Pandemic Archives - USC Consulting Group

Supply chain disruptions were the cause of significant chaos during the early stages of the pandemic. Product shortages and price hikes made shopping for things like cars, appliances, and even some grocery items next to impossible.

It seems that the worst of the pandemic is behind us, and yet the lessons it taught remain crucial for avoiding future disruptions. In this article, we look at what the pandemic has taught us about supply chains.

Global Supply Chain Management

Global supply chain management is the responsibility of overseeing raw materials as they transition into products and make their way onto store shelves. The job of the global supply chain manager is to reduce costs, eliminate risks, and increase efficiency.

During normal times, the overwhelming number of variables that go into the process of product development make global supply chain management difficult. Covid, however, completely changed the world’s understanding of how vulnerable supply chains were.

Supply Chains are Endlessly Connected

A look at the numbers shows that supply chain disruptions occurred across the board following the first wave of the pandemic in 2020. It’s true that supply chain disruptions were up almost 700%–a startling though not particularly surprising statistic.

However, some of the stats aren’t as easily explained. For example, factory fires went up almost 150%. Prices soared. Almost 30% of businesses said they needed to find new suppliers altogether.

When one thing goes wrong in a supply chain, it’s very easy for others to get out of sync as well. Factory fires rose because of employee shortages. An absence of one raw material, or, for that matter, processed goods, can have significant ramifications for a wide range of different industries.

To that end, the pandemic showed just how vulnerable supply chains really are.

Does the Made Just in Time Model Still Work?

For decades, manufacturers have worked to be very precise in how much product they generate, creating just enough at exactly the right moment to supply immediate needs. This is done mostly to guarantee that they achieve their bottom line and avoid waste.

From certain perspectives, including a focus on sustainability, it is a good model of production. But what about in times of crisis? Covid-19 showed that unexpected supply chain disruptions can lead to shortages that last months, or even years.

While producing a significant surplus is not practical, manufacturers need to consider advancing their strategic sourcing and SIOP methods. Minimizing waste and improving efficiency is the key to it all. That way, they can protect their margins in the future and avoid shortages.

Think Small Picture

While the pandemic was a big picture problem, many supply chain disruptions are very local. A strike in one village, power outages, bad weather. Highly localized Covid spikes. In the world of supply chain management, it is very possible for something small to have major ramifications.

Supply chain managers are now equipped with technology that makes it easier to anticipate even minor disruptions, pivoting quickly into solutions that will provide relief.

Not only is this beneficial for future situations, but it can also help businesses navigate what is left of the pandemic. While the proliferation of vaccines has significantly diminished the worst Covid-19 outcomes, there continue to be spikes and variants that can lead to worker shortages and other forms of supply chain problems with potentially debilitating consequences. The right technology makes these situations easier to anticipate and react to. Speaking of which…

Data is King

Data processing and implementation can have a significant impact on the future of supply chain management. Data-driven technological solutions can be used to anticipate probable disasters, and help supply chain managers find solutions quickly.

In the context of a pandemic, data might be used to predict viral spikes which then result in employee shortages and subsequent supply chain disruptions. Even in run-of-the-mill operations, however, data implementation can have a significant impact on how products find their way onto store shelves.

Fleet management technology is a good example of this. Using IoT sensors and data algorithms, fleet management technology can analyze routes, economize fuel, and improve vehicle maintenance automatically, making it easier for manufacturers to guarantee on-time deliveries.

Not only does this save money, but it can also improve the efficiency of the entire manufacturing process.

Backup Plans

Finally, the Covid-19 pandemic illustrated the importance of having alternatives for our supply chains. To ensure minimal disruptions, supply chain managers should consider multiple streams of production, ideally finding localized or nearby solutions for manufacturing that can be tapped quickly when the need arises.

Globalization has allowed manufacturers to shop around anywhere, looking for the most affordable option for their production needs. While this remains appealing, having contingencies, even if they come with a higher sticker price, can be an invaluable component of avoiding disruption.

* This article is written by Andrew Deen. Andrew has been a consultant for startups in almost every industry from retail to medical devices and everything in between. He implements lean methodology and is currently writing a book about scaling up business. You can follow him on Twitter @AndrewDeen14

Reshoring, or the idea of bringing manufacturing services and supplies back to the United States from overseas, has been bandied about in manufacturing corner offices, at political rallies and around workplace water coolers for decades. The general thought is: bring those manufacturing jobs back home. In an ideal world, everybody wants that, right?

