the supply chain

Supply chains matter. The plumbing of global commerce has rarely been a topic of much discussion in newsrooms or boardrooms, but the past two years have pushed the subject to the top of the agenda. The COVID-19 crisis, postpandemic economic effects, and the ongoing conflict in Ukraine have exposed the vulnerabilities of today’s global supply chains. They have also made heroes of the teams that keep products flowing in a complex, uncertain, and fast-changing environment. Supply chain leaders now find themselves in an unfamiliar position: they have the attention of top management and a mandate to make real change.

Forward-thinking chief supply chain officers (CSCOs) now have a once-in-a-generation opportunity to future-proof their supply chains. And they can do that by recognizing the three new priorities alongside the function’s traditional objectives of cost/capital, quality, and service and redesigning their supply chains accordingly.

The first of these new priorities, resilience, addresses the challenges that have made supply chain a widespread topic of conversation. The second, agility, will equip companies with the ability to meet rapidly evolving, and increasingly volatile, customer and consumer needs. The third, sustainability, recognizes the key role that supply chains will play in the transition to a clean and socially just economy.

Boosting supply chain resilience

Supply chains have always been vulnerable to disruption. Prepandemic research by the McKinsey Global Institute found that, on average, companies experience a disruption of one to two months in duration every 3.7 years. In the consumer goods sector, for example, the financial fallout of these disruptions over a decade is likely to equal 30 percent of one year’s EBITDA.

Historical data also show that these costs are not inevitable. In 2011, Toyota suffered six months of reduced production following the devastating Tohoku earthquake and tsunami. But the carmaker revamped its production strategy, regionalized supply chains, and addressed supplier vulnerabilities. When another major earthquake hit Japan in April 2016, Toyota was able to resume production after only two weeks.

During the pandemic’s early stages, sportswear maker Nike accelerated a supply chain technology program that used radio frequency identification (RFID) technology to track products flowing through outsourced manufacturing operations. The company also used predictive-demand analytics to minimize the impact of store closures across China. By rerouting inventory from in-store to digital-sales channels and acting early to minimize excess inventory buildup across its network, the company was able to limit sales declines in the region to just 5 percent. Over the same period, major competitors suffered much more significant drops in sales.

Supply chain risk manifests at the intersection of vulnerability and exposure to unforeseen events (Exhibit 2). The first step in mitigating that risk is a clear understanding of the organization’s supply chain vulnerabilities. Which suppliers, processes, or facilities present potential single points of failure in the supply chain? Which critical inputs are at risk from shortages or price volatility?

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Healthcare Financial Trends for 2022

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The trajectory of the COVID-19 crisis suggests a long-tailed recovery. The latest financial data reveals the ongoing challenges.

The trajectory of the COVID-19 crisis suggests a long-tailed recovery. The latest financial data reveals the ongoing challenges.

COVID-19 continues to dominate the headlines, and its massive influence on healthcare will extend throughout 2022. At the same time, longstanding issues demand attention. CommerceHealthcare® recently completed its annual market scan and analysis of leading issues in finance and revenue cycle management (RCM). Healthcare Finance Trends for 2022 detail eleven trends that carry significant implications for the economic and operational wellbeing of health systems, hospitals, and physician practices.

Another Year of Financial Recovery

The trajectory of the COVID-19 crisis suggests a long-tailed recovery. The latest financial data reveals the ongoing challenges.

