Supply Chain1

For many organisations, the pandemic was a disruption, but it has also been an accelerated learning event. Agility and resilience have become buzz words in supply chain management. 

Here are just a few ways UK businesses are coming out of the pandemic with better, more resilient supply chains.

 

1. Digitisation

New technologies can certainly enable much-needed agility and lower reliance on people if we were to ever have an experience like COVID-19 again. But this was a shift that was well underway, and the pandemic has merely accelerated implementation.

Increased investments in digitisation of supply chains; covering automation, robotics, artificial intelligence and machine learning are making supply chains more agile and improve transportation and pricing optimisation.

From simple prebuilt software to bespoke platforms, businesses of all sizes can now have greater control over supplier quality management (SQM). Digital audits can help businesses to map out or create a dashboard of their supplier base, highlighting weaknesses and including considerations on environmental, cultural, political or security threats, which can then be used to mitigate risks.

Building demand patterns and the introduction of analytics/AI-machine learning for demand forecasting is also helping manage unforeseen events and build resilience. 

 

2. Shipment visibility

The pandemic has taught us to increase visibility across supply chains to manage expectations, particularly in logistics. Shipments can now be tracked in real-time and the shipper can make use of valuable information at several key points in the journey for better customer interaction. 

Many transportation providers have products and services that can help with increased visibility, so it is always worth discussing with your logistics partners how you can work together to get the very best from their solutions.

 

3. Regionalisation

Without the free movement of goods and manufacturers disrupted by social distancing requirements and lack of raw materials, the exchange of goods outside the UK became bottle-necked or halted altogether throughout 2020. 

To prevent future disruption, organisations are recognising the importance of actively investing in regionalising or localising their manufacturing base or nearshoring production. Localised dark stores closer to distribution points have been introduced and supply lines have been shortened or kept entirely within the UK.

This is not really a new concept, more a re-engineering of the logistics model back to how it was many years ago. However, it is great news for UK manufacturing, with growth hitting a ten-year high in March 2021 according to UK Manufacturing Purchasing Managers' Index – and for the environment too, fewer international shipments equal less pollution.

The effect of COVID-19 on retailers

28%

underwent shortages and out-of-stocks

56%

re-negotiated contracts

64%

were challenged to adapt their supply chain for e-commerce

28%

tried to find alternative sourcing options

Stats source: RetailNext (2020)

 

4. Compliance

It isn’t just COVID-19 that has brought changes to the way our supply chains operate. Make sure you are up to date with the complexities of new customs rules and regulations post-Brexit. Again, this has been a major change for the transport industry, so check with your logistics partners, local government or customs authorities what support they can offer.

 

5. Business interruption and risk management

Many businesses have incurred considerable uninsured business interruption and extra expense losses due to disruptions in their supply chains. By considering effective planning and reporting on internal supply chains and introducing effective BI plans with insurers, businesses can make better provision for when the unexpected happens.

Undertaking effective risk analysis across your supply chain will highlight who the business-critical suppliers are and the incidents that may affect your ability to trade. You can then choose the right level of cover that will provide financial relief if a significant supplier or manufacturer negatively impacts your business's ability to operate. As mentioned previously, some of the portals used for SQM audits also produce intelligence on possible global supply chain issues and some even give risk ratings.

When looking at risk, don’t forget the old-fashioned risks of theft, unsecured overnight parking, packaging, storage too; it’s not just about planning a route from A to B, it’s about ensuring those goods are not compromised on the route also.

6. Cutting costs

Don’t compromise on reduced packaging, or security, or maximising payload at the expense of poor stowage or product to save money. In many instances, it proves to be a false economy, as losses increase, and the hidden time and effort in dealing with such issues. Lost market and revenues could outweigh those tangible savings.

Supply Chain2

7. Effective communication

This may be the simplest tip of all, but working with supply chain partners and ensuring clear communication channels will always help businesses deal with potential challenges quickly and effectively. If an unexpected problem does arise, communicating the issue to all partners will ensure that it is dealt with in the best way for everyone involved, minimising damage to the supply chain. 

Involve your risk management team, security team or the person responsible for insurance in developing any plans for procurement, sourcing, forecasting, routing etc. See them as a value-added team and get input from them at all stages of your strategy development and not as an afterthought. Effective communication should be fully inclusive of all stakeholders at the outset.

Whatever the specific lesson you take from the pandemic, by investing now and learning from such a disruptive time, UK businesses can put themselves in good stead to safely support consumers in their time of need with more resilient supply chains – whenever the next big challenge may be.

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