The healthcare system consists of multiple arduous tasks that need substantial resource allocation, leading to increasing operations costs and slow processes. Leveraging the power of Robotic Process Automation (RPA), the healthcare industry can address many issues and make the entire system more efficient while improving patient satisfaction.

What is Robotic Process Automation?

Robotic Process Automation is a kind of automation technology that allows organizations to integrate and emulate human interactions within digital systems for more efficient business processes. Organizations can automate their processes at a fraction of the cost and time with RPA.

It is a non-intrusive technology and uses organizations’ existing infrastructure without disturbing its essential systems. Leveraging this technology in the healthcare sector presents opportunities to enhance healthcare delivery and free up clinician’s time.

Why is RPA important for the healthcare sector?

Robotic Process Automation can help reduce healthcare sector inefficiencies and contribute to better healthcare delivery, which is vital for both the public and the industry.

Like every other industry, the healthcare sector also has challenges such as strict regulations regarding patient data and fewer resources to deal with such regulations. With RPA enabled processes, healthcare providers can avoid long-running and costly digital transformation implementation projects and reap the rewards faster, thus enabling them to channel more resources to the healthcare industry.

RPA offers many benefits to the healthcare industry-

With robotic processes, patients can schedule their appointments without intervention from medical staff in clinics/hospitals. Therefore, eliminating the need for resource allocation for appointment scheduling enhances customer experience since patients can schedule appointments faster.
Another area where RPA is beneficial for the healthcare system is in managing the claim management process. Once healthcare service is delivered, the billing process typically takes time due to repetitive and manual claims management processes. With RPA enabled claim management, human errors can be avoided, and processing can be much faster.

In addition, RPA bots can streamline the process of front-office support, thus making it easy for the support staff to manage patient queries. Furthermore, RPA allows healthcare providers to document and track each step in the process in a structured format, thus enabling the organization to be audit compliant.

Moreover, RPA in the healthcare sector can help staff optimization since robots will complete all mundane tasks, thus giving employees more time to manage the strategic tasks.

Allowing robotic technology to handle business processes will improve clinical workflows and save time and enable tailored treatment for patients.
How can RPA strengthen the healthcare sector supply chain management?

In the quest to create a patient-centric and resilient supply chain, the healthcare industry is now turning to digital supply chain management. The digital supply chain networks not only provide better visibility across the end-to-end supply chain but enable members to share and access a continuous flow of actionable insights and information that can be used to improve supply chain processes continually.

The supply chain network ensures that patients, pharmacies, and healthcare providers get the medical supplies and medicines efficiently. RPA enabled processes can help in augmenting manufacturing and logistics processes.

The healthcare supply chain network has been continually fronting disruptions such as global health crisis, new regulatory mandates, and natural disasters. The ongoing pandemic challenged the resiliency of the healthcare supply chain. Now, many organizations are taking steps to shore up their supply chain, and one such step has been increasing the adoption of RPA.

The introduction of RPA in the healthcare supply chain can help improve resiliency by ensuring better controls and compliance, increasing process efficiencies, improving quality and much more. By leveraging RPA, the healthcare industry can streamline its key administrative functions such as order set up and entry, purchase order management, inventory management, and supply & demand planning.
It can help supply chain managers to track the inventory required in hospitals, such as syringes, needles, gloves, medicines, etc., by notifying them about the changes in demand and supply.

Final Word

Robotic Process Automation is a new technology with growing capabilities, and it not only automates the process but also increases accuracy. Robotic Process Automation can lead conversations, keep chaotic data structured, and make complex decisions.

The healthcare industry stands to gain from investing in Robotic Process Automation as it can result in improved patient care at less cost.

The post Robotic Process Automation In Healthcare Industry appeared first on ScaleUp Consulting..

The traditional supply chain management has worked on a predictive model and has focused on optimizing efficiencies with a just-in-time inventory framework that maintains the stock required to meet the present demand. The predictive model can fall short in the circumstances such as this pandemic. According to a survey done by the Institute for Supply Chain Management, 95% of companies reported that they have already been or are expected to get impacted by COVID-19 supply chain disruptions. 

