Coronavirus has given rise to huge cross-industry disruptions, shining a light on the importance of effective inventory management in the supply chain. As the world grapples with the human and economic crisis unravelling before us, inventory and supply chains are finding themselves squarely within the public eye and experiencing unique challenges of their own. When the COVID-19 pandemic began, companies experienced abrupt shifts in customer demand and channel preferences. In March 2020, the Institute for Supply Management (ISM) conducted a survey that focused on the impact of coronavirus disease (COVID-19) on supply chains. Nearly 75% percent of companies reported supply chain disruptions. Retailers and consumer goods are facing an unprecedented disruption in supply and demand due to COVID-19 and the rapid shutdown in business in the United States and around the world. As short-term consumer demand shifts from wants to needs, and some consumers hoard food and medical supplies, retailers are being faced with massive shifts in demand for their products, with some seeing demand fall to near zero.
At the beginning of the year, when Covid-19 first made headlines, inhabitants of cities, countries and continents across the world could never have imagined the wide-reaching and debilitating impact the virus would have over the ensuing months. Its rapid spread has since sent shockwaves worldwide; driving people indoors on “lockdown,” putting pressure on global health services, and ultimately changing life as we know it.
Driven by the unprecedented global pandemic, the ability to effectively react to unexpected disruptions has fast become the most valuable commodity in logistics. Supply chain disruptions stimulated by the virus are varied in nature; dealing with an off-the-cuff toilet paper crisis is one thing, a shortage of vital protective equipment in the healthcare sector is quite another. A successful inventory management system can help generate the valuable data needed to deliver visibility and predictability in unforeseeable circumstances such as these. When it comes to these essential health needs, it's important to check on inventory levels, particularly in areas where there are more coronavirus cases. Because inventory management can be so complex, prioritizing data is a critical inventory management strategy for virtually every company. In addition, companies should establish stronger communication channels with their distribution networks so they can share information more accurately to identify regional demand patterns.
The fundamental techniques of supply chain and inventory management were based on a core principle that says 'what happened yesterday has a pretty high likelihood of happening tomorrow’. However, when that rule was broken, owing to COVID-19, everything went haywire. Below are few measures that can be adopted by the organizations so that they can better position themselves to weather the COVID-19 outbreak or any pandemic by quickly finding alternative suppliers to keep running operations:
Digital Collaboration and Supplier Communication: The COVID-19 crisis has shoved into the spotlight the traditional paper-and-time intensive activities associated with Supply chain. Digital collaboration is the need of the hour as retailers explore the possibilities of collaboration across every aspect of the supply chain process. Collaboration and communication can enable transparency and faster responses to operational decisions on both sides. Lotus Analytics integrates technology through vast and deep cross-vertical experience, helping define and support control mechanisms for guiding strategy implementation.
Visibility in Supplier Operations: Sharing of information across the supply chain is key to avoiding potential demand-supply issues. Information needs to be shared with all supply chain stakeholders for logistic decisions to be made that help businesses to operate more efficiently.
To mitigate these issues in the short-term, supply chain leaders are working to create transparency and rapid response capabilities. One of the ways to do this is to use a technology platform that brings suppliers and manufacturers together for visible collaboration. Grocery retailers in particular, during the COVID-19 crisis need visibility across the supply chain to better address issues like OOS (Out Of Stock) and surplus stock of non-essentials.
Handling Volatile Inventory Demand: Retailers today are struggling to know their current inventory supply, and be able to replenish demand essentials without sustaining losses. During this crisis situation (or any crisis situation for that matter) it is not unusual for consumers to panic hoard essential commodities. This results in a stress on retailers like grocers and pharmaceutical companies to manage an unexpected spike in product demand.
Many retailers are managing this by ramping up warehouse and distribution numbers, while others are using warehouse management technology to assess inventory, predict peaks and coordinate employee shifts to keep supply moving. Retailers are also being pushed into moving inventory and resources to new channels. Because of today’s social distancing norms, there’s been a growth in ecommerce orders, and retailers are moving inventory by making it available online for purchase and working with distribution channels for fulfilment.
Limited Supplier Dependency: Pharmaceutical companies in particular are currently facing a crisis in their supply chain, as a majority of active pharmaceutical ingredients are developed In India and China. In fact, organizations that have diversified their supplier base after experiencing tariff impacts, are potentially better equipped to address the effects of COVID-19 on their supply chains.
While some pharmaceuticals often have a redundancy in drug supply of such drugs, companies which contract with multiple suppliers can prevent disruptions from causing shortages.
Lack of Data for Agility: Any technology platform that can help retailers stay on top of their supply chain activities, relies heavily on standardized data to collaborate and communicate effectively. However, for most retailers, data is still not standardized for sharing on collaborative platforms.
Yet the use of information technology to share data between supply chain partners is crucial for agility. For retailers to be able to survive amidst chaotic demands, information sharing between and within the supply chain players is a critical requirement towards optimizing supplier-retail relationships.
COVID-19 pandemic has caused organizations to consider investing in more "flexible and resilient" supply chains - that is, supply chains that can resist disruptions and recover operational capabilities after disruptions occur - by adding additional sources of supply for critical items so they can quickly pivot to meet changing market demand. Lotus Analytics provides powerful cloud-based tools and technology powerful that allow you to run all your key back-office operations in one place and help your business survive any pandemic outbreak.