  1. Margin/Profitability. More than a third of hospitals maintained negative operating margins during 2021. Estimated total industry net income loss was $54 billion and median margin 11% below pre-pandemic levels. Hospitals paid an additional $24 billion for clinical labor during the year, $17 million for the average 500-bed hospital. Medical practices have suffered as well. Under 30% of surveyed primary care practices reported being financially healthy.
  2. Revenue and Volume. An encouraging but decidedly mixed picture emerges on the demand side. Through August 2021, overall healthcare spending was 7.2% higher than the previous year, distributed as displayed in Figure 1. Spending has lagged GDP growth. Hospital revenue grew, but volume of overall discharges and emergency department (ED) visits remains depressed from 2019 and flat for OR minutes. The longer-term utilization outlook sees inpatient volume decreasing 1% through the end of the decade, outpatient rising 14% and ED growing 5% for emergent and falling 15% for urgent.
  3. Cash/Liquidity. This metric was bolstered by COVID-19 government subsidies and expedited insurance reimbursements. Disciplined cash management will be required as these supports are removed. In fact, a recent article detailed an emerging liquidity challenge. Major insurers are behind on billions of dollars in payments for various reasons.7
  4. Medical Cost Trend. Another closely watched indicator is growth in employer medical costs. Forecasts for 2022 include:
    1. PwC: 6.5%8
    2. Willis Towers: 5.2%9
    3. Aon: 4.8%10
Health spending by category

Health spending by category

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The changing role of the CFO in a post-Covid-19 world

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The changing role of the CFO in a post-Covid-19 world

The changing role of the CFO in a post-Covid-19 world

Pre-Covid-19, CFOs primarily focused on reporting historical financial performance. But today, with rising logistics costs, supply chain bottlenecks, escalating input costs, and the uncertainty of sales, developing a forward-looking perspective is a must, write Chee Wee Teo, Huan Gao and Adam Mokhtee from Alvarez & Marsal.

In the months and years ahead, the CFO role must significantly evolve to keep up with the ever-changing Covid-19 environment. To be successful in the role, CFOs need to apply predictive thinking, adopt a greater strategic view, and increase their focus on forward risk assessment and contingency planning.

Develop a forward-looking perspective

Traditionally, finance teams spent 80% of their time on reporting results and 20% of their time on forecasting. In a Covid and post-Covid world, that ratio needs to shift toward a forward-looking approach that will better prepare companies to respond to unexpected events.

With this new approach, the CFO’s conversations with the CEO and the board will center on what could happen in the future. For the CFO who is accustomed to relying on historical data, this may be an uncomfortable transition, but it’s vital for the changing role of the effective CFO.

Digitize the finance function

Although digitizing processes has always been necessary for efficiency, the digitization offorecasting has become especially crucial. Leveraging digitization for predictive analytics can help anticipate challenges ahead and allow companies to stress test their business plans.

In some companies, the CFO manages the finance team while the Chief Digital Officer leads the data analytics effort. We strongly encourage the finance function to collaborate with data analytics so that the CFO can develop a predictive, forward-looking view of where the business can go.

The following should be digitization focus areas:

Customer focus:

Build a profile of key customers, their cadence in ordering products, consumption pattern and liquidity situation.

Production and inventory management:

Establish a robust production system (that captures the right production costs) all the way through to an effective sales fulfillment (that delivers the right product to customers at the right time witminimal production waste and inventory leftover). These interdependent processes are typically filled with manual touchpoints and subject to human judgement. This can be significantly augmented with digital tools to drive optimization.

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Supply Chain Problems in 2021: How They Impacted the Economy and What’s Next?

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Supply Chain Problems in 2021: How They Impacted the Economy and What’s Next?

Supply Chain Problems in 2021: How They Impacted the Economy and What’s Next?

Supply chains are networks — ways to source and supply various goods and services across the globe. Unfortunately, due to complications resulting from the pandemic, both businesses and consumers have learned firsthand how vulnerable these networks are, and how critical they are to deliver what we and others often desperately need.

Here’s how the supply chain impacted the economy this year — and also what the future may hold.

Why Did the Supply Change Shortage Occur?

Supply chain shortages first began back in the first quarter of 2020 — at the beginning of the pandemic. Factories all over the world were forced to slash or halt production due to the spread of COVID-19 and the resulting lockdowns. Because factories were not shipping as many goods — or any goods at all — shipping companies responded accordingly by clearing their schedules.

