The worldwide impact that Covid -19 has had on public health, society and the economy simultaneously, has been the differentiating factor of the crisis that today involves more than 170 countries, including world powers. Although all economic sectors have been affected, there are industries that have not had the same levels of damage.
The automobile, tourism, consumer goods, and service delivery industries, to name a few, have been highly affected, for example: in Korea, a market-leading automaker had to close 7 of its factories due to the inability of its Suppliers deliver components to produce wire harnesses for their vehicles. Well, the city where these providers are located was completely closed by the government.
The company that was in charge of launching a new model, estimated that 40% of its production was affected. It is here that planning and purchasing professionals must evaluate various strategies that balance the cost and risk that companies have by applying planning models and leveraging technology to support rapid responses.
In this situation, what actions should companies take in relation to their value chains?
Traditionally, the methods used in value chain planning have been based on time series techniques based on the sales history, however real-world events, climate change, market trends, natural disasters, among others are factors that take away weight from these values.
Now, taking up the current situation in the world and taking into account the teaching of the Korean company that is only one of the cases worldwide, it is essential that companies direct their eyes and efforts on strengthening their supply chains:
- Carrying out supply chain risk assessments from start to finish, engaging each part of the ecosystem, i.e. suppliers and suppliers of suppliers, in order to identify risks, define common objectives and short-term resilience strategies. deadline and deploy action plans.
- By developing solid risk management processes and diversifying the digital logistics network, a map must be drawn that involves each of the nodes present in the supply chain, including final consumers, in order to establish risks and methodologies for each actor, increasing responsiveness.
- Involving the use of technology in processes. Companies must take advantage of technology by putting it at the service of their interests, implementing tools that facilitate and support decision-making and allow a quick reaction to contingencies.
- Innovating in the way of doing things, it is necessary to evaluate to what extent the processes can change maintaining quality standards, production capacities and response, for example through the use of automation or IoT.
This is the moment in which companies must assess whether their business model is capable of responding to impending generational changes, increasingly versatile competitors and historical events such as the one we are experiencing.
Source: EY Building a Better Working World.
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