Consultants in Logistics

COVID-19 Supply Chain Management Response

COVID-19 Supply Chain Management Response

Successfully structuring your business for the 'New Future'

As the Country starts the process of returning to work it is clear that the journey back to something that resembles normality will be slow and painful.

Even though more of us are returning to work and a more normal life, it’s noticeable that some products are still in short supply or not available and that previous guaranteed lead-times are still not offered. This was driven by the need for suppliers and retailers to change operating models to cope with the initial lock-down. But is this going to become part of the new normal? Can your business return to offering the same service levels you did in the past, and comply with distancing & hygiene protocols and still do so profitably? Will customers accept this? What mitigations will you and they put in place to accommodate the new future?

The challenge, therefore, is how to get back to work when inter-personal interaction will be restricted, and customer demands may have changed significantly.  Supplying customers in a safe environment at a cost that is financially viable will be a major challenge for many organisations, private and public, as we emerge from Lockdown and potentially, for the long term.  For some organisations, the solution to changes in customer demand will become readily apparent for larger or more complex organisations detailed planning and modelling is likely to be required.

Social Distancing

It is incumbent on all employers to provide a safe working environment.  Within the supply chain where multiple tasks have to be competed against a tight timescale and within a restricted environment imposes particular challenges.  Where possible, every opportunity will be required to minimise the need to bring people into the operational environment that are virus free and with the correct PPE. Considerable planning is required to redesign warehouse and transport operations to avoid close personal contact either expanding the working day and week through changes to shift structure or a change to operational processes.  This applies to colleagues and customers alike.

Davies & Robson has extensive experience in warehouse, transport and process design to meet changing requirements and the unique requirements of individual companies.  With careful analysis and planning it should be possible to design safe working environments without impacting service or incurring significant additional cost.

View the latest government guidance for people who work in or run warehouses >

Infrastructure Modelling

For those organisations that are subjected to profound change it may be necessary to undertake a complete restructuring of the supply chain infrastructure.  This may be because of significant volume or product changes, the need for revised service levels or perhaps a requirement for internet fulfilment.  This could require different stockholding requirement, warehouse locations or different warehouse layouts and operational systems and processes.  It could involve implementing new routes to market including home delivery.  Davies & Robson has extensive experience in determining the correct number, location and size of stockholding or cross docking facilities and the optimum layout of the fit out.

Product & Service Modelling

For many organisations, changes in customer behaviour, either voluntarily or imposed, means that their business model has to change.  For some organisations, the pandemic has brought unprecedented demand for their products and services for others the drop off in demand has been dramatic.   In the future customer requirements may look very different to that experienced as we emerge from this initial phase of the pandemic.  Organisations will have to act quickly to redefine their product and service offering to avoid either incurring unsustainable costs or failing to remain competitive in the products and services offered.

This may require evaluating a wide range of factors including:

  • Changes to order lead time
  • Introduction of minimum order quantities
  • Changes to the product range and service options
  • Introduction of new routes to market – home delivery
  • Introduction of higher standards of bio security for serving vulnerable groups

The effective use of modelling, including ‘cost to serve’, can help evaluate possible alternative solutions as restrictions change and customer demand evolves thereby avoiding costly mistakes that could impact on your organisation’s financial performance or viability. 

Davies & Robson has extensive experience assisting companies develop and refine their service offering in the face of an ever changing competitive environment.

Forecasting

Forecasting demand as we emerge from lockdown will be particularly challenging for many organisations.  Determining underlying demand will be essential if expensive mistakes are to be avoided by over or under assessing demand.  Key to success will be the ability to combine up to date information with market intelligence and data analysis. Davies & Robson have an established data modelling approach that can evaluate large and complex data sets through deploying a wide range tools and techniques to deliver the best possible demand forecasting scenarios that assist companies formulate supply chain strategy and guide contingency planning.

Product Sourcing

One of the early casualties of COVID-19 has been the notion that cross boarder trading and extended distances are no obstacle to resilient and predictable supply lines.  Planning for long transit times from the Far East has been a feature of supply chain management.  Unfortunately, COVID-19 also demonstrated the disadvantage of long lead times and the vulnerability of single supplier sourcing. Where required, Davies & Robson can assist in evaluating alternative supply policies and redesigning the supply chains of critical products to increase resilience whilst avoiding unnecessary investment in stock.

Transport Planning

Most organisation have evolved their delivery operations over time balancing what customers are prepared to pay against the service they desire.  In many cases this has resulted in a variety of service options and the use of a range of delivery methods including dedicated vehicles, parcel & pallet networks, Royal Mail and couriers.  Remaining financially viable depends on not over servicing customers where it cannot be commercially justified but offering a service that matches or betters the competition.  For many organisations, COVID-19 has thrown carefully developed plans into total disarray as the activity profile upon which they are based has fundamentally changed.

As we come out of Lockdown, transport planners will therefore come under considerable pressure in the face of reduced volumes and potentially reduced order sizes to adopt different standards and delivery methods in order to save cost.  This could include:

  • Greater use of parcel, pallet and subcontractors where it is not cost effective to send a dedicated vehicle
  • Changes to order cut off times to facilitate social distancing and greater time to plan optimum solutions
  • Introduction of nominated day delivery to enable the more productive use of dedicated vehicles
  • The potential use of more shared user services
  • Changes to minimum order quantities both for purchases and sales
  • Changes to warehouse requirements to accommodate larger minimum order quantities, product mix change and potentially increased inventory to re-risk the impact on supply chain disruption

Close cooperation between the transport planners and the sales and customer services teams in order to understand customers requirement and manage expectations will be essential.  In the short term customers are likely to be understanding as long as communication is good and promises kept.  In the longer term, it maybe necessary to review and restructure the delivery operation in order to find a new balance of service versus cost with possibly different delivery methods.  Davies & Robson with a range of modelling tools and an excellent understanding of the services available will be pleased to help in undertaking a review.

Contractor Engagement

The logistics services required as organisations come out of Lockdown may be very different to those previously required, a situation that could continue if the ongoing requirement has fundamentally changed.  For those services subjected to a formal contract it maybe the case that the commercial terms are able to accommodate a fundamental change in activity or service requirement.  However, where the commercial terms are no longer appropriate it may be necessary to renegotiate the contractual terms.  Not easy midway through a lengthy agreement. Davies & Robson has extensive experience in outsourcing and in finding commercial solutions acceptable to both service providers and users.

Organisational Support & Development

Many organisations will be facing a period of rapid change or adjustment as they come out of lockdown and then as they adjust to a new commercial and operational environment.  The additional workload could involve planning, project management and operational management and could be either short or long term.  In addition to consultancy advice, Davies & Robson can provide interim management if the support required is short term or management recruitment if there is a long term requirement to strengthen the management team.  For many organisations, the challenges will be unprecedented, and it will be essential to ensure that the management team is able to address the task.

Working with Davies & Robson 

As changes to the Lockdown now approach, how organisations prepare will determine whether they are able to adapt and even prosper in a new commercial environment.  Over the years, Davies & Robson has helped companies weather a range of upheavals including the three day week of 1973, the 1982 economic crisis, the 1991 recession and of course the banking crisis of 2008. Throughout this time Davies & Robson has continued to apply the same principles; rigorous data analysis, detailed planning, the application of leading edge technology, a pragmatic approach and a sound understanding of the services available in the marketplace.  If you would like to know how Davies & Robson can assist your organisation please feel free to give us a call.  We will be happy to help.

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