How supply chains can prepare for a second wave of COVID-19
From both a humanitarian and business standpoint, the impact that this novel virus has had and continues to have cannot be underestimated. For businesses, it has led to significant drops in revenue and productivity. The combination of the two is now leading to thousands of job losses and an impending global recession. It has also changed the way they approach their supply chains, transitioning away from the notion of static networks towards more dynamic value chains.
Partly due to a relaxation of lockdown protocols and partly as a result of businesses beginning to reassess their supply chains, there have certainly been recent signs of recovery. The UK’s retail sales figures for June reaching ‘near pre-lockdown levels’. However, in conglomeration with this signal of hope there remains a residue of uncertainty and concern, which is quickly rising to the surface. This comes in the form of a second or even third wave of infections across the globe. Businesses need to take the lessons they have learned from the last six months and prepare for this eventuality.
Unprecedented? Not anymore
When COVID-19 first emerged as a global pandemic the word ‘unprecedented’ was, and in many cases, still is used with a frequency which has somewhat negated the meaning of the word. It is, of course, certainly true that nobody saw this pandemic coming and that there have been precious few viruses in human history to compare it to. The World Health Organisation has even labelled it the ‘most severe’ global health emergency ever.
However, there has to be a point at which businesses stop using the word ‘unprecedented’ and use the new precedents set by the pandemic to become both more resilient and more agile. Across the globe, we have now lived with this virus for long enough to know what measures can be used to tackle it, the speed with which they can be implemented and the disruptions that they cause.
Whether it concerns the impact of stockpiling, which led to shortages of essential items such as toilet paper, or the issue of excess stock as demand for products fluctuated, there now exists six months’ worth of data about the impact of COVID-19 on businesses. Therefore, should there be a second or a third wave of the virus, which leaders across Europe are bracing themselves for, businesses now have both the information and the opportunity to leverage technologies such as AI and machine learning to prepare and react accordingly.
The phrase ‘hindsight is a wonderful thing’ is often framed sarcastically or regrettably. However, in this instance, there is a great deal which businesses can gain from hindsight; from looking back at the last six months and assessing what went wrong, why and how they can avoid history repeating itself.
For businesses, one of the major pain points during the pandemic stemmed from lockdown protocols, which saw shops, offices and even entire countries locked down. This caused havoc within the supply chain. Firstly, it meant that key nodes within the supply chain, whether for transportation, sourcing or storage, were either eliminated as an option or reduced to very limited capacity. Secondly, a shift in consumer priorities saw huge fluctuations in demand, leading to both excesses and shortages in supply.
These disruptions, and the suddenness of them, highlighted one very important lesson for businesses: failure to prepare is preparing to fail. For many businesses, the issue was simple: they did not have the technology in place to adapt to these disruptions. As a result, if they were able to recover at all, it was either too late or not a long-term solution. In many cases, it might have been both. This needs to change moving forwards.
Bending not breaking
When considering how businesses can make their supply chain both flexible and resilient, a good analogy to draw is how buildings are made to withstand earthquakes. In Japan, a country more at risk with earthquakes than most, buildings are fitted with base isolators. These act as shock absorbers between the building and the ground. Essentially, when an earthquake hits, the building can slide back and forth while remaining upright: flexible, yet resilient.
Similarly, the supply chain has to be flexible in order to withstand shocks and continue performing its primary function. However, instead of using base isolators, flexible supply chains should rely on technology such as digital twins, AI and machine learning to navigate through disruptions.
Using COVID-19 as an example of a disruption, businesses which have a living, breathing digital twin of their supply chain can rapidly model all kinds of scenarios and evaluate the cost and service trade-offs associated with changes in the supply chain – whether planned or unplanned. Advanced algorithms can then be used to simulate and optimise the outcomes, providing insights which businesses can both rely and act upon.
With these systems in place, businesses can not only prepare for the expected, but for the unexpected too. Using digital twin technology, in combination with advanced algorithms and artificial intelligence, businesses can virtually test out contingency plans within the supply chain before putting them into practice. That means, should there be a second or third wave of COVID-19 infections and the subsequent disruptions, the supply chain can be quickly adapted to tackle these.
Businesses that want to be truly agile and resilient within their supply chain need to accept today’s reality: there is no ‘new normal’, just the ‘never normal’. Disruptions will always exist, whether we know they are coming or not, so businesses need to expect the unexpected and have the technology in place to deal with them. When it comes to implementation of this technology, the old adage rings true here: there’s no time like the present.