Shipping companies were subsequently called to action to ship personal protective equipment around the world. Unfortunately, many of those containers were unloaded in destination countries, emptied of goods and not returned, which led to a shortage of shipping containers.

How Do Supply Chain Shortages Affect Businesses?

“Most consumers don’t truly understand how astoundingly intricate today’s supply lines are,” said economic expert Monica Eaton-Cardone, owner, co-founder and COO of Chargebacks911. “Corporations might import some parts from China, other parts from India, maybe some rare-earth elements from elsewhere — and if there are any delays at any point, it limits how quickly these products can be sourced, assembled, packaged, shipped and sold.

“As we’ve recently seen, this causes prices to rise because all the efficiencies that were so carefully built into the supply chain have collapsed. Eventually, this leads to scarcity, shortages and lots of unhappy consumers — especially during the holiday season. A broken supply chain is unpredictable, and the system cannot function without reliability in sourcing and predictability in shipping.”

Why Does the Supply Chain Make Such a Difference for Our Overall Economy?

“To compete in the global economy, businesses must outsource and create supply chains,” said Dr. Tenpao Lee, professor emeritus of economics at Niagara University. “The success of a supply chain is based on tremendous collaboration, coordination, and communication. Any small disruption would ruin the whole supply chain system. For example, car manufacturing cannot proceed without simple computer chips. Port congestion can paralyze many related industries.”

What’s Potentially Next Regarding Supply Chain Issues?

“At some point, our supply chain crisis will subside and return to normal,” said Carlos Castelán, managing director of The Navio Group, a retail consulting firm that advises businesses on how to navigate supply chain challenges.

“But until then, the key going forward is inventory,” he said. “For business retailers, inventory could be the difference between success and failure during early 2022. The first and possibly second quarter of 2022 will be a test of retailers’ supply chains and operational capabilities. With shortages of many key components for manufacturers as well as labor shortages – or stoppages in the global due to COVID – retailers are facing a variety of different headwinds across different fronts.”

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Inventory Management: We Can Do Better

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Inventory Management: We Can Do Better

Inventory Management: We Can Do Better

Each day through the COVID-19 pandemic, I tune into Anthony Cuomo’s (governor of New York) daily briefings. It is my break in the day. As a multi-tasker, when Governor Cuomo broadcasts, I use the time to work out on my rowing machine.

His opening line is, “Let’s start with facts. While we all have opinions, let’s start by reviewing the facts.” When he says this, I smile and row harder. I wish that all discussions could start with the facts.

Reflection

In my day-to-day work in supply chain management, I find more encounter more opinions than facts. …most discussions are fueled by over-zealous and self-serving marketing programs. Strong opinions and egos (mostly male) abound… For over two decades, I obediently tapped my foot to technology leaders’ glibly spouting opinions. I seek facts, but I find that they are few and far between.

The lack of fact-based discovery makes me itch…

A Story

Last week on my Network of Networks call, a proud technology salesperson, let’s call him Jim, announced, “I am speaking at Logimed next week on the impact of Just-in-Time (JIT) on the COVID-19 response. Downsizing inventories over the past decade crippled the response.” As I heard Jim speak, I twisted in my seat unsure what to say.

I struggle when I hear opinions that don’t align with facts. So, let’s start with the data. (Yes, am that geeky kind-of-gal that likes to ground discussions in data.) In Table 1, I share research collected for the Supply Chains to Admire analysis on the average days of inventory by industry across the period of 2004 to 2019 by increments to match economic shifts. The period of 2007-2008 was the downturn of the recession while the period of 2009-2013 marked the recovery. (The source of this data is a syndicated data provider of public reporting termed “Y-Charts.”)

So when we start with the facts, it is clear that every industry peer group increased the days of inventory. In addition, each peer group is markedly different. So, why have we not reduced inventory?

Now I will share my opinion.

