The unprecedented supply chain disruption caused by COVID-19 has had severe operational and financial consequences, with decision makers and planners having to address issues related to

• Demand drops
• Surges by segment
• Supply shortages
• Inventory placement challenges
• Reduced productivity & lot more.

Manufacturing Companies must focus on the immediate challenges of keeping their businesses stable. They must form rapid response teams to gain a better understanding of their production demand changes, labor support challenges and supply chain ecosystem constraints.

They also need to focus on building a business that is as future-proof as possible, using new resilient working model to increase reliability, responsiveness and cost management, sustaining the product operations, and human capital workforce through the crisis. As well as being essential now, these future-proofing actions will also help sustain competitive advantage to accelerate business growth once economies rebound.

Three immediate actions to build agility now and in the future:

1. Understand the impact of demand disruptions.
2. Ensure manufacturing ecosystem viability.
3. Rebalance physical production network assets.

Manufacturers must rapidly identify the products that are most critical for stabilization and growth, shore up associated supply chains, and reconcile critical skills to meet near term and future demand.

Demand priorities in product portfolios have changed drastically. We see three key scenarios affecting manufacturing assets:

• Manufacturers are shifting to address opportunities for hypergrowth (e.g., canned, shelf stable and frozen goods, respirators, personal protective equipment).
• Manufacturers are transitioning and repurposing legacy lines to make new products to support the community (e.g., distillers producing hand sanitizers).
• Manufacturers are slowing or shutting down production volumes, where demand has drastically fallen off or supply chains have been disrupted,

In all scenarios, manufacturers need to rapidly identify the products that are most critical for stabilization and growth, shore up associated supply chains, and reconcile the critical skills to meet near term and future demand.

Manufacturers must understand the implications of COVID-19 and contract provisions for each critical ecosystem player, including

• Sourcing Material suppliers
• Sourcing Contractor companies
• Sourcing Co-manufacturers
• Sourcing Logistics providers.

Ecosystem relationships typically suffer the most during massive market disruptions. Given the increasing adoption of ecosystem-based global supply chains, this is a challenge for manufacturers.

The rapidly changing demand/product mix, combined with workforce and ecosystem availability challenges, may be substantially disrupting manufacturers’ existing physical production networks. Companies must make fast and accurate decisions on the capital investment, new technology investments with new supply source manufacturers, enabling new suppliers through knowledge sharing collaboratively and effort required to redeploy underutilized assets or build greater flexibility in current assets in the short term. At the same time, they must ensure those decisions do not inhibit future growth.

Manufacturers must take a hard look at existing operating models – where and how work gets done and for what reason, challenging legacy ways of working, and building in more transparency and intelligence across core ecosystem partners and the entire physical supply chain network.
There are essential steps for manufacturers to reshape themselves into partnership-enabled, resilient, and agile organizations. Manufacturers must drop the idea of suppliers and choose 9 Important Pointers for the manufacturing companies especially in U.S going forward,

• Work with planners to confirm customers’ and the market’s actual needs to segment demand of critical products needed for production reprioritization.
• Drop the idea of suppliers and choose partners instead.
• Find the right partners who do sourcing, manufacturing capability assessment, proper screening, pilot batch manufacturing and supplier qualification.
• Be open towards investments with new or strategic partners on new technology and process capability enablement
• Segment operations based on market outlook, taking into consideration supply chain input for customer demographics, geographies, market sales channels, and decide which production is in high demand which requires repurposing, slowing down, shutting down or re-channeling.
• Develop rapid demand and supply scenarios to confirm operational feasibility.
• Develop a road map for the next wave of in-demand changes and product needs.
• Assess whether co-manufacturing alliance partners and the extended ecosystem are still viable options and whether they can meet any new demand/product mixes.
• Review contracts to determine if any obligations need to be changed in the light of the current situation i.e., many companies are choosing to lease their equipment instead of selling upfront to give advantage to their customers in terms of cash flow which is the biggest challenge during these crisis situations
• Analyze the demand/product mix, workforce, and ecosystem to identify critical facilities, equipment and processes.
• Ensure proper alignment of their Supply chain partner’s deliverables with their overall strategic goals.

To overcoming above said challenges, manufacturers are looking beyond their traditional outsourcing destinations.

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