Furthermore, if we look at the demand side, the buyers have moved to an online platform, resulting in the unstiffening of demand and a shift towards contactless interactions across many businesses.

Digital Transformation Can Bring More Resilience In Global Supply Chains

To build more resilient global supply chains, there is a need for a more coordinated, distributed, and traceable global supply of components and suppliers while sustaining economies of scale. To achieve this, companies across the globe would have to adopt sophisticated technologies such as AI, IoT, blockchain, digital paper, robotics, and 5G. A digitized supply chain will also make it easier for businesses to achieve agility, intelligence, flexibility, and scalability, which is required to adapt to a rapidly changing world.

To address a situation like this pandemic, the organizations must be able to identify the risks and possible breaks in the supply chain before they emerge and swivel quickly to maintain operation. This would mean that businesses should be able to quickly shift to another supplier, change the product and services offered or sell to another buyer.

According to a research done by McKinsey & Company, on an average, businesses that aggressively digitize their supply chains can expect a boost in their annual growth of earnings before taxes and interest by 3.2%.

However, when digitizing the supply chains, there have to be a few considerations that will have to be made.

Redundancy to be kept in mind– A plan for contingent suppliers and partners, IT infrastructure, such as; applications, cloud, and networks in other geographic locations, need to be in place for each point in the supply chain. By having a hybrid IT infrastructure that is distributed across different geographic locations, they could scale quickly to meet the demand.

Look for performance and agility– To build more robust and agile supply chains, digitization of the buyer-supplier relationship is very important. A cloud-based digital supply chain interconnected with a rich IoT ecosystem of present and potential partners can make it easy to recruit IT providers and new suppliers, as well as enable switching to alternative providers when disruption is faced with regular suppliers.

Ensuring end-to-end visibility- To lower the supply chain’s level of vulnerability, the data must be exchanged digitally. The suppliers may be hesitant to share data for competitive advantage reasons; however, a trusted data exchange combined with blockchain can ensure data privacy though this could bring some challenges around data management.

Moving To New Normal

With the pandemic, it has become evident that even when the economies look bright, a single event can shake industries to the core- disrupting everything. The COVID-19 crisis may have become the catalyst for accelerating the digitization of global supply chains, some businesses have already adapted more quickly to the new normal. Whether it means switching production lines from consumer goods to medical supplies or providing new tools and resources to help combat the pandemic, the businesses making these changes are understanding the importance of collaboration, end-to-end visibility, and responsiveness.

To conclude, the adoption of new technologies such as blockchain, IoT, and robotics were already underway before the outbreak of the coronavirus pandemic, however, it has forced this change to happen much faster. With digitization, we can look forward to a world with speedy and accurate deliveries, transparent and secured transactions, faster warehouse operations, and total customer satisfaction. 

The post Can Digitizing Supply Chains Make Them More Resilient? appeared first on ScaleUp Consulting..

The COVID-19 pandemic has put tremendous stress not only on the population but on economies across the globe. To effectively deal with this situation, much hope has been placed on creating a vaccine. Various countries and leading pharma players are conducting trials on potential COVID-19 vaccines worldwide, which could significantly slow the virus’s spread and ultimately eliminate it. However, while the creation of a vaccine will be historic, it is still not the final step. No matter where and who develops the vaccine first, the real challenge lies in providing the vaccine nationally and internationally. It is, however, a challenge we need to prepare for.

The global supply chain has already been stretched thin by the pandemic. The industries that drive goods around the world on planes, ships, and trucks will have to deal with the challenges of shipping an eventual COVID-19 vaccine from the drug makers to billions of people worldwide. But is the global supply chain ready for this challenge? Let’s explore 

The roadblocks ahead

Developing a vaccine in a shorter time-span is hard enough but distributing it across the globe offers a host of other challenges- from manufacturing vaccine contents to storage and packaging components, to cold-chain transit, global and domestic shipping, to distribution strategies. The road to creating and supplying the COVID-19 vaccine will be a long journey troubled with disruptions. Besides the colossal cost involved, the chances of failure are still very high.

