The unprecedented supply chain disruption caused by COVID-19 has had severe operational and financial consequences, with decision makers and planners having to address issues related to
- Demand drops
- Surges by segment
- Supply shortages
- Inventory placement challenges
- Reduced productivity & lot more.
Manufacturing Companies must focus on the immediate challenges of keeping their businesses stable. They must form rapid response teams to gain a better understanding of their production demand changes, labor support challenges and supply chain ecosystem constraints.
They also need to focus on building a business that is as future-proof as possible, using new resilient working model to increase reliability, responsiveness and cost management, sustaining the product operations, and human capital workforce through the crisis. As well as being essential now, these future-proofing actions will also help sustain competitive advantage to accelerate business growth once economies rebound.
Three immediate actions to build agility now and in the future:
- Understand the impact of demand disruptions.
- Ensure manufacturing ecosystem viability.
- Rebalance physical production network assets.
- Understand the impact of demand disruptions
Manufacturers must rapidly identify the products that are most critical for stabilization and growth, shore up associated supply chains, and reconcile critical skills to meet near term and future demand.
Demand priorities in product portfolios have changed drastically. We see three key scenarios affecting manufacturing assets:
- Manufacturers are shifting to address opportunities for hypergrowth (e.g., canned, shelf stable and frozen goods, respirators, personal protective equipment).
- Manufacturers are transitioning and repurposing legacy lines to make new products to support the community (e.g., distillers producing hand sanitizers).
- Manufacturers are slowing or shutting down production volumes, where demand has drastically fallen off or supply chains have been disrupted,
In all scenarios, manufacturers need to rapidly identify the products that are most critical for stabilization and growth, shore up associated supply chains, and reconcile the critical skills to meet near term and future demand.
2. Ensure manufacturing ecosystem viability:
Manufacturers must understand the implications of COVID-19 and contract provisions for each critical ecosystem player, including
- Sourcing Material suppliers
- Sourcing Contractor companies
- Sourcing Co-manufacturers
- Sourcing Logistics providers.
Ecosystem relationships typically suffer the most during massive market disruptions. Given the increasing adoption of ecosystem-based global supply chains, this is a challenge for manufacturers.
3. Rebalance physical production network assets:
The rapidly changing demand/product mix, combined with workforce and ecosystem availability challenges, may be substantially disrupting manufacturers’ existing physical production networks. Companies must make fast and accurate decisions on the capital investment, new technology investments with new supply source manufacturers, enabling new suppliers through knowledge sharing collaboratively and effort required to redeploy underutilized assets or build greater flexibility in current assets in the short term. At the same time, they must ensure those decisions do not inhibit future growth.
Looking to the future: Solvanni recommends taking the following actions:
Manufacturers must take a hard look at existing operating models – where and how work gets done and for what reason, challenging legacy ways of working, and building in more transparency and intelligence across core ecosystem partners and the entire physical supply chain network.
There are essential steps for manufacturers to reshape themselves into partnership-enabled, resilient, and agile organizations. Manufacturers must drop the idea of suppliers and choose 9*
Important Pointers for the manufacturing companies especially in U.S going forward,
- Work with planners to confirm customers’ and the market’s actual needs to segment demand of critical products needed for production reprioritization.
- Drop the idea of suppliers and choose partners instead.
- Find the right partners who do sourcing, manufacturing capability assessment, proper screening, pilot batch manufacturing and supplier qualification.
- Be open towards investments with new or strategic partners on new technology and process capability enablement
- Segment operations based on market outlook, taking into consideration supply chain input for customer demographics, geographies, market sales channels, and decide which production is in high demand which requires repurposing, slowing down, shutting down or re-channeling.
- Develop rapid demand and supply scenarios to confirm operational feasibility.
- Develop a road map for the next wave of in-demand changes and product needs.
- Assess whether co-manufacturing alliance partners and the extended ecosystem are still viable options and whether they can meet any new demand/product mixes.
- Review contracts to determine if any obligations need to be changed in the light of the current situation i.e., many companies are choosing to lease their equipment instead of selling upfront to give advantage to their customers in terms of cash flow which is the biggest challenge during these crisis situations
- Analyze the demand/product mix, workforce, and ecosystem to identify critical facilities, equipment and processes.
- Ensure proper alignment of their Supply chain partner’s deliverables with their overall strategic goals.
Solvanni’ s solution to the present supply-chain debacle:
To overcoming above said challenges, manufacturers are looking beyond their traditional outsourcing destinations.
Large and small manufacturers in the US have largely been the first movers in this direction. US manufacturers exploring nearshore destinations are stumbling upon human-resource issues within the country and Mexico, and protectionist tariffs in South America. On the other hand, the Asia Pacific region, mainly India, has been emerging as a desirable geography, given the lower costs of operation and higher availability of quality Supply chain partners. Steady FDI inflow into the region over the last decade has also improved its USP as a potential supplier market with a robust manufacturing environment.
Despite the advantages, a nagging concern for manufacturers looking for newer options is finding the right suppliers, who will not only be resource providers but also close partners. Manufacturers are also looking for similar operating-cost environments as in their current locations. They want to ensure proper alignment with their overall strategic goals. To find the right fit, they are loaded with the tedious tasks of
- Identifying suppliers
- Evaluating technical and financial ability of the providers.
- Sourcing, manufacturing capability assessment,
- Quality checks
- Pilot batch manufacturing
- Supplier qualification
- Ensuring a steady and reliable mass production output capacity with the supplier partners.
Solvanni is the one-stop destination to solve all the above listed tedious tasks. As industry leaders in supply chain efficiencies, our gamut of offerings ranges from physical sourcing, procurement to logistics.
Solvanni have significant presence in India with its own offices and work force. India is fast emerging most sought-after destination for finding the right Supply chain partners. Also, India has been emerging as a desirable geography, given the lower costs of operation and higher availability of wide range of raw materials, semi-finished and finished components.
Our unique standing in the market as an end-to-end supply chain services provider – covering both the Manufacturing companies of U.S with its head office in Fremont, California, U.S and having good presence and capacity with its branch offices and vibrant work force spread across in the sub-continent of India (APAC)- is a distinct value proposition we bring to the table. Since Solvanni operates globally in the Americas and the APAC region, we are uniquely placed to do the legwork and be the one point of contact to all your sourcing needs. The long process, which could potentially run into several months, can be brought down to a few weeks because of our extensive supplier network.
We work closely with various manufacturers in APAC to connect you and establish business operations quickly for raw materials, semi-finished and finished engineered components for manufacturing, high-tech, automotive, wireless, CPG, engineering, and process industries etc.
With our extensive supplier network and vast experience in the procurement arena, we can cater to all your supply-chain needs.
We offer complete solutions right from
The only way out is to develop supply chain resilience and to reduce risk. We understand the difficulties in planning to do so. We are here to help you overcome your supply-chain sourcing and procurement challenges and to be your single-point contact to source, procure, transform, and deliver.
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