Mitigate supply shock
In the short-term, companies should work with their existing suppliers to create a business continuity plan. In the meanwhile, suppliers in different regions allow organizations to diversify supply chain and safeguard against shortages, especially for organizations that deal with longer supply cycles.
According to Anshul Acharya, vice president, management consulting, Publicis Sapient, New York, organizations that have exposure in China typically see longer spans between demand signals and delivery, often with 30, 60, or 90-day delays.
“In these situations, it's always important that your business model allows a buffer with additional inventory,” Acharya said.
In one example, an organization may rely primarily on one or two active suppliers from one region, like China, but place a contract with another partner in a different region, like Europe or South America, that will be able to guarantee a certain amount of inventory that can be leveraged in case of emergency.
“Balancing sourcing resilience and flexibility with cost was already on the list for many retailers,” Anderson said. “With the desire for more unique, customizable products and more speed, opportunities exist in sourcing near-shore as well as offshore. The spread of coronavirus might just be another reason for retailers to consider introducing more supplier flexibility.”
Aggregating data from third-party partners allows visibility into stock movement across the supply chain network and can pinpoint potential roadblocks. For example, if inventory is delayed when crossing the border, organizations can put contingency plans in place to address the issues and accelerate outcomes.
“Can you link your data sets from your supply and your demand across your internal network and across the supplier network?” Dsouza said. “From there, you can then start measuring various scenarios and identifying where rapid intervention could be done.
In the longer term, companies would benefit from using Enterprise Digital Twin solutions that can simulate demand and supply end-to-end within and across the enterprise.
“Technologies that provide inventory visibility across the distribution network (e.g. distribution centers, stores, vendors, third-party providers and wholesale inventory) offer major benefits for flexibility and transparency to serve customers in best way possible given supply limitation,” Anderson said.