The coronavirus has tossed supply chains around the world into chaos.
Forty-four percent of companies "right now do not have a plan for this," Eric Wilson, director of thought leadership at the Institute of Business Forecasting & Planning, said in an online town hall on Thursday (a town hall that filled quickly and nearly crashed the conference calling system because of demand). In addition, nearly 75% of U.S. firms are reporting disruption and supply chain shocks, according to the Institute for Supply Management.
This doesn't mean all is lost when it comes to planning. Transparency and data can help companies withstand turmoil caused by the coronavirus.
'There's no way to forecast this'
Peter Bolstorff, executive vice president of the Association for Supply Chain Management, told Supply Chain Dive that the focus should be on planning, not forecasting, because "there's no way to forecast this," he said.
That's, in part, because of consumer behavior, i.e. stockpiling toilet paper or buying bottled water when there has been no proven threat to supply. "The idea that you should go out and you should buy 10 times what you normally buy — the consumer is their own worst enemy right now for the supply chain," he said.
"The idea that you should go out and you should buy 10 times what you normally buy — the consumer is their own worst enemy right now for the supply chain."
EVP, Association for Supply Chain Management
Supply chain professionals should think about how to make their planning systems more resilient, Bolstorff said. That means getting as much visibility in the supply chain as possible to see what their organizations have in stock and what the demand curve might be for the next 60 days.
If organizations don’t have transparency in their supply chains, now is the time to ramp that up, Subodha Kumar, professor of marketing and supply chain management at Temple’s Fox School of Business, told Supply Chain Dive in an interview. The pandemic should be "a wake up call for all the companies, that this is the time to change the whole supply chain, and create transparency in the system where any changes at the store-level are transmitted to all the partners in the supply chain — and as quickly as possible."
Bolstorff also said companies in a better shape to forecast for the future, mostly global companies with footprints in Asia, are in that position because they started seeing the disruption in January. "They used artificial intelligence simulations to see how this could look if things go badly," he said. If organizations can use AI for forecasting, they should run those simulations now. If not, look into how those tools can help.
Data, data and more data
Motorola confronted the coronavirus before it reached the U.S. The telecommunications company shut down its primary cell phone factory in Wuhan, China, where the virus was first detected. But as China has started to recover, so has Motorola's supply chain, Dustin Deal, director of North America business operations at Motorola, said in the IBFP town hall. Factories opened over a week ago, and the company shifted from reopening the factory to the demand side of forecasting. "That's our current challenge right now, is quickly pivoting to how this economic impact is going to affect us in the short term and in the long term," he said.
"That's our current challenge right now, is quickly pivoting to how this economic impact is going to affect us in the short term and in the long term."
Director of North America Business Operations, Motorola
Motorola sees data as the answer, Deal said. The company is restrategizing almost daily, "because there's so many data points coming at you from all over: the health industry, the government, financial markets," he said. "Constantly look at the variables and try to figure out how that's going to shape our markets.”
Patrick Bower, senior director of supply chain planning and customer service for Combe, also pointed to the recent run on toilet paper as a reason forecasting is difficult right now, and why looking at data every day is important to make informed decisions.
Combe is also re-strategizing and reassessing every day. "The idea of collecting data is so important because I'm not sure what the right step is. We're smack dab in the middle of it, and I'm not sure there's a lot of clarity in terms of forward direction," Bower said.
Preparing for a post-coronavirus market
What you need to be thinking about is how you can now start positioning to come out of the tunnel sprinting – not crawling, but sprinting," Scott Fuzer, director of West Monroe Partners' private equity practice, told Supply Chain Dive in an interview. That means not just forecasting for the next 30-90 days, but for beyond a year.
That also means doing all of this immediately.
"Companies that are going to do well are the ones that are working right now," Fuzer said. That could mean purchasing excess inventory but also thinking about how to handle labor, especially because so many manufacturing companies worked hard to find good employees over the last two to three years. "How are companies going to retain those employees and keep them employed so they're ready for the next phase of recovery?" he said.
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