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Supply-chains under urgent review

The vulnerability of supply chains that cross national borders has been cruelly exposed by the pandemic. Ironically, the roll-out of the COVID-19 vaccine – featuring multiple delays due to red-tape, political intervention, blatant national self-interest, production glitches, public scare-mongering and downright incompetence – is fast-becoming a case study. As a nation, we have certainly found out who are our real friends are!

This whole episode has also shown us how apparently cast-iron contracts can suddenly become no-such-thing in a crisis and that, even if it costs a little more, lining up alternative suppliers based in different locations – preferably on home soil – has become a sensible precaution.

Those expecting a return to ‘business as usual’ when the coronavirus finally retreats may be in for a long wait. Commercial life will recover – we are already seeing some encouraging signs – but not as we knew it pre-pandemic. Whilst recognising the exceptional circumstances, most responsible managers are busily revamping their supply chains to future-proof their businesses. The crucial difference this time is that the process must extend beyond just preserving financial viability to ensuring the safety, health, and wellbeing of staff.

Understandably, most of the actions taken so far have likely been to mitigate short-term threats. However, the real challenge is to build longer term resilience into our businesses. A recent report from management consultants McKinsey & Company talked about six fundamental issues (all of which sound like common sense), listing the need to:

  • Create transparency

  • Estimate available inventory across the supply chain

  • Assess realistic final-customer demand

  • Optimise production and distribution capacity

  • Identify and secure logistics capacity

  • Manage cash and net working capital

The report goes on to explain in detail the reasons why and how we should meet the various challenges. Businesses will recognize most of the recommendations, but what shines through are the basic requirements to be adaptable, flexible and to be prepared to act quickly and decisively. Above all, we need to keep an open mind.

New technologies are emerging that can dramatically improve a company’s visibility across the end-to-end supply chain, which in turn can reinforce its ability to withstand shocks by mediating between fluctuating supply and demand patterns. The report also makes a strong case for the permanent adoption of more flexible working practices, such as home working. Investment in advanced manufacturing and digital technologies is also vital.

There are clear opportunities for those prepared to adapt and prepare for the uncertainty we will face in the future – and that we have always faced. Action, instead of good intentions. Corporate survival is at stake.