With the coronavirus still having a major impact on manufacturing, production, freight transportation operations, and logistics processes, there is no shortage of things for supply chain stakeholders to keep an eye on.
That point was driven home by Jim Hull, senior industry strategies director, for JDA, a provider of AI-driven supply chain management services.
In terms of the biggest pain points, or things shippers need to focus on, regarding how the coronavirus can have a negative impact on their global supply chain operations and processes, Hull explained that, unfortunately, the real opportunity to mitigate the impact of this outbreak has passed for most companies, with proper preparation and flexibility serving as key parts of contingency planning.
“Companies that have already made investments in supply chain infrastructure and have a multi-source supply plan will be much better positioned to weather the ultimate impacts of the outbreak compared to companies that have not,” said Hull. “This again shows the wisdom of the maxim that standing still in today’s business world really means falling behind.”
What’s more, Hull said that most companies will have already made investment and purchase decisions driven by the uncertainty of the China Trade Tariffs and the Chinese New Year holiday, which means that things are starting from a relatively high inventory level compared to where they typically are at this time of year.
“This can help Retailers and Manufacturers carry on for a bit longer than normal, but will be felt by the transportation companies as the need for product movement wanes a bit,” he explained.
“I suspect the biggest area that shippers (and their customers) need to be really solid on right now is inventory visibility across the supply chain. As the outbreak continues to develop, companies that source from affected areas will have to make hard decisions on where to position the inventory that they already have. The first step in this is knowing what you have and where it is.”
When asked how can, or should, shippers sourcing out of China best be equipped to deal with shocks to the global drug supply, Hull said that the three main tenets for all supply chain operators should be:
-Visibility: Knowing what is in your supply chain, how much you have and where it is are critical components to being able to deal with shocks like this. As China is the largest global manufacturer of pharmaceutical active ingredients, disruptions like we are experiencing now will have a dual effect. The supply side is going to get much tighter as companies slow down or stop manufacturing, workers either stop coming to work or are stranded in the countryside and transportation hubs experience slowdowns. In parallel, the global demand for these pharmaceuticals are going to jump as cases pop up outside China’s borders and the visible reminders of the outbreak become more apparent through media and in person;
-Predictability: Using advanced tools like Machine Learning and other AI capabilities, supply chain operators are starting to be able to predict future constraints and disruptions, allowing them to take preventative measures to mitigate the impact; and
-Automation: Using autonomous decision making and material handling systems will allow shippers to better weather these type of biologic-based outbreaks. Properly set up and trained systems can continue on with order creation, processing, manufacturing and even autonomous material handling while their human counterparts focus on the critical aspects like outbreak containment, caring for family and generally getting back to healthy
As for the proper approaches shippers need to take in order to address production delays resulting in factory workers not working, coupled with needing to find alternative suppliers, sourcing options, and facilities, Hull pointed to various steps shippers can take.
“The biggest action that shippers can take today is to review the predictions related to probable spread of the disruptions and start to position capacity accordingly,” he noted. “Savvy customers will have ramped up non-China sourcing for raw materials and finished goods, and shippers should expect a shift of volume to these alternate source locations. Shifting capacity ahead of this demand shift will be critical to staying ahead of the curve and keeping product flowing.”
The role of supply chain technology in order to help shippers stay on top of potential disruptions in real time cannot be overstated, according to Hull. And the reason for that, he said, is that today’s supply chains are so data-intensive and complex that it is practically impossible for a human brain to comprehend and assimilate all the various causal factors that ultimately drive shipments and product movements.
“It was telling that an AI engine was able to call the outbreak several days ahead of the CDC’s own prediction capabilities,” he said. nderstanding the actual factors that drive your business, either through news, weather, social platforms, etc., is critical to being able to project and anticipate disruptions. Highly precise, granular predictions looking out many days and weeks is possible, but it is only possible through appropriate application of highly capable and proven technology.”
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