By Aaron Galer, SVP of Strategic Partners, Arrive Logistics
The pandemic showed us how quickly consumer behavior can shift — or stop — on a dime. As part of the Strategic Partners team at Arrive Logistics, I focus on growing and strengthening partnerships with our enterprise shippers and carriers by tailoring unique solutions specific to their organization, industry and logistics challenges. While many of these organizations were forced to adjust to a new normal, the question of “What if there is another pandemic?” has inevitably been raised. With science suggesting this is a likely possibility, it’s important that all organizations have a supply chain pandemic preparedness plan in place tailored to their specific needs and how they operate. These plans should focus on three elements:
Scope of Supply Chain
Understanding the elasticity or inelasticity of your product in a pandemic and how nimble your organization can be, is key. For example, let’s consider a food packaging company whose business is split 50/50 between food service and CPG customers. When a disruption like a global pandemic shutters restaurants at a moment’s notice, do they have the ability to change their food service production lines over quickly to minimize waste? In this case, the biggest hurdle to shifting half their lines from gross production to CPG would likely be packaging. Knowing now what a disruption of this caliber may require, food packaging companies should be looking at how they can plan for future production shifts.
When you’re considering the scope of your supply chain, a contingency plan that allows you to shift your production model efficiently can save time, money and resources.
In an extraordinary situation like a pandemic, relationships with suppliers are put to the test. As you put your pandemic preparedness plan together, consider what your relationships with your suppliers look like throughout the supply chain. Do you view your suppliers as simply service providers needing to come down in price, or do your suppliers view you as a close partner where you regularly talk about your business needs? When you encounter a disruption, is the goal to save money, or are you focused on protecting service and ensuring on-time delivery for customers?
Based on your responses to the above questions, you need to determine how best to forge deep relationships that allow you to lean on your partners when necessary to continue meeting business goals. Is meeting quarterly for business reviews an option? Are you talking about how suppliers are creating their own pandemic preparedness plans, and are you aligned on the procedures they have in place? Answering these questions before you need to will allow you to create a pandemic preparedness plan that is agile and effective. Then, when things change, expectations are clearly understood from the start.
A pandemic preparedness plan needs to reflect your inventory strategy. As we’ve seen over the past year and a half, the pandemic exploited the “just in time” approach to inventory that a lot of companies have adopted since the 1970s. Can your inventory strategy stand up to months of backorders and constantly changing consumer habits?
Your strategy should address how much inventory to carry and where to carry it and, if the inventory was previously outsourced, you need to flesh out the details for how you will now bring that inventory strategy in-house. As you begin to plan, you should consider whether you have enough inventory to carry you through another global disruption, if you have the option to own your inventory instead of outsourcing it, as well as your ability to implement a direct to customer or drop-ship option to get your product to customers on time.
Much like weather contingency plans, pandemic preparedness plans are likely to become a staple in the supply chain. As we take time to review the learnings from the current pandemic, it’s important your organization considers how to put in place a plan that is tailored to its specific requirements to help thwart the level of disruption we saw in 2020. By evaluating the scope of your supply chain, your supplier relationships and your inventory strategy upfront, you’re setting your organization up to survive the next global disruption.
Photo credit: Global Trade Magazine, original article published here.