However, this is not to say that it is not possible to do it faster than usual. More than 150 vaccines are in development worldwide, and many are in their third phase of trials. The hopes are high to bring one to market in record time to ease the crisis. The key to cross all the roadblocks is to be prepared.

Across the globe, pharmaceutical companies are receiving significant financial backing from their respective governments in their effort to create the vaccine for COVID-19. Therefore, expediting the complete process is not completely impossible.

Nevertheless, whether financial backing is provided or not, there is still no fool-proof method for developing an effective vaccine, and the timeframe still remains a bit uncertain. However, this does not prevent the planning of its arrival. The global supply chain must prepare a strategy to ensure that it reaches people in both a timely and safe manner. The suppliers must not be caught off-guard once the breakthrough is finally announced.

Julian Sutch, head of Emirates SkyCargo’s pharmaceutical division, estimated recently that a single Boeing Co. 777 freighter can carry 1 million individual doses of a vaccine. That means airlifting double-dose regimens to protect half the world’s population would require the space in about 8,000 cargo planes.

Large-scale preparedness is the need of the hour

The most important aspect of a vaccine is that it must be stored at an optimal temperature. The optimum temperature needs to be maintained right from the manufacturing through to the administration of shots. To fulfill this, the lead time between production and the final destination must be reduced.

As per a Bloomberg report, Health officials have said a vaccine that eventually comes to market will likely need to be maintained at 2 to 8 degrees Celsius (35.6 to 46.4 degrees Fahrenheit) throughout the shipping process. Some newer technologies could require more advanced freezers that can keep them at a frigid minus 80 degrees Celsius. Any deviation can ruin the shots.

Other factors will have to be taken into consideration, as well. For instance, the demand for the vaccine will likely outstrip the supply in the immediate term. Therefore, identifying the vulnerable sections of the population and prioritizing would be the key. Not only the supply of vaccines, but the supply of needles, syringes, and peripherals is equally vital for the success of a global vaccination effort.

Different companies often deliver these products; however, these components’ delivery will be crucial just like the vaccine itself. Most importantly, these items should not face any supply shortages which may create problems in administering the vaccine.

The Bottomline – Global supply chains must be able to look ahead and do so accurately

The supply chain integrity may seem like an unknown part of the pandemic-ending effort; however, it is a critical element of vaccine acceptance globally. Safeguarding the COVID-19 vaccines from diversion and falsification, cutting-edge traceability solutions, national-level support, and public-private collaboration will be needed. Emergency response always needs a well-coordinated, pragmatic, and agile action. 

FedEx, DHL, UPS, Deutsche Lufthansa AG, and other major players have expertise in delivering pharma cargo. The problem is not vaccine delivery but the volumes involved, which will require massive planning and a coordinated supply chain strategy to make an impact globally.

If this is done right, the COVID-19 response will leave a lasting legacy for more efficient and safer medicine supply chains for the future.

The post Is The Global Supply Chain Ready For A COVID-19 Vaccine? appeared first on ScaleUp Consulting..

A recent Washington Post report noted that, “More than 22 million Americans have filed for unemployment aid since President Trump declared a national emergency, a staggering loss of jobs that has wiped out a decade of employment gains and pushed families to line up at food banks as they await government help.

The United States has not seen this level of job loss since the Great Depression, and the government is struggling to respond fast enough to the deadly coronavirus health crisis and the widespread economic pain it has triggered.”

Amidst all this, businesses whether small or large are struggling around the world. While there are businesses which have adapted to the work from home model and have revenue streams still open, aviation, hospitality, manufacturing, etc. have virtually come to a standstill. With economies under total or partial lockdowns to contain the spread of the novel coronavirus, supply chain disruptions have become the norm. While bigger cash rich businesses may still be able to withstand this shutdown, smaller businesses will basically be wiped out.