But for many manufacturers, the economics were just too tough to get around. The ability to purchase supplies or get the job done for pennies on the dollar overseas in places like China meant bottom line stability and growth here at home. It simply wasn’t possible to afford to produce those goods at home.

Enter the chaos of COVID-19 and reshoring got a reconsideration. A serious reconsideration.

Every person and nearly every industry in this country has been impacted by the supply chain disruptions caused by the pandemic. Manufacturing, perhaps, most of all. Manufacturing slowed to a crawl and even ground to a halt because overseas supply chains snarled and closed. Layoffs happened, and once-busy shop floors became eerily quiet. And even when supply made it out of places like Asia, hundreds of cargo ships idled off shore here because they couldn’t enter our ports. As a result of those bottlenecks, consumers found nothing on the shelves, waited months for items like new furniture, books or electronics and — let’s all admit it — hoarded toilet paper.

Now, for manufacturers, the question isn’t whether they can afford to reshore their supply and, in some cases, operations, it’s whether they can afford not to. With the pandemic, climate disruptions, and current international instability, it is plainly crucial to locate closer to home.

The New York Times highlights these recent reshoring developments:

General Motors announced in December that it is considering spending $4 billion to expand its production of electric vehicles and batteries in Michigan.
Toyota announced plans to build a $1.3 billion battery plant in North Carolina.
Samsung is building a $17 billion semiconductor plant in Texas, its largest-ever investment in the U.S.

Other factors contributing to the reshoring resurgence

While the supply chain disruption is clearly the driving force of the reshoring discussion, other factors are increasingly coming into play as well.

Sustainability. Customers are increasingly committed to buying goods that are manufactured with sustainability in mind. They want transparency and to know where and how products are made. It’s also important to reduce the carbon footprint of manufacturing, transportation and pollution. Knowing a product was sourced and manufactured in the U.S. rather than transported across the ocean is becoming more and more important to consumers.

Trade tensions. The trade and tariff war with China started by the Trump administration has been percolating for a while now, but the current international instability is making it poised to bubble over. With China leaning support towards the side of Russian in the invasion of Ukraine, we can expect to see trade sanctions imposed.

Subsidies. Both sides of the political aisle agree on the desirability of manufacturing more goods at home. Subsidies for manufacturers seeking to reshore are leveling the playing field.

National security. During the height of the pandemic, supply chain disruption caused panic among consumers and real hardship among health care workers who couldn’t get the PPE they needed to do their jobs. That kind of nationwide instability isn’t simply an inconvenience; it’s a matter of national security.

A big boost to the economy. Twenty-five years ago, U.S. factories employed some 17 million people. In 2010, that number had dipped to 11.5 million, and today has crawled back up to 12 million. More manufacturing at home means more manufacturing jobs. And for the economy, that’s a great thing. We don’t have to tell manufacturers this truth: Manufacturing is one of the only industries where people without a four-year degree can make great money. More manufacturing jobs will mean a big shot in the arm for the middle class in this country.

With more and more companies bringing manufacturing and supply back home, they will need help optimizing their processes to ensure efficient operations. At USC Consulting Group, we have more than 50 years of experience helping manufacturers find opportunities for greater efficiency and productivity. Call us today to talk about how we can help.

Most of the challenges supply chain players face in today’s market are related to the pandemic and economic shutdowns. Even so, they’re no different than what companies have dealt with in the past, or what will come after.

Understanding what those challenges mean for the greater market calls for a brief look at current events and existing obstacles.

1. Improving Resilience

The only thing constant in the market and supply chain operations is, interestingly enough, a wave of change. Whether it involves the shifting demands of consumers, raw material and supply shortages, or a global pandemic, something is always changing or evolving.

Despite this, many trends have skewed towards lean processes and a boost in agility. The problem is that in eliminating excess, many of the redundancies that would boost resilience have become less of a focus.

Until now, the tradeoff has been lucrative. By cutting many of those redundancies, operators have been able to conserve funds, reduce operating costs, and speed up mission-critical processes. If there’s less inventory on hand, there are fewer goods to sort, worry about, or waste. Unfortunately, the pandemic stomped hard on the entire economy, and not having those extra resources compounded all of the other problems.

The entire supply chain has learned an invaluable lesson about proper balancing, as opposed to leaning heavily on a single paradigm or strategy. Going forward, everyone will be focused on building strong supplier relationships, with multiple access points and opportunities. The goal is to bring some of those redundancies back, without destroying agile processes.

2. Building Out Flexibility

To keep up with market changes, supply chain operations need to be flexible. They need strong alternatives, with clear processes and sourcing adaptations.

How does this differ from resilience? Resilience involves creating a more secure operation, while flexibility is about developing alternatives and fostering relationships to support them.

If one supplier is experiencing delays, then an immediate shift to another, with a reliable supply, may be necessary. Taking that a step further, if that shortage is impacting an entire lineup of suppliers, then it’s time to find alternative resources — like a comparable raw material. A move like that cannot always happen quickly or in-the-moment.

Having those avenues in place before an event is the proper solution. The same could be done with regular operations, like a spike in product demands.

3. Unprecedented Visibility

Long before COVID-19, consumers were growing more aware of the environmental impact of their actions, and of the companies they’re doing business with. This has led to many operators moving not just to more sustainable practices, but also making more transparent moves in the market, and sharing them. The pandemic has certainly amplified that need, to ensure safe and healthy practices.

But end-to-end supply chain visibility is challenging, to say the least. That’s where modern technologies come into play, thanks to Industry 4.0. IIoT devices, supply-related blockchain applications, machine learning, and big data all have a role to play, and they’re already being used in the industry to great effect. They also provide a host of benefits, which affect even some of the other challenges like resiliency, flexibility, security, and so on.

More visible practices will become commonplace as supply chain operators work together to create a sustainable, open, and secure network.

Data analytics help overcome supply chain challenges

Photo by Luke Chesser on Unsplash

4. Data-Driven Operations

The supply chain has always been powered by data, but digitization takes it to a whole new level. Successful management improves planning in operations, materials-sourcing, production, and distribution.

Machine learning and advanced analytics will highlight new trends, opportunities, and decisions directly related to the market. A predictive model might help account for a demand shift or shortages, before signs of change rear their head. Similar data might empower leaner processes that don’t sacrifice mission-critical redundancies.

That’s what Industry 4.0 is all about: smarter and contextually driven processes that utilize real-time market details to bob and weave with incredibly precise actions. It’s safe to say that no industry has ever seen anything like this before, which is why these technologies have taken root so deeply and rapidly in the modern world.

Many operators have already adopted and deployed data-driven practices in regular operations, so it’s more about discovering new ways to leverage the related solutions. Digital twins have become almost pervasive in the industry, but with the help of artificial intelligence, they can become so much more valuable.

5. International Relations and Trade Agreements

Without touching upon specific events, political or otherwise, the past few years of tumultuous global relations and trade agreements have posed some unique challenges.

In November 2020, 15 countries came together to ratify one of the largest free trade agreements in history — the Regional Comprehensive Economic Partnership (RCEP). While the United States and India withdrew, the agreement still has a significant impact on foreign trade and the supply chain. It should help strengthen the economies in North and Southeast Asia.

Supply chain operators must remain mindful of these changes, along with any on the horizon, and how they might impact the market, relations, and partnerships. Parsing some of these events is a challenge by itself. There is no straightforward answer, unfortunately, but it does highlight the need to maintain a team of experts for understanding and dealing with them.

6. Trade Disruptions

Despite being a mission-critical component of the modern supply chain, the trans-Pacific trade lane has been disrupted in various ways. From ocean rate spikes due to trade tariffs to physical disruptions, much like the Suez canal mishap, there’s an ever-growing need to plan for these events and make up for when they do happen.

It’s impossible to predict some of these events, which is why resilience and flexibility are so important. Supply chain operators will need to form strong partnerships to resolve issues quickly and create new opportunities.

Looking to the Future

The entire supply chain faces formidable challenges, and there are no guaranteed solutions. But that doesn’t mean there’s no way forward. Modern technologies like IIoT and advanced analytics, alongside data-driven operations, can certainly alleviate some of the growing pressure. So can the improved resilience and flexibility of all parties.

Preparing for the future will keep everyone on their toes. But the good news is that there is a light at the end of the tunnel. As the pandemic hopefully winds down, many challenges will become more manageable, as well.

This article is written by Devin Partida. Devin is a tech writer with an interest in the IIoT and manufacturing. She is also the Editor-in-Chief of ReHack.com.

How do you plan for the future when you’re just trying to get through the present? A present filled with crisis, uncertainty and wildly fluctuating demand, complicated by severely disrupted supply. If that situation sounds familiar, you’re not alone. We’ve all just lived through it.

Companies in just about every industry are riding the same supply-demand roller coaster, fueled by the ultimate disruptor of this century, COVID-19. Just a quick snapshot: The construction and furniture industries are now suffering from shortages of everything from lumber to foam, but demand is high as people, shuttered in their houses for the past year-plus, looked around and decided to spend their dollars on home improvements rather than vacations. Filling that demand, not so easy. Finished products like sofas and appliances are delayed because of shipping snafus. And that list goes on. Cars, chlorine, chips for video games, chicken, bacon (say it ain’t so!), and aluminum cans.

Not helping the problem: peaks and valleys in employment, with companies laying people off only to see demand for their products soar again.

It boils down to a whole lot of disruption, leading to long delays getting product to customers. Everyone is frustrated. The culprit, in the broad sense, is the pandemic. But closer to home, within your own company, it might be the result of lack of planning.

Many companies are in the same boat. Employees, managers and the C-suite alike have been focused on simply getting through the pandemic with the doors still open. We were dealing with work slow-downs because of new ways of working. Employees had to go through a dance of protocols (temperature checks, questionnaires) to even get onto the shop floor. Social distancing resulted in fewer people at work at one time, slowing it down even further. Supply chain disruptions ground businesses to a halt, or at least to a crawl. Demand in many industries dried up. For other industries, demand dramatically lessened as customers were put out of work and stopped buying much of anything that wasn’t a necessity.

We get it. Companies across all industries were just trying to keep their heads above water to get through the crisis. What they weren’t doing was planning for it to end.

Planning is the key

Now that there is an ever-growing light at the end of the pandemic tunnel, companies are scrambling to figure out what comes next. Dealing with current shortages of supply and, frankly, employees, as customer demand begins to creep up, it has been a struggle for people to define, forecast and plan for what comes next. The good news? We can help companies ramp up to meeting the demands of the coming months and beyond. It’s about efficiencies, planning and forecasting.

Here are some strategies we’ve seen to help companies ramp up for increasing demand in uncertain times.

Focus on efficiencies. If there was ever a time to throw out the “this is the way we’ve always done it” mentality, it’s now. It’s vital to focus on doing more with your current assets, even doing more with less. It’s about looking at your processes and procedures with a critical eye to determine if you can do things better, faster, leaner and more efficiently.

Implement a rolling forecast calendar vs. a yearly calendar. We recommend a flexible, rolling forecasting process, going 24 months out. When you’re finished with one month, it drops off and you add another at the end. Unlike a yearly forecasting and planning calendar that is written in stone once a year, this is flexible, requiring frequent refining, tweaking and amending, based on current market conditions. That concept, flexibility, is important here. If this past year-plus has taught us anything, it’s that the ability to be flexible, change plans, pivot and otherwise react or anticipate market conditions is vital to survival.

Sales, Inventory and Operations Planning. SIOP is a planning process that meshes demand forecasting with production, sourcing and inventory plans. Most people are used to this as the S&OP process, but at USC Consulting Group, we believe that leaves out the critical “inventory” piece of the puzzle. We feel SIOP is a more holistic approach that leads to greater efficiency.

Adopt an agile, lean mindset. Lean manufacturing is nothing new, and people think of it as optimizing inventory on the basis of demand. It’s about having enough, but not too much, inventory on hand. It’s also about carrying that mindset throughout your organization, with the goal of maximizing value for your customers while minimizing waste. It can also include things like employee cross training to make sure there are people on the job who can step in at critical moments.

At USC Consulting Group, we’ve been helping companies ramp up their operational efficiencies for more than 50 years. If you’d like to talk about how we can help you position yourself for a post-pandemic world, give us a call today.

Tag Archives: Pandemic