Article:

The one thing supply chain executives should do right now in response to COVID-19

25 March 2020

Luke Rochester, Senior Manager, Consulting |
Kamal Prasad , Partner, Technology Advisory |

Supply and demand challenges presented by COVID-19 have emphasised the importance for supply chain executives to immediately begin having cross-functional discussions, in order to coordinate an organisational response. Organisations that successfully weather the storm now will be in a much stronger position when things finally return to some form of normality.

To assist organisations through this process, BDO has outlined a five-step supply chain response. These steps can form part of an organisation’s overall business continuity plan and relate to various functions. A resource list of all BDO’s COVID-19 related materials is also available here.

Five-step Coronavirus (COVID-19) supply chain response plan and process

A pragmatic five-step roadmap has been provided below using specific examples. It is highly recommended that each response team tailor the approach for their specific organisation.

Step 1: Form a supply chain response team

Organisations should identify and gather a team of key internal stakeholders to form a ‘supply chain response team’. Seven key areas have been identified where representation is required, keeping in mind these can be tailored to your organisation’s specific situation:

  1. Sales
  2. Marketing
  3. Finance
  4. Operations
  5. Human Resources
  6. Information Technology
  7. Supply Chain Intelligence (SCI).

Note that SCI is one of the less common roles in this list but critical to success.

Step 2: Set-up a command centre

Your organisation may not have the luxury of converting a physical conference room into a command centre and relocating the response team there. Enabling remote access is key which can be done through the setup of a virtual command centre. This process can be carried out by the information technology role in your response team.

Step 3: Acknowledge and highlight three repeating processes

Identify daily, weekly and monthly process cycles.

For example, start with a weekly cycle that repeats each month, as follows:
 

Week

Key tasks

Week 1

Supply chain intelligence role works with sales and marketing to present the sales forecast and customer allocations.

Week 2

Supply chain intelligence role works with operations to respond to the week one request.

Week 3

Based on the above, the entire team finalises the supply plan.

Week 4

The supply plan is presented by the supply chain intelligence role and finance role to the executive team for sign-off.  The executive team’s comments and questions are rolled into the next month's cycle.


There will also be monthly processes that repeat each year such as annual reporting, AGMs, budgeting, target setting and the end of financial year reporting process. The key focus for the weekly cycles will depend on which month you are in.

In addition, there will be daily processes that repeat each week detailing the tasks on the critical path. These could be tasks such as loading supply chain data, analysing, tagging and flagging, visualising, reporting, discussing, agreeing and confirming. A skilled supply chain intelligence person should be able to create a skeleton 365-day calendar on the first day with the help of the response team.

Step 4: Set up meeting agendas

Set up agendas and key information for each weekly meeting. The weekly cadence is the most important agenda to address first, as the daily is often too granular and monthly not granular enough. For each weekly meeting, organisations should also have an information checklist (inputs and outputs) and distribute agendas four weeks in advance where possible. Agenda templates should be attached to the calendar processes outlined in step three.  

Agenda templates should include:

  • Key people required, time and place (remote log-in details), and the goal of meeting
  • Key items to address first in the meeting
    (e.g. staff/people, customer service, stock availability, supply, demand, financials)
  • New action items
  • Old action items with person responsible, due date, priority (critical, urgent and high, medium, low) and status.

Step 5: Conduct meetings, review, modify and repeat

One of the biggest mistakes organisations make is to wait until all the information is available before holding these cross-functional meetings. One of the goals of the supply chain response team is to provide a single point of entry to one version of the truth. The more transparent this is the quicker the rest of the organisation can react. 

In the absence of any information, people in the organisation will make their own decisions. The factory will make something, the purchasing department will buy something, and the sales department will sell something.  It is better this is done in a coordinated fashion, with some guidance, rather than departments operating as silos with no guidance at all. 

The key message is to start having regular cross-functional meetings today.

Significant changes to business-as-usual

In all of the steps above, many of the key items to address may seem obvious (e.g. staff, customers, supply, demand, stock, and financials). However, take a moment to consider less obvious items that may need addressing as part of the current COVID-19 crisis. For example:

  • Health and safety should be your first priority but it is not always straightforward (e.g. people may work too hard or expose themselves to unnecessary risk). Risk management, fatigue management and general support for staff will be important
  • Identify critical resources and keep them safe and operational (e.g. if your truck drivers or forklift drivers fall sick it could halt the entire supply chain)
  • Segmentation and prioritisation of customers, suppliers, products, services and key resources in the organisation will most likely not follow business-as-usual rules. Re-segmenting and re-prioritising may require early intervention since flexibility and resilience will be key
  • Continuous inventory rebalancing is key (e.g. the toilet paper roll scenario). There may be enough stock in the supply chain but the location and level of the stock needs to be monitored and rebalanced.

A note about momentum

It is important not to confuse employees with too many large-scale changes at once. Monthly lock-ins to supply plans, sanctioned by the executive team, give people enough time to ‘get the job done’.  A weekly cadence enables key staff to adapt to fluctuations within the monthly cycle and a daily calendar of key activities gives staff something stable they can cling to in uncertain times.

If you would like more information on how to set-up your supply chain response team and process, please contact our Consulting team.

 

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