It is true that the coronavirus emergency has caused the slowdown or even the blocking of logistic and production activities, but this can become an opportunity for companies to rethink their supply chain model: Apple, for example, has already reported the risk of reduced iPhone availability.
The global problem with supply chains is due, as is well known, to the fact that the coronavirus epidemic has exploded in wuhan, in hubei province, an important industrial and freight hub in central China. So in addition to the risk of contagion, the epidemic has an obvious economic impact: the slowdown or even the halt of the logistic and productive activities.
According to reports from TrendForce, the entire worldwide production of smartphones is expected to fall by 12% in this first quarter of 2020 compared to the same period of 2019. Apple has published a note to its investors, in which it admits that it will be impossible to achieve the anticipated turnover targets last January, at the time of the periodic publication of financial results. According to Bloomberg, FCA has planned to suspend its activities in the assembly plant in Serbia that produces the Fiat 500L, due to deficiencies in the supply of components from China. In addition, China produces most of the active ingredients needed for the production of a broad range of medicines, so the world is also facing a shortage of medicines.
Other risk factors for logistics
In addition to coronavirus, other factors can impact supply chains worldwide: brexit, US-China trade war duties, natural disasters such as floods, hurricanes, earthquakes, cyber-attack“”, regulatory changes, volatility of demand, changing consumer needs, decarbonisation and environmental sustainability objectives.
How to ensure business continuity
In this context, to ensure the necessary “business continuity” and therefore the sustainability of the operating activity, the response of companies must be addressed to:
1. have an agile supply chain, with ability to react quickly to the external events, guided from a supply chain Control Tower that knows to collect data from the field in real time and, through advanced analysis and simulation of alternative scenarios, is able to make decisions on both the short and the medium term (for example, activating alternative suppliers, modifying a production plan, moving production activities from one plant to another, creating buffer stocks, reviewing the “footprint” production);
2. develop a culture and a supply chain risk management capability capable of identifying, classifying and managing the main risks, Based on advanced analytics and scenario schedules, as well as an ongoing monitoring process of possible risk events. In this way it is possible to move the Risk Management activities from the world of the compliance to that of the business and draw from it real competitive value.
The set of these elements is facilitated by a well structured “Global Supply Chain Control Tower” ie by a shared Service Center with a team of supply chain experts and“data scientist”, characterized by a series of capabilities:
• real-time data collection from all the nodes of the extended supply chain (production plants, suppliers, contract manufacturers, distribution centres, logistics operators, customers, etc.)
• Large Data Management (Big Data)
• extended sector visibility and control dashboard
• analysis of data collected through advanced reactive analytics (e.g. alert to critical situations), predictive, prescriptive (e.g. machine learning logic)
• simulations and assessments of alternative scenarios, including scenarios to manage risk events
•decisions based on data collected and scenarios developed
A Supply Chain Control Tower must be designed to be distributed over multiple locations, with groups of experts who have access to the same data and can easily work even in smart working mode (remotely), through an application platform that, leveraging new technologies such as IOT, cloud, big data, machine learning, is able to capture data from the field, analyze it, show it, support decisions.
Here is that the crisis triggered by the coronavirus, faced from the point of view of the business, can become an occasion for the companies to rethink own model of supply chain, developing a greater sensitivity to the risk management, constituting a real control tower for the monitoring and understanding of the phenomena dispersed along the (increasingly global) supply chains, for example considering the hypothesis of moving and/or redundant even in the West some of the productions currently carried out only in China.