The COVID-19 pandemic provided a wake up call for the supply chain management industry, catching many companies off guard.
The average person doesn’t think about supply chain management until they can’t get toilet paper. But with last year’s floods, and COVID-19 pandemic and social unrest in parts of the country this year, the importance of the supply chain is front and center. SCM is a whole lot more than toilet paper and PPE, and as the last year has proven, your supply chain needs to be prepared for whatever life throws at it.
“Supply chain is something that touches everyone and a lot of people don’t even realize it until it impacts them personally,” said Honey Zimmerman, assistant professor of supply chain management at Western Illinois University‘s Quad Cities’ campus. “With this pandemic, for example, it has really shed light on companies that don’t have near as sophisticated supply chains as they need to have. So they’re realizing they need people who know what they’re doing in this area. It’s very high in demand from the jobs market perspective. For any supply chain graduate, there are six to nine jobs available. In today’s climate, that’s increasing.”
The key aspects of supply chain management include strategic sourcing, transportation, distribution, risk management and inventory management.
Zimmerman said WIU’s advisory board of 25 to 30 business people tell her risk management has become an area of focus for their businesses in preparing for weather events, social unrest, catastrophes and now the pandemic.
“It could be a global health crisis, it could be hurricanes and tsunamis or even labor disruptions,” she said. “A few years ago there were labor strikes at the port of Los Angeles and that caused huge havoc in supply chains. Risk management covers all of those scenarios.”
Zimmerman said the coronavirus pandemic has caused a “couple key challenges that companies are facing right now in different supply chains. The example of toilet paper really brought it out. There is so much demand unpredictability right now. People are only going to stores once a month and they’re buying in larger quantities.”
“When all the schools shut down, there was a surge in toys being purchased in the middle of spring, which is odd,” she said. “Demand irregularity is creating a challenge for companies and they’re trying to figure out how to react to that better.”
Target stores, which remained open during state close-downs as essential businesses, couldn’t keep enough toilet paper, ketchup and rice and beans on the shelves.
Brian Harper-Tibaldo, corporate communications spokesman for Target, said purchasing agents have streamlined their process in order to meet demand caused by the pandemic.
“We’re working hard to accommodate increased demand,” Harper-Tibaldo said. “To ensure as many guests as possible can find the items they need, we’ve taken measures such as coordinating stores, distribution centers and suppliers so that the things our guests need most are fast-tracked through the supply chain and prioritized for re-stocking.”
Zimmerman advises companies to have several different supply chains in order to meet demand irregularities.
“Companies can’t just change from one distributor to another; it takes more than that,” she said. “The other thing going on right now are transportation and distribution challenges.”
As some supply chains struggled, transportation prices skyrocketed. Another challenge has been receiving products in a timely manner due to strains on the transportation system, which in turn affects distribution.
“Companies are being really cautious right now with the economy being so uncertain,” Zimmerman said. “They don’t want to invest in a lot of extra inventory because we don’t know what the future holds. Companies are being cautiously optimistic as we head into the second half of the year.”
Going forward, Zimmerman advises companies to look into outsourcing as a solution, or even near-shoring, when manufacturing is brought back to the United States. Buying local also is an option.
But if companies want to make the biggest difference in their future, Zimmerman said investment in technology will be necessary as the trend toward connectivity takes off.
“I feel like the pandemic might hasten this. Companies might want to invest a little quicker in technology because they’ll want to have that operational flexibility. If they have technology that gives them predictive data, they’ll be able to be more agile. That’s where the strategy is for the future. Technology will be one of the answers to getting there.”
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