58% see decrease in demand 3 months post lockdown

There have been many challenges in the past for the manufacturing supply chain, such as the 2001 recession, SARS, 2011 Tohoku earthquake, 2016 oil crisis, and Brexit. Although there have been other pandemics such as swine flu and Ebola, the Covid-19 pandemic was like nothing the modern world had ever seen before.

The survey by researchers at WMG, University of Warwick found found several impacts from the Covid-19 pandemic, including:

• 58% of firms are still experiencing a decrease in demand 3 months post lockdown
• 66-73% of firms have been effective in responding to increases and decreases in demand
• Buffer management, multi-sourcing and visibility were favoured over agile production networks
• Cash management and securing supply were critical initial responses to the Covid-19 crisis
• 84% of firms found their planning systems were effective, but still required human intervention
• The most apparent bottlenecks to their supply chain was people issues, such as warehouse staff being in quarantine at home

The researchers then assessed manufacturers supply chain resilience in three different times, business as normal, during Covid-19 and preparation for Brexit. For each time period they identified how 6 supply chain resilience practices that could be used proactively (pre-disruption), reactively (during and post disruption) or both. 

These included:

• Supply chain planning – demand forecasting and contingency planning (Proactive)
• Visibility – Having access to real time data (Proactive)
• Collaboration – Working with SC partners to deliver customer value (Proactive & reactive)
• Buffer management – Utilising inventory and production capacity to enable material flow (Proactive and reactive)
• Flexibility – Establishing multiple sourcing options (Proactive and reactive)
• Adaptability – Transforming the SC in responding to dynamic business environment (Reactive)

Professor Jan Godsell from WMG, University of Warwick comments: “It’s interesting to see that the lessons manufactures’ have learnt in developing supply chain resilience practices in response to Covid-19 pandemic are helping manufacturers to prepare for Brexit. However, the uncertainty of Brexit, particularly in terms of the impact of flow of material is challenging for developing supply base flexibility. Whilst manufacturers can proactively prepare for Brexit, a high degree of adaptability will be required to buffer against the unknown.

“All manufacturers should consider assessing their current level of supply chain resilience to identify the areas in which their current supply chain resilience practices could be developed. Working collaboratively with supply chain partners to improve supply chain visibility and planning are the key building blocks. More effective use of inventory and capacity buffers, and flexibility within the supply base can further improve resilience. Some disruptions cannot be predicted, and supply chains need to the capability to adapt.”

The full report can be seen here