The true impact of this human tragedy will be clear in the months to come, however, one thing is for sure, there will be global economic and financial ramifications that will be felt through global supply chains, from raw materials to finished products.

Though businesses which have been around for some time are not unknown to disruptions, it is the preparedness of a business to mitigate disruptions which ultimately matters and determines its fate.

Here is a comprehensive look at mitigating disruptions and getting your manufacturing and supply chain in robust shape. This is based on a case study. The focus should be in understanding business objectives, as well as, constraints, as well as in conducting a structured optimization/resiliency process that results in an optimal network configuration and strategic roadmap.

The Case Study

A multinational was looking to develop a comprehensive and industry leading disruption mitigation strategy and a well-laid implementation plan to mitigate disruption. The strategy would also have to fuel growth to achieve business goals. It is vital to note that the disruption planning had to account for both global as well as local disruption that would cause significant negative impact to the business.

The business imperatives were analyzed and a disruption sensitivity analysis was performed with well-thought levers to understand the impact of the disruption on the business and to come up with a mitigation plan. Taking the sensitivity analysis into account, the optimal network configuration and strategic roadmap was determined. A comprehensive implementation plan was also drafted to achieve the desired results.

This approach to mitigate disruption can be extended to other forms of disruption and to other business sectors  with specific adjustments as per the type of disruption, and business.

The Business Imperative – At A Glance

The business imperative should be clear, well-defined, and well understood across the organization and its principal decision makers. It should take into account the short term and long term objectives of the business and should focus on mitigating disruptions in the network, addressing capacity constraints, and being prepared to fuel growth and withstand downturns.

Below are the highlights of the business imperative for this case study which would be valid for any supply chain or manufacturing business facing disruption.

Risk mitigation in the network

• Mitigate the risk of sole source across major components, processes and finished goods
• Mitigate the risk of key operational levers that can hinder capacity – including productivity, space and rate of resource ramp up/ramp down
• Mitigate network strategy execution risk – including paced, managed deployment of product changes across the network

Capacity constraints

• Existing facilities may need to grow/shrink to support capacity requirements or downside risk
• Understand resource growth requirements to support capacity requirements

Growth requirements

• Growth needs to be supportable by the manufacturing network or a viable outsource alternative
• Planning of product changes to achieve capacity needs to be evaluated and planned
• Balancing of resources across the business in support of growth/shrinkage needs to be structured

Core competencies to pursue suitable network strategy

• Assess people, process, technology requirements to support network strategy
• Highlight gaps and make necessary changes to build required core competencies

Disruption Sensitivity Analysis

Sensitivity analysis is the first step to estimate the impact of disruptions in a manufacturing network and to understand the impact of different levers to mitigate the resulting revenue loss.

In this case study, local, regional, global, component-specific, product-specific disruptions were analyzed to come up with a holistic approach to mitigation strategy 

Multiple sensitivities were run to understand the impact of various levers (resource reallocation, overtime and additional months of FG inventory) on achieving recovery from a disruption. The objective should not be to achieve full recovery necessarily, but to seek the cost-benefit analysis that the organization is most comfortable investing into.

Country Disruption Analysis

A country disruption for the business would result in an estimated loss of $300M. Executing contingency plans outlined below would result in losses of only a fraction of this amount; representing a much more palatable scenario for management and shareholders. Let’s suppose that the following happens, and management takes the outline of actions below.

• Disruption occurred for a period of 6 months
• 20 FTEs relocated to other sites in 4 months
• 100 FTEs cross trained from Prod X to Prod Y in 4 months
• 2 Months of FG inventory present
• 10 percent overtime is utilized during disrupted time period

Below is the impact of running multiple sensitivities to mitigate the revenue loss:

• Utilizing 10 percent overtime throughout the year and resource reallocation the business could reduce the loss by almost 50 percent
• Utilizing 10 percent overtime throughout the year without resource reallocation reduces the loss by half. However, in this case the business is not able to meet 100 percent of the demand
• 10 percent overtime, 3 months FG inventory and relocation/cross training results in meeting 100 percent demand for Prod X, but approximately 90 percent for Prod Y
• By utilizing only the inventory and overtime levers, the network is able to meet almost 100 percent of demand

Regional Disruption Analysis

A regional disruption for the business would result in an estimated loss of $400M after executing contingency plans outlined below:

• Disruption occurred for a period of 6 months
• 20 FTEs relocated to other sites in 4 months
• 100 FTEs cross trained from Prod X to Prod Y in 4 months
• 2 Months of FG inventory present
• 10 percent overtime is utilized during disrupted time period

Below is the impact of running multiple sensitivities to mitigate the revenue loss:

• Utilizing 10 percent overtime throughout the year and resource reallocation results in meeting only 90 percent of Prod Y demand
• Utilizing only the 10 percent overtime lever results in meeting less than 90 percent of Prod Y demand
• Utilizing all 3 levers result in meeting 100 percent of demand in the year
• Utilizing only the inventory and overtime levers result in falling short of Prod Y demand requirement by approximately 10 percent

A Structured Decision Support Model

Here are some thoughts around a structured Decision Support model to determine the optimal network configuration and strategic roadmap.

• Build decision support model with core inputs and functionality 
• Evaluate model scenarios with no constraints with respect to capabilities and manufacturing changes 
• Add business rules to constrain the number of changes, buffers, etc. 
• Prioritize product changes according to total net contribution to the business and the network/site strategy 
• Lock configuration and changes and run scenarios, sensitivities 
• Conduct final evaluation of the configuration for fit with overall business objectives 
• Make final changes to recommended configuration 

The Recommended Network Configuration

The recommended network configuration was arrived at after considering a number of scenarios and sensitivities on the network model. The focus again was on mitigating disruption and determining the end state profile.

The end state profile is what a business plans to achieve within the predefined timeline to mitigate disruption, restore normalcy, and fuel growth. It includes effective management of resources, and utilization, network reclassifications, Capex planning, and a handful of other considerations.

Key Execution Requirements for Network Strategy 

The key requirements outlined in the network strategy need to be executed successfully to realize the benefits and risk mitigation requirements. Key areas to manage carefully include:

Execute multiple product/process transfers 

Improved management of tech transfer and compliance/regulatory requirements 

Decentralization supports risk mitigation, but there is no one-size fits all

Manage shifts in production volume 

Advanced inventory planning across sites 

Manage aggressive hiring and training of direct labor 

Enhanced focus on workforce recruiting, training, and talent management 

Execute infrastructure and technology investments 

Capacity incremental options at the different sites

Integrated product hierarchy & master data management 

Enhanced systems and inventory controls (PLM, Planning, MES, etc.) 

Visibility to new product demands on manufacturing technology

The Implementation Roadmap

The implementation roadmap needs to be comprehensive and should include all the key elements needed for ensuring success.

Strategic Requirements – The product moves and volume shifts from the recommended model drive the execution requirements.

Execution Requirements

• Capacity Builds, and Changes – The product transfer, regulatory processes and capacity build-outs are key execution requirements
• Hiring and Training – Improvements to the hiring and training process will be required given any steep ramp up rates or downside adjustments
• Supply Chain and IT – There are select Supply Chain and IT related activities key to execution

Project Management – Managing transformations on such a scale requires establishment of appropriate change management, and governance mechanisms.

Effective Contingency Plan During Disruption

Reallocation of resources after prioritizing the product portfolio can mitigate the impact of a disruption to an extent. The prioritization criteria should be well-defined and must include:

• Gross Profit and Capacity Impact – Prioritize products with higher contribution to gross profit and impact to capacity (hours).
• Product Growth Potential – Prioritize products with higher growth potential and the one’s that require minimum resources to produce (ease of production).
• Flexibility and Risk Mitigation – Ensure redundancy across networks for growth products and substitutes.
• Network Management Complexity – Reduce network complexity for e.g. reduce the number of SKUs (SKU Rationalization), minimize the number of hand-offs / touch points, etc.) and ensure the focus is on managing the core business.

The Verdict

Disruptions are common for any business. While it may not necessarily be as severe as the current COVID-19 situation, it is good to plan for even smaller disruptions which can negatively impact a business. A well-defined disruption mitigation plan has the potential to not only bring the business back on track, but also deliver growth.

The post Disruption Mitigation – A Comprehensive Analysis appeared first on ScaleUp Consulting..

Let’s take a look.

How China monopolized supply chains?

Until the pandemic raided us, the world overlooked the dangers of putting everything in the Chinese basket. As multinational companies remained obsessed with keeping the cost of production low, the western governments allowed colossal outsourcing of industrial and manufacturing capabilities in return for financial gains. China leveraged this opportunity and monopolized the global supply chains. 

China soon became the “world’s factory” and simultaneously developed a complex network of internal supply chains and interoperability. This made relocation more difficult, and as a result, the world became even more reliant on China.

China’s role as a dominant supplier of components and goods across nearly all industrial sectors- automotive, pharmaceuticals, technology, consumer goods, and equipment made it impossible to reroute the global supply chains. However, now with the disruption caused due to the coronavirus outbreak, the possibility of removing China’s dominance in global supply chains is being discussed.

How is the US pushing to remove the global supply chain from China?

According to a Reuter’s report, to remove global supply chains from China, the Trump administration is weighing the new tariffs to punish Beijing for its handling of the COVID-19 pandemic. The undersecretary for Economic Growth, Energy, and the Environment at the State Department, Keith Krach told Reuters that they have been working over the last few years to reduce their reliance on supply chains in China, but now they are “turbo-charging” that initiative. 

Ahead of the US presidential elections, President Donald Trump has stepped up recent attacks on China and has long pledged to bring manufacturing back home. In May 2020, the President even said that if US cuts-off ties from China, it would “save $500 billion”. The US government is working with countries such as India, Australia, New Zealand, Japan, Vietnam, and South Korea to take the global economy forward. According to Mike Pompeo, secretary of State, the discussions include- how to restructure the supply chains to prevent something like this happening again.

However, many analysts and government officials in the Asia-Pacific region in their interviews, which are in the public domain, have said that any big effort to restructure the global supply chains is still wishful thinking. It would not be easy to dismantle a rooted system when most of the companies are struggling to survive.

COVID-19 And Decoupling

Most likely, the COVID-19 outbreak will accelerate the change that was already driven by market forces as rising cost and wages in China in the last decade have led to an exodus of lower-value manufacturing, most of it to South-East Asia. This is despite the desire from a few in the Trump administration to begin decoupling the two biggest economies of the world as the US and China continue to spar over everything from pandemic to Hong Kong to 5G network.

Most importantly, many advantages of China being the global supplier cannot be easily replicated by many countries and regions. The US-China trade war has increased uncertainty and costs for the global supply chain, which has prompted a few businesses to move out of China or adopt a ‘China plus one policy’. However, what remains in China is production that has somewhat limited room to change significantly. Moreover, it’s a hard sell for companies. Many companies in the US have invested heavily in Chinese manufacturing and are largely dependent on China’s population for a big chunk of their sales.

Even if the US government uses executive orders to force US businesses to move out of China or impose exorbitant tariffs, it will be highly undesirable. For example, production may move somewhere else rather than return to the US due to years of stagnation in the production sector and structural change of the country into a service-based economy.

The slow-paced relocation of Apple’s production out of China and the Tesla opening factory near Shanghai are both testaments that China is a critical part of the global supply chain. Decoupling the two largest economies would not be an easy process.

Our View

As of now, the idea of ending China’s monopoly on the global supply chain lacks firm footing. The US State Department does not have jurisdiction over trade, and many Asian countries officials have said that there have been no formal talks. Diluting China’s role in the global supply chain will be a slow evolution as China holds the major manufacturing output, which is so huge that even a group of companies would struggle to do just a fraction of it.

It’s not easy to wave a magic wand and say “make it so”. So who would control the global supply chain in the post-pandemic-world – we will have to wait and see.

The post US vs. China – Who Would Control The Global Supply Chain In A Post-Pandemic World? appeared first on ScaleUp Consulting..

The complications created by the coronavirus pandemic have never been experienced before and are beyond any regionalized natural disaster ever faced by the industry. The COVID-19 outbreak has placed unprecedented stress on the global food supply chains, with impacts in farm labor, transport, logistics, processing along with significant shifts in demand. Most of these interruptions are a result of measures adopted by countries to contain the spread of the virus.

How has the current situation affected the food supply chains?

The disruptions due to the pandemic have been experienced at various stages of the food supply chain. Let’s take a look.

Effects on farm production

Farm production has been affected by blockages for inputs, mainly labor. Many farm sectors are more dependent on seasonal labor than others. For instance, fruits and vegetables are more labor-intensive, while oilseeds and cereals require less labor. Limited mobility of people has reduced the availability of seasonal labor for planting and harvesting in the vegetable and fruits sector in many countries.

Besides farm labor, other important inputs include seeds, fertilizers, pesticides, and energy. The seed sector is highly globalized, and the seeds travel through several countries for production, multiplication, processing, and packaging. Seeds are often transported by air, a mode of transport that has been severely disrupted. With several countries now easing down the lockdown restrictions, the concerns regarding supply of these inputs have waned.

Impact on processing due to shutdowns and labor shortages

The food processing industries have been affected by the rules of social distancing, labor shortages due to illness, and due to the lockdown measures. In confined places such as packaging units for meat, fruits, and vegetable processing facilities, the requirement of maintaining social distancing has reduced the efficiency of operations since the employers need to ensure the safety of the labor force.

Some modes of transport have been affected severely

Bottlenecks in logistics and transport have disrupted the movement of products along the food supply chains. Broadly speaking, there are three main modes of transport that are used in the supply chains- ships and barges for bulk, trucks, rail or boat for transporting containers, and air freight. Different transport is used for different products. For instance, oilseeds and cereals are typically shipped in bulk quantities; meat and dairy products are transported in refrigerated containers and trucks. Although the bulk shipments have not been affected much, air freight has taken the maximum brunt. 

According to the OECD (Organization for Economic Cooperation and Development), the global air cargo capacity between the second and third weeks of May was 26% lower than during the same period in 2019 with the largest decline on routes between Latin America and Europe. The vegetables and food sector has also seen a major impact due to quarantine measures and delays in border inspections.

Consumer demand has seen unprecedented and rapid shifts

The pandemic has led to drastic shifts in consumer demand from ‘outside food’ (restaurants or food service) towards ‘food at home’. This has caused significant changes in how food supply chains operate. As the coronavirus outbreak gathered pace, the sale of food from restaurants, hotels, cafes, and catering collapsed. However, at the same time, the retail demand for food increased. There was a dramatic increase in demand for packaged and frozen food items. 

According to a report by OECD, in the second week of March, weekly sales of frozen food were 63% higher than last year in France, for example. The shift from food away from home to food at home had a considerable impact. For instance, restaurants tend to use more cheese on pizza toppings than what is made at home and also involve expensive meat cuts (like steak vs. minced meat at home). Even though similar products are consumed, the products usually sold to foodservice operations and restaurants cannot always be sold to retailers without incurring extra costs. For instance, a restaurant will be buying a big block of cheese, whereas much smaller packs are needed for retail sales. Moreover, retailers have different quality expectations and requirements.

The Bottom Line

With the COVID-19 pandemic threatening to wreak more economic havoc globally, governments and the private sector must work together to address the risk of disruptions to the food supply chains. Beyond that, global policy coordination may be required to prevent food protectionism from becoming the new-normal post the pandemic.

The post Impact Of The Pandemic On Food Supply Chains appeared first on ScaleUp Consulting..

The general geopolitical trend towards nationalization, Brexit, the US-China trade war, and lately, the pandemic have changed the priorities of many supply chain frontrunners. They have to now balance operational efficiency and cost with more resilience.

Building a resilient supply chain

There is no hundred percent certain way to overcome the threats to supply chains like natural disasters, accidents, and international disruptions. The situation becomes even more complicated in case of a global pandemic or a terrorist attack. This is because the historical data does not include the use of predictive statistical tools to ensure that risks like these can be contained.

However, some organizations cope much better than others with both manifestation and prospect of indefinable risk. These organizations don’t have a common secret formula or even many of the same processes to deal with such situations, but they share an essential trait – resilience.

The concept of resilience is not new. The ability of an organization to successfully face the unforeseen has always been the essential element of success.

Achieving resilience

Supply chain resilience no longer means merely the ability to manage risks. In fact, the ability to manage risks means being better placed than the competitors to deal with it and even gain advantage from such disruptions.

Here are the three most important strategies to adopt to build resilience in your supply chain.

Diversify resources

Despite being the foremost step in alleviating risk, many organizations carry vital parts of their supply portfolios with one point of failure. Businesses need to reduce their dependence on sourcing from a single region, supplier, or country. During the Tsunami and Tohoku earthquake in 2011, the global automotive industry was crippled as the large concentration for automotive parts and accessories was manufactured in Japan. Even in the present situation, when the coronavirus first appeared in China and the ‘world’s factory’ went under lockdown, many industries and economies suffered. 

There has to be a simple yet effective strategy, which should be a combination of offshore and near-shore suppliers for every component. Broadly speaking, there is a need to develop a strategy where the regional supply chains are developed that can source and distribute products within a region. Besides that, the focus should also be on building redundancy so that if one region is disrupted, other region’s suppliers can step up.

Impact is broad, getting diversified can reduce risk because if you have a concentration of suppliers at high risk of financial default, then it is sensible to qualify alternative sources with a better financial footing.

Build reserves

The typical safety-stock calculations and inventory-optimization can disregard the element of fundamental risk. With the concept of eliminating single points of failure, it is crucial to carry exigency safety-stocks, especially for low-volume parts that might impact the availability of high-value features. Broadly speaking, a business needs to develop inventory plans to ensure supplies over a long projection by taking into account possible shortages during a disruption.

During the ongoing pandemic, approximately 5 million masks and 2000 respirators were released by the US Department of Defense from its stock reserves to help fight the crisis. Most of the time, these strategic reserves go unnoticed unless there is a crisis like this. The value of building strategic reserves has become increasingly clear over the last few years. These reserves can safeguard against the ‘black swan’ events that are rare but can cause a pragmatic threat to businesses.

Besides strategic reserves, there is also a need to build strategic relationships that can make a difference in the long run. The foundation of all businesses is built on relationships with your business partners, customers, and suppliers.

Sense, foresee and respond with agility

The best supply chain teams stay ahead in the market trends for their products, customers, the latest design practices, suppliers, and emerging technology trends. They utilize the content services that help them consolidate such sources of insight to forestall risks and opportunities and promptly take proactive actions even before their competitors. For instance, monitoring leading indicators of a supplier’s financial status to anticipate the risk of default.

Furthermore, businesses need to be mindful of single sources that could be formed from the ripple effect of other risks. For instance, obsolescence or default of one source within a two-fold-sourced component will create a single-source situation that will be high-risk.

To help organizations recognize market shifts early, and take pre-emptive actions, the sourcing platforms need to track inflection points in demand, trends, cost, lead time, the financial health of the supplier, and consolidation of suppliers across various commodities. 

To conclude, there will always be events that cannot be anticipated beforehand. However, the best performers build processes with upright learning cycles. The rewards for building a resilient supply chain are significant – the business will not only be able to withstand all kinds of disruptions but also increase its competitiveness.

The post How To Build Resilience In Your Supply Chain? appeared first on ScaleUp Consulting..