  1. Complexity. Supply chain leaders in the beverage and household products industries struggled to manage complexity.
  2. Supply Chain Leadership. With average operating margins of 20-22%, medical device and pharmaceutical companies are supply chain laggards.
  3. Supply Management. Industries like automotive pushed cost and waste backward in the supply chain.
  4. Network Design. Only 9% of companies actively design the supply chain with a focus on buffer design.
  5. Factory Scheduling. With the evolution of the advanced planning market and the growth of the market share of ERP expansionist companies, solution capabilities in factory scheduling weakened.
  6. Executive Understanding. Many executives do not understand the form and function of inventory and the need for inventory buffers.
  7. Balance in S&OP. While 82% of companies have an S&OP process, less than 50% of company processes are balanced and only 1/3 of companies actively run “what-if” scenarios.

Read more at Inventory Management: We Can Do Better

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Supply Chain Creativity During COVID-19

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Supply Chain Creativity During COVID-19

Supply Chain Creativity During COVID-19

Just as we typically don’t think about how groceries get to our grocery store, we probably don’t wonder how medical supplies get to our hospital room or doctor’s office. But for those of us who work in hospital supply chain management, we know a lot of negotiating, storage and coordination goes into this at the best of times.

As the world confronts COVID-19, issues regarding medical supply chains have been thrust into the spotlight. When a previously nonexistent health threat spreads across the globe in a matter of weeks, demand for essential medical equipment suddenly outstrips supply. Fraudulent vendors become a higher risk. Established vendor partnerships are strained. In fact, this virus originated near a major personal protective equipment (PPE) manufacturing area in China. This greatly reduced supply at a time when the world needed it most.

While most of UW Health has thus far not encountered a surge of COVID-19 patients, we have still faced unprecedented challenges since the onset of the pandemic. To overcome these current and potential shortages, serious creativity and collaboration need to be front and center.

With so much still unknown, a best-case scenario might be a new normal of carefully caring for COVID-19 patients in steady conjuncture with the many other patients who need our support. This creates a significant and prolonged increased need for PPE, posing tremendous challenges as the supply chain is under immense stress.

Using Public and Private Partnerships

As an academic medical center where our physicians are also faculty of the University of Wisconsin School of Medicine and Public Health, UW Health often works methodically. Now that time is of the essence, the health system and university have been collaborating closely and swiftly, and UW Health is benefiting greatly from its close partnership and proximity to the institution’s educators and students.

Making Unusable PPE Usable

In mid-March, UW Health received 1,250 hoods from the strategic national stockpile. These were meant to be used with our PAPRs, the respiratory protection systems that protect healthcare professionals when bodily fluids can be aerosolized, such as during intubation. Powered by a blower strapped around the wearer’s waist and connected by a hose to a hood covering the head, PAPRs offer the highest form of protection to a medical professional’s head, face and respiratory system during high-risk procedures.

Keeping Hand Sanitizer Flowing

As COVID-19 rapidly spread, the supply of hand sanitizer dwindled everywhere. We knew we would be hard-pressed to safely care for patients without it, so again we relied on the ingenuity and expertise of partners, this time at the UW-Madison School of Pharmacy’s Zeeh Pharmaceutical Experiment, which typically focuses on supporting drug development.

Reuse and Recycle

Sometimes supply chain challenges are not about getting or making more, but making existing supplies go further. We began sterilizing used N-95 respirators to reuse if we experienced a significant surge of patients. We have not yet needed to use them, but preparing for the worst is vital.

UW Health goes through thousands of surgical, isolation and patient gowns each week. Sourcing new, disposable gowns would be nearly impossible in the current climate. Fortunately, we are part of a laundry cooperative that not only launders all linens but sterilizes surgical and isolation gowns. Partnerships like this put a health system in a better position to control the supply chain than if it were a contracted client to a third-party laundry vendor or disposable gown supplier.

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