In this blog, we highlight critical shifts that enterprises need to make in COVID-19 times and establish some navigation beacons to help adopt these changes and plan for recovery in the area of supply chain management.
As we all know, the rapid spread of the Coronavirus is responsible for slowing down and halting many parts of the global economy, resulting in a high degree of uncertainty within organizations. The COVID-19 pandemic has put an incredible strain on global supply chains, from medical supplies to household goods, as spikes in demand stress-test logistics infrastructures. A recent article written by TIME discusses the increased demand in products and services that America is witnessing in the event of the COVID-19 pandemic. Nielsen’s data shows that in the last week of March, Americans bought an unusually large amount of non-perishable food, as well as cleaning products, health goods, and lots and lots of toilet paper as they got ready to keep themselves and their homes clean and stocked with food with longer shelf lifes. Instacart, which delivers goods from local grocery stores, reported that order volume is up by 150% compared to the same period last year; customers were also buying more, with average baskets 15% bigger compared to last month. Nielsen’s data also shows how Americans rearranged their lifestyles owing to the virus. Unsurprisingly amidst a pandemic, consumers are also focusing their spending on health products. Thermometers are up 498%, cold and flu remedies 159% and vitamins 93%. Snack foods such as popcorn and pretzels are also up 47% in popularity as consumers geared up to munch at home.
Both retail and online stores are at risk of reaching a breaking point with this surge in demand. These trends of increased online shopping, stockpiling, growing basket sizes, and rising out-of-stocks is adding huge strain on the supply chain and impacting monetization streams for companies. With entire populations isolating and quarantining, companies are seeing demand spike for certain items and plummet for others, while their access to parts and labor from around the world is being severely disrupted.
According to Business Insider, the coronavirus outbreak is disrupting supply chains in every way, around the world—here are a few insights on how companies can adjust and prepare.
1. Larger companies can build regional supply chains
According to experts “you may reach the limit of your economies of scale at half the size, by running two plants, you don’t give up much in efficiency, but you gain a lot in resiliency.” If you split your production capabilities, you are close to achieving the best economy of scale. And the likelihood of both plants going offline at the same time decreases significantly. Segmentation of the supply chain by region can save a complete shut down of production because different countries may hit peak disruption at different times. This allows a company to be agile enough to match the appropriate supply points with the appropriate demand points as the situation continues to evolve.
2. Smaller companies can lean on technology
The build-up of inventory to bridge uncertainty has proven to be prohibitively expensive. Technology alone can provide the flexibility to withstand supply-chain disruptions. A group of Italian engineers have led the way for small and medium sized companies by showcasing how 3D printing can decrease supply uncertainties. When the Italian startup Isinnova learned about a shortage in respirator valves, it was able to reverse-engineer a 3D-printed version of the part and begin printing it — all in a matter of days. Thus 3D printing is a good go-to strategy for small players looking to source a few parts. Smaller companies are also encouraged to explore flexible technologies in warehousing and production as information systems have made warehouses more efficient at locating and picking stocked items.
3. Balance efficiency and resilience
The COVID-19 pandemic has most companies making big adjustments to their current supply-chain needs. Preparation is expensive but planning for adversity is a better course of action in the long run. Companies can establish resilience and stabilize their supply chains in multiple ways such as enlisting new suppliers, boosting inventories or investing in omni-channel distribution that includes online sales and encourages subscriptions.
4. Map supply chain visibility
Surviving supply chain disruption means making sure you still have suppliers and a steady flow of parts and materials. This includes mapping plant locations and what each plant makes, and the knowledge of parts that are critical for you to produce your products or can be outsourced to other suppliers. By understanding your plant’s operational status and inventory level and having end-to-end supply chain visibility, your organization will be better prepared to respond to a crisis. The researchers found that investing in supply chain visibility is a surefire way for companies to gain consumer trust and can even lead to increased sales from the customer base. Increasing supply chain visibility strengthens not only consumer trust but also establishes a trust-driven revenue benefit due to greater visibility.
5. Give your company a technology enabled future
The need for real-time tracking, accurate delivery systems and up-to-date information demands that supply chain management invest in technological innovation and financial management solutions. To thrive during this time when your supply likely doesn’t meet the demand, prioritize customer care, communication and expectation management to deepen customer relationships.
Thus, changing and expanding on your business model to serve your customers better and meet the demands on the supply side are the only constants in these times. Now is the time to improve your organization’s ability to manage financial processes with a modern and agile order-to-cash automation platform to handle your dynamic multi-dimensional billing and payments requirements.
RecVue recommends safeguarding your billing and revenue recognition automation capabilities to make your organization future ready. Only RecVue delivers a next generation order-to-cash automation platform built on big data, designed specifically to address the unique challenges of managing recurring revenue, in addition to traditional one-time transactions. This is a critical requirement when modernizing your order-to-cash system, as a majority of companies must continue to grow their traditional revenue streams, while also turbo charging the growth of their subscription revenue. RecVue’s solution includes data mediation tuned to support high volumes of transactions, a 360 view into the entire contract lifecycle, attribute-based pricing, complete billing-to-invoice capabilities, partner management, and robust analytics and reporting.
Make yourself future ready today! Contact us to learn how RecVue’s platform can provide agility and smoother revenue streams to enable your organization to combat the uncertainty and trials of this time.