Four-Quadrant Approach To Mitigate COVID-19 Impact On Your Supply Chain

Like it or not, the worldwide spread of COVID-19 is negatively impacting your supply chain more and more every day.

Organizations are scrambling to fortify their supply chains against financial disaster. However, it is a monumental task to ensure that all Global Trade Management (GTM) Systems, Warehouse Management Systems, Order Promising & Allocation Systems, and Continuous Improvement on Operational Systems will be properly configured in time. Variables related to inventory, sourcing, consumer behavior, and logistics must all be considered.

In order to mitigate risks to your supply chain, you will need a knowledgeable, cross-functional team that is able to deploy a tactically superior solution.

As a supply chain specialty consulting firm, we at ITOrizon have devised a four-quadrant plan for our customers, and we would like to prescribe it to an extended audience through this article.

 

 

Country of Origin

Request that your logistics provider or vendor share the origin of each product. All international goods are required to pass regulatory compliance codes before they can be accepted at their port(s) of entry. It’s always a good idea to capture “country of origin” (COO) information and distribute it to downstream systems.

Enable global trade management rules for both substantial transformation and non-substantial transformation product lines to track product origin.

Enable COO regulatory compliance while receiving inventory in port as part of clearance.

Enable that global sales orders comply with country of origin certification.

House inventory units with suspected COO and noteworthy manufacturing dates in separate locations.

Now is also a good time to review and strategize your procurement compliance report, especially while keeping the volatile global situation in mind.

Audit & Quarantine

Tracking inventory and quarantining stock will help keep your supply chain uncontaminated. Warehouse systems are typically configured to perform random audits, new vendor audits, and new product line audits for efficiency reasons.

Implement warehouse management rules to flag products received from “quarantined” regions or vendors, as well as for inventory made within specific manufacturing date ranges.

Deploy quarantine measures for units with questionable or missing COO information before putting them away.

Include COO restrictions in picking, packing and shipping processes. Consider holding orders that do not match their expected origins.

Apply additional hygienetic measures inside the warehouse and within the labor force.

Consider fulfilling orders using a fully automated warehouse instead of a warehouse with less automation, until we combat this virus.

Allocation Strategy

Maintaining optimal levels of on hand inventory is always a struggle for businesses. Given transportation delays and labor shortages, preplanned inventories can become stuck in-transit or may remain with vendors indefinitely. By the time it arrives, the product could be expired or out of season. Inventory shortages can be avoided through restrategizing procurement and allocational algorithms.

Order Promising & Allocation Systems can play a vital role in maximizing on hand units, which will retain brand value and improve customer experience in this critical time.

Configure Global Order Promising Systems to check and track COO data as a product passes through its supply chain, and allocate inventory accordingly. If a sales order has preferential origins, configure the Order Promising System to honor that. As a worst case precaution, exclude units that do not have COO data from being allocated at all.

Ship from store fulfillment can be exploited as customers tend to avoid shopping malls, and do not purchase products in-person as often.

Enabling alternate suppliers and transportation vendors will prevent businesses from experiencing inventory shortages, order cuts, and cancelations.

Prescriptive Analysis

As a long-term strategy, continuous improvement of supply chain planning and execution is vital.

Predict and model various business outcomes by considering environmental parameters and customer behaviors, and be ready to execute your contingent business plans if the situation worsens. A well designed business plan should include informing execution systems about rerouted trucks, reshuffling inventory allocation strategies, moving units to off-price, etc.

Prescriptive analysis should consider internal factors like sales volume and inventory levels, and external factors like virus progression trends and containment, before recommending solutions like proceeding with purchase orders or canceling outstanding purchase orders.

Predict optimal safety stock level in case of pandemic situations. Understand the trade-off between cost and supply-chain resilience.

Businesses need to diversify their supply chain strategy. Examine each part of the value chain to identify alternate sources of supply from different geographic regions. This strategy may lead to higher costs, but the added expense is likely smaller than any cost incurred due to a disruption in your supply chain. Engaging in what-if exercises is mandatory to weather this storm.

Continuous improvements like rerouting inventories to outlet stores based on close-to-real-time data would save transportation and warehouse labor costs.

Businesses need more than business intelligence tools to succeed in this exercise. A no code platform with analytical capabilities is ideal for this research and execution.

ITOrizon is a specialty consulting firm and a supply chain system integrator focused on end to end supply chain solution design, implementation, test automation, and value-added DevOps support. ITOrizon specializes in implementing vendor solutions such as Manhattan Associates, Oracle, NetSuite, Reflex-Hardis. Check us out ITOrizon.com or find us on LinkedIn.