As we enter 2021, an overriding concern shared by supply chain managers is how to minimize supply chain disruption. This follows the unprecedented chaos caused by the COVID-19 pandemic. According to the IMF, worldwide GDP in 2020 declined by 4.4% and, in the US, by 4.3%.
Additionally, the epicenter has moved closer to home as the second wave worsens. The US leads the world in total infections and is right up near the top in terms of deaths per 1 million, as are many of its major trading partners.
As the nature of the pandemic changes, companies face new and unexpected challenges. More contagious strains are pushing the infection rate to a point exceeding anything experienced in 2020. Further lockdowns seem inevitable, particularly in Europe, and international travel is likely to be increasingly restricted, where some countries may keep borders closed indefinitely.
In this guide, we look at six ways you can minimize supply chain disruption in 2021.
We've researched what industry leaders and analysts say about mitigating supply chain disruption. In so doing, we have identified six ways you can anticipate and respond to potential supply chain disruption in 2021. These include:
Develop supply chain resilience to absorb the impact of future supply chain disruption. Avoid the temptation of looking short-term, rather than focusing on the future. Use scenario analysis to stress test your supply chain, and evaluate strategies like inventory banking in place of JIT and lowest cost.
Map out your supply chain in detail. Establish where and how raw materials are sourced, processed and converted into a final product. Uncover and address vulnerabilities and risks. Consider applying mathematical supply chain modeling that allows you to identify and analyze vulnerabilities.
Diversify your supply chain. Source critical components and raw materials from more than one source. Minimize risk of supply chain disruption by splitting suppliers geographically to avoid being caught out by a disaster that hits an area where alternative suppliers are grouped.
Evaluate alternative strategies such as sourcing and manufacturing in the same geographical region as your customers. This insulates the supply chain from disruptions in another part of the world. Approach this option with caution and evaluate supply chain risk, as it may take years to develop comparative manufacturing capabilities to those existing in China.
Switch from linear legacy supply chain models to a digital supply chain. Benefit from one view with end-to-end transparency. Break down functional silos. Increase agility. Use a digital twin to evaluate scenarios, anticipate supplier issues and avoid supply chain disruption.
Add depth to your understanding with predictive and prescriptive analytics. Model your supply chain, predict future trends and use prescriptive analytics to proactively determine the most cost-effective decisions to deal with current, future and potential supply chain disruption.
It's almost impossible to predict how the changing nature of the COVID-19 pandemic will affect trade and supply chains. With such uncertainty, companies need to find new ways to anticipate, navigate and mitigate future supply chain disruption.