The negative impact due to COVID-19 has been felt by more than 80% of the companies involved in a research report issued by Capgemini Research on Nov. 24.
The report “Fast forward: Rethinking supply chain resilience for a post-COVID-19 world, finds that the pandemic has caused companies to prioritize supply chain resilience, with two-thirds (66%) say that will need to change their strategies to adapt to the new normal. Just 14% of organizations expect to return to business-as-usual.
Organizations surveyed across retail, consumer products, discrete manufacturing and life sciences are facing multiple supply chain challenges.
Those challenges include:
- shortages of critical parts/materials (74%)
- delayed shipments and longer lead times (74%)
- difficulties in adjusting production capacity in response to fluctuating demand (69%)
- difficulties planning amid volatