Supply-chain data visibility paramount as industry lurches into next chapter

The COVID-19 crisis has hit the global supply chain from all sides.

Shortages for in-demand products abound, while shipment delays are common and production lines run at a fraction of capacity. Erratic consumer demand adds further dysfunction.

Supply chains will survive COVID-19, of course, but not without interim pain and structural change. Practitioners must develop a data analytics strategy that gives them insight into supply chain aberrations before catastrophe sets in.

“If we’re going to be able to prepare for these types of events in future, we have to identify appropriate sources of information that we should focus on all the time — not just when [crisis] manifests,” said Randy Bradley, associate professor of information systems and supply chain management at the University of Tennessee.

Shortages, consumer hoarding and delays all signal a tipping point.

“We can’t operate the way we have,” said Milind Balaji, a senior supply chain manager at an East Coast manufacturer of toilet tissue, diapers, pulp and other products. “There is just too much risk.”

Supply Chain Faces Perfect Storm

Product supply shortages are also contributing to supply chain distress. Many product components are sourced from Asia, which experienced a major slowdown in production in early 2020.

Today, China represents some 16% of global GDP. Many components for electronics, retail and many other consumables are made in China, so the slowdown in production has hamstrung the flow of these goods. Compare China’s share today with 2002, during the SARS epidemic, when China represented only 4% of world GDP.

A second factor is unprecedented shifts in consumer spending. Demand has soared for groceries and toilet tissue but also for products such as Peloton bikes, board games and cleaning supplies. E-commerce increased 49% in April, according to Adobe’s Digital Economy Index, given shuttered brick-and-mortar stores. Meanwhile, restaurants, office parks and entertainment venues have been closed, skewing commercial demand.

Erratic supply and demand have strained logistics as well. Shipping from Asia is delayed by weeks given soft demand for apparel and other products, and some suppliers are turning to the airline industry — with air travel down by 95% — to reduce delays. Trucking delays are rife, and by some accounts, demand for short-haul deliveries has increased 30%.

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