How Manufacturing Supply Chains Can Overcome the COVID-19 Crisis

By: on June 4, 2020

2020 is proving to be one of the most challenging years for doing business, mainly due to the COVID-19 pandemic. Businesses across industries are reevaluating their strategies to restart operations while simultaneously taking measures to deal with the crisis.

The manufacturing sector is also hard hit by the pandemic.

According to a recent survey by the National Association of Manufacturers (comprising 14,000 member companies across the U.S. in every industrial sector), 35.5% of manufacturers are facing COVID-19-related supply chain disruptions. Manufacturers also expect a negative financial impact and are planning to change the way they operate their business.

covid-19 impact on manufacturers chart

Amid this disruption, manufacturing leaders are looking for ways to mitigate the impact and normalize operations.

In this article, we’ll focus on the effect the crisis has had on manufacturing supply chains and discuss how to overcome its impact.

How manufacturing supply chains are being affected?

One fact is clear—the crisis has exposed the vulnerabilities of many manufacturers, especially those dependent on China for raw material, finished goods, or other manufacturing needs.

China is the hub of the global manufacturing value chain, and a slowdown in the country’s production has resulted in losses of around $50 billion in global exports. Manufacturers whose supply chains are dependent on primary or secondary suppliers based in China are most likely to experience disruption. Other manufacturers may also experience the residual impact of this development.

Listed below are the major areas where manufacturing supply chains have taken a hit due to the pandemic.

covid-19 impact on manufacturing supply chains summary

3 ways to rebuild your manufacturing supply chain

Manufacturers across the U.S. are taking quick action to overcome the challenges caused by COVID-19. Actions taken now will also help build resilience against similar future crises. Let’s check out three ways in which you can rebuild your supply chain and safeguard future operations.

1. Increase visibility across your supply chain

Visibility is key to optimizing supply chain efficiency when disruptions hit, as it helps understand the cascading impact on the rest of the network chain. It also helps plan and take action in advance, such as preparing alternative supply routes to arrange raw materials.

If you sell finished products, you should know your primary suppliers’ complete production and shipment schedule. You should also know where the main supply chain nodes are located and where your suppliers’ suppliers, and even their suppliers, are based.

Use technologies such as radio-frequency identification (RFID) tags, cloud-based global positioning system (GPS) tracking software, and fleet tracking software to map and track your entire supply chain. You can even ask your suppliers to implement these technologies.

2. Digitize records to make your supply chain more resilient

Most trading activities in manufacturing supply chains rely on paper-based records and processes—the bill of lading, handwritten notices, packing lists from logistics carriers, and more.

But now, more than ever, it has become crucial to move from paper-based registers to digitized records. Since the physical presence of staff is no longer guaranteed, even normal operations that are dependent on paper records can’t function. Make your data available online so it can be accessed by all stakeholders via digital means.

Manufacturers that have strong digital infrastructure—electronic data interchange (EDI) software, electronic signature software, driverless vehicles, drones, automatic identification, etc.—are better positioned to deal with supply chain disruptions.

3. Stay connected with your employees and customers

Non-production staff constitutes a significant portion of manufacturing companies’ workforce. Consider implementing remote work policies for your non-production staff. This will allow you to focus on your production staff and implement proper safety measures to bring them back to work.

Reskill employees and realign their existing roles to build operational resilience. You can consider creating an employee talent strategy to help develop professional capabilities, such as digital skills (useful for employees working from home). You can also realign employee roles. For instance, quality control staff can take on some production responsibilities.

It’s also equally important to stay in touch with your customers. Communicate clearly that customer interests still remain your top priority, and try addressing customer queries as quickly as possible. Apologize and inform customers beforehand if your response will be delayed. Prepare and publish frequently asked questions (FAQs) that customers can use to self-resolve their queries without having to contact you.

Planning for new supply chain processes

Situations such as the COVID-19 crisis are impossible to predict, but what you can do is identify potential risks and opportunities across your supply chain to plan for the future. Review your supply chain processes regularly to identify operational or financial risks and to understand any direct or indirect impact you might face.

Have a contingency plan ready to tackle any unexpected disruptions. New technologies can play a major role in improving supply chain processes and handling potential risks. For instance, supply chain management software can provide complete visibility, while risk management software can be helpful if you’re looking to conduct risk assessments.

If you need personalized assistance with software selection, reach out to our advisors for a free, no-obligation consultation.

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