Accenture: holistic actions to strengthen supply chains
The COVID-19 pandemic has stretched businesses to their limits, and nowhere has this been more prominent than in supply chain.
A vital function for society during this pressing time, supply chains have kept supermarkets stocked, medical professionals provisioned with PPE, and now form the backbone of the global vaccination effort.
But how can supply chain professionals shore up their processes and protect against the inherent instability associated with a global function set upon at all times by lockdowns, border closures, and shifting safety protocols at customs.
Accenture, which found that 94% of Fortune 1000 companies are experiencing disruption along their supply chain as a direct result of the virus, has shared a number of key action points supply chain managers should be focusing on to mitigate risk today, and prepare for a post-pandemic tide change.
“The COVID-19 pandemic is not just a short-term crisis,” the consultancy firm says. “It has long-lasting implications for how people work and how supply chains function. There is a pressing need for businesses to build long-term resilience in their value chains for managing future challenges.”
In the short-term it recommends using the tools supply chain managers have at hand to consistently monitor, assess and react to product flows, leveraging data and analytics platforms to identify and address points of failure as they arise.
Five priorities that demand immediate action will lead to more stable processes, which rely on in-built flexibility to over come new hurdles, rather than firefighting and reactionary tactics. Accentue identifies these as:
1. Put people first: Keep the planning workforce healthy and productive by supporting new ways of working.
2. Leverage data to improve visibility: maximise visibility into demand, inventory, capacity, supply and finances across the ecosystem.
3. Define segmentation to prioritise demand: carefully analyse demand and define priority micro-segments.
4. Build a sales and ops SWAT team: mobilise dedicated planning and execution teams that are able to undertake multiple interventions and orchestrate responses effectively.
5. Evaluate supply chain scenarios: run simulations to predict when and where excesses and shortages are likely to occur as well as running end-to-end scenarios to get actionable insights that will optimise operational metrics.
Repositioning for growth
More than half (55%) of companies have downgraded their growth forecasts, or plan to do so, according to Accenture, but swift action and investment during the height of the pandemic will place businesses on stable footing to forge ahead once vaccinations begin to turn the tide against infections: “Companies have an opportunity to use this challenging period to discover where investments are needed, evolve the supply chain planning function, and reposition the organisation for growth once economies rebound.”
Organisations should look to accelerating digital transformation plans and adjusting the operational model that is asset light, driven by data. Procurement leaders, who have been critical to cost-cutting and problem solving as traditional avenues for procurement collapsed, will continue to play a central role post-pandemic. Planning for a downturn or the very real risk that COVID-19 infections will rebound - or, indeed, a new global crisis hits - must be front of mind.
Working in harmony with partners and acting as “a force for good” will be key: procurement leaders can use this period of flux and rapid change to “reshape the organisation to combine greater resilience and responsibility and help both the business and society come through stronger”.
Biden establishes Supply Chain Disruptions Task Force
The US government is to establish a new body with the express purpose of addressing imbalances and other supply chain concerns highlighted in a review of the sector, ordered by President Joe Biden shortly after his inauguration.
The Supply Chain Disruptions Task Force will “focus on areas where a mismatch between supply and demand has been evident,” the White House said. The division will be headed up by the Secretaries of Commerce, Transportation, and Agriculture, and will focus on housing construction, transportation, agriculture and food, and semiconductors - a drastic shortage of which has hit some of the US economy’s biggest industries in consumer technology and vehicle manufacturing.
“The Task Force will bring the full capacity of the federal government to address near-term supply/demand mismatches. It will convene stakeholders to diagnose problems and surface solutions - large and small, public or private - that could help alleviate bottlenecks and supply constraints,” the White House said.
In late February, President Biden ordered a 100 day review of the supply chain across the key areas of medicine, raw materials and agriculture, the findings of which were released this week. While the COVID-19 health crisis had a deleterious effect on the nation’s supply chain, the published assessment of findings says the root cause runs much deeper. The review concludes that “decades of underinvestment”, alongside public policy choices that favour quarterly results and short-term solutions, have left the system “fragile”.
In response, the administration aims to address four key issues head on, strengthening its position in health and medicine, sustainable and alternative energy, critical mineral mining and processing, and computer chips.
Support domestic production of critical medicines
- A syndicate of public and private entities will jointly work towards manufacturing and onshoring of essential medical suppliers, beginning with a list of 50-100 “critical drugs” defined by the Food and Drug Administration.
- The consortium will be led by the Department of Health and Human Services, which will commit an initial $60m towards the development of a “novel platform technologies to increase domestic manufacturing capacity for API”.
- The aim is to increase domestic production and reduce the reliance upon global supply chains, particularly with regards to medications in short supply.
Secure an end-to-end domestic supply chain for advanced batteries
- The Department of Energy will publish a ‘National Blueprint for Lithium Batteries’, beginning a 10 year plan to "develop a domestic lithium battery supply chain that combats the climate crisis by creating good-paying clean energy jobs across America”.
- The effort will leverage billions in funding “to finance key strategic areas of development and fill deficits in the domestic supply chain capacity”.
Invest in sustainable domestic and international production and processing of critical minerals
- An interdepartmental group will be established by the Department of Interior to identify sites where critical minerals can be produced and processed within US borders. It will collaborate with businesses, states, tribal nations and stockholders to “expand sustainable, responsible critical minerals production and processing in the United States”.
- The group will also identify where regulations may need to be updated to ensure new mining and processing “meets strong standards”.
Partner with industry, allies, and partners to address semiconductor shortages
- The Department of Commerce will increase its partnership with industry to support further investment in R&D and production of semiconductor chips. The White House says its aim will be to “facilitate information flow between semiconductor producers and suppliers and end-users”, improving transparency and data sharing.
- Enhanced relationships with foreign allies, including Japan and South Korea will also be strengthened with the express proposed of increasing chip output, promoting further investment in the sector and “to promote fair semiconductor chip allocations”.