Supply chain disruption is nothing new, and the same goes for planning efforts to mitigate risk. Consider the exogenous shocks that jolted global commerce in the wake of the Japanese earthquake and ensuing tsunami in March 2011 or the Hanjin shipping bankruptcy of 2016. The challenges are ongoing. Floods, volcanic eruptions, hurricanes, and forest fires have all played varying degrees of havoc with product delivery systems over the last decade, yet supply chains continue to adapt with increasing resilience and reliability.
Nothing prepared consumer products companies for COVID-19. They were tasked with navigating the emerging challenges of government closures of “non-essential” businesses, workplace virus outbreaks, strict safety measures, and supply shortages. Meanwhile, some consumer products suppliers found themselves forced to pivot abruptly, shifting production from the devastated restaurant trade to address increased demand from supermarkets.
With an end to the pandemic hopefully close at hand, Jason Adlam, Vice President New Business Development at CHEP USA, sees the recovery from Covid-19 as an exciting opportunity for companies to reflect upon their experience and make the changes necessary to ensure more resilient delivery systems. “With COVID-19, we really saw supply chains put to the test and the whole notion of ‘just-in-time networks’ being challenged,” he said. In non-COVID times, just in time can make sense, he noted, but in the wake of unprecedented demand and uncertain supply caused by the pandemic, it fell short.”
“Before COVID, we had situations where retailers were asking the manufacturers to absorb a lot of the inventory and hold the buffer stock,” Adlam reflected. “Subsequently, erratic supply chain behaviors have caused unpredictability in stocking and ordering behavior: Some manufacturers are holding buffer stock, some are operating under very short just in time windows, and others are holding inventory much longer than usual.” He anticipates manufacturers and retailers to continue overriding inventory ordering algorithms to best serve their market and supply chain demands. “If there’s one thing that we’ve seen through this experience, it is to expect the unexpected,” he said. Companies have taken pause to consider what worked well and what fell short during the pandemic.
“When we talk to our manufacturing partners, what we’re hearing is that they never want to let anybody down,” Adlam said. “They want to make sure that when they get the call from the retailing customers that they have products. No matter the situation, they always want to be able to deliver. So, they’re really trying to future proof their businesses.”
One way that companies are strengthening their position is through taking a more collaborative approach with other stakeholders, ranging from ingredient and packaging providers to carriers and customers. “We’ve seen more dialogue around data sharing, technology, and automation,” he said.
“One of the key learnings a lot of manufacturers had was that the ones that had really strong relationships, the ones with good communication and a data-sharing mindset – those were the ones that best weathered the storm,” he said.
Adlam states that conversations regarding retooling and automation have become commonplace. Interest in automation and other technologies has accelerated during COVID-19, which makes perfect sense. While interest in automation to reduce cost and improve quality has been ongoing, the pandemic put labor-intensive processes increasingly at risk and has made automation increasingly attractive.
Also, the promise of visibility or illumination of the supply chain now is increasingly at hand with the rollout of 5G – the fifth generation of the cellular network, as well as the further refinement of other IoT technologies. Adlam notes that there still several “somewhat dark” links in the supply chain and that there is an incredible opportunity in establishing a true line of sight from raw materials, ingredients, packaging from the point of origin through to the end retailer. Visibility is also crucially important for timely, accurate recalls. “Data and data insights are not going to go away, in my opinion, and will only continue to strengthen and be more important for manufacturers to tap into,” Adlam said.
The other trend Adlam is hearing about from manufacturing and retail customers is around sustainability, which like other initiatives, is supported by efficiency gains, managing costs, and information sharing. “Customers are shoring up their supply chains, strengthening collaboration, and improving data sharing with partners, and they are looking at ways to become more sustainable in the process,” he said.
“Once we get back to some level of normalcy, whatever that looks like, the companies with more streamlined supply chains, those with a greater commitment to data sharing and insights, will be positioned for success,” he said. “Those who can execute and do it in a sustainable fashion, are going to be the winners, and generate a lot more business because of that.”