Supply Chain Rebuild your supply chains to ensure timely access to all inputs your business requires In partnership with www.b3cmsme.org 1
Key questions to be addressed • Why do we need to focus on supply chain? 1 • Which component(s) of the supply chain to focus on? 2 • What are the strategies for restoring supply chains? 3 • What are the action points for each strategy? 4 • What shall be the approach for implementation of the action plan? 5 www.b3cmsme.org 2 2
The need to focus on the supply chain ! Estimated 75% of companies are seeing disruptions in supply chains as a result of COVID19 pandemic and lockdown ! Even after the lockdown, the next crisis is not so much a matter of ‘ if ’ but ‘ when ’ ! Uncertainties and their impacts are difficult to model and assess; hard information is lacking ! Suppliers & customers in lockdown areas depleting/ depleted/ idling stock and work in progress inventory ! Major risks in meeting contractual obligations potential time- and cost- overruns ! Decades-long focus on supply chain optimization minimized costs, reduced inventories, high asset utilization minimized buffers and flexibility high vulnerability to supply chain disruptions Current disruption provides an opportunity to ► To gain deeper understanding of strategic operations and supply chains ► To spot ‘ areas of improvements ’ within current supply chains ► To develop more collaborative and resilient relationships with critical suppliers & key customers ► To instill agility & resilience in operating models to strengthen preparedness to face any disruption www.b3cmsme.org 3 3
Which component of the supply chain to focus on? Upstream Internal Downstream Tier-1 suppl. Manufacturer Distributors Retailers Consumers Tier-2 suppl. A typical supply chain B2B B2B B2B B2B B2C Direction of flow of demand Direction of flow of product Typical Availability of raw materials WIP inventory Finished products ’ inventory • • • Warehousing costs Quality of supplies Buffer stock • aspects of • • Timely delivery/ JIT Storage costs Transportation costs • • • the supply Supplies ’ costs Master production schedule Response/ cycle time • • • chain Transportation costs Manufacturing costs Availability/ service levels • • • components Etc. Etc. Etc. • • • The crisis Disruptions along all components of the supply chain Maximum impact felt in the upstream component: affecting supplies, suppliers and logistics available www.b3cmsme.org 4 4
Strategies for restoring supply chains: Focusing on 4 key areas Enhancing visibility of supply chain and ensuring availability of raw materials and supplies Supplies Upgrading Facilitating supplier risk procurement capability management and Procurement Suppliers to make it agile and collaborative relationship, more responsive and securing capacities to meet requirement Logistics Securing reliable, feasible and economical transportation and storage options www.b3cmsme.org 5 5
Supplies Determine business exposure by identifying current buffer inventory & short-term requirements Enhance inbound materials visibility (lead time, delivery schedule, etc.) Identify strategic and concentrated supplies at risk Map critically sourced materials to high-value products and revenue streams Use pre-approved substitutions for parts or raw-material (where primary sources are impacted) Consider product redesign or material certification resources (where secondary sources are not available) Targeted outcome: Enhanced visibility of supply chain and Secured supply-capacities www.b3cmsme.org 6 6
Suppliers Evaluate Tier-1 suppliers ’ risks & capacity to meet the requirements; access real-time supplier data Secure capacity for Tier-2 & Tier-3 suppliers Identify and activate alternate sources of supply/ secondary suppliers Work with critical suppliers to balance supply & demand; logistics-based costs & buffer stock Review contracts with key suppliers to understand liability in the event of supply shortage Explore resource-sharing with other enterprises (material exchange, sharing common inventories, etc.) Targeted outcome: Supplier risk management and Collaborative supplier relationship www.b3cmsme.org 7 7
Logistics Assess supply routes and transport options; determine current feasibility (availability, costs, permissions) Evaluate alternative inbound logistics options and outbound logistics options and secure capacity Explore faster transportation options Keep updated on imposed city/ state- specific restrictions (affecting transport and deliveries) Rapidly model alternate supply and transportation scenarios (such as re-routing around a hub/port) Explore resource-sharing with other enterprise (lending of idle transport) Targeted outcome: Secure, reliable and viable transport and storage options www.b3cmsme.org 8 8
Procurement Plan procurement considering current exposure (WIP buffer, inventory in transit, warehouse, spare, etc.) Buy-ahead to procure inventory and raw materials (in short supply in impacted areas) Re-orient procurement to updated inventory planning parameters (to be able to manage crisis) Prioritize procurement on the basis of criticality of supplies mapped to high-value products and revenue streams) Update procurement manual to include the priority-list of what products will be produced in the event of raw and direct material shortages Targeted outcome: Agile and responsive procurement capabilities www.b3cmsme.org 9 9
Cross-cutting approaches Value chain assessment of all risk factors that may escalate costs and impact service and inventory capabilities, taking proactive action to address anticipated shortages Scenario planning: Developing and implementing enhanced risk management practices; Creating pre-emptive action plans; Making effective trade-off decisions and to identify sweet spots End-to-end supply chain management: Ability to model and predict demand; Ensuring supply chains can cope with demand and expectations; Ensuring agile replenishment processes Technology upgrades, ICT and analytics: Re-designing the way employees collaborate with each other, customers and suppliers; Cloud-office technology and zero-touch models; Prepared for potential web-based fraudulent actions/ items such phishing, malwares, etc. Focus on resilience: With learnings from the crisis, moving toward more comprehensive proactive modeling; Controlling further dimensions of supply chain; Longer-lasting reconfigurations of supply chains to build resilience www.b3cmsme.org 10 10
The approach for implementing the action plan The approach for implementation will be a mix of Kaizen and Business Process Re-engineering, and will comprise following steps Mobilize resource team; initiate response plan; establish operating Mobilize rules to all supply chain interventions; contingency management Prioritize new risks and implications to supply chain components and products/ services Operate Execute the Configure Prioritize Configure and tailor plan & monitor the network and results product flows to execute the protocols Analyze what-if scenarios and Analyze protocols for source, plan, make, distribute and service implications www.b3cmsme.org 11 11
Supply Chain Rebuild your supply chains to ensure timely access to all inputs your business requires In partnership with www.b3cmsme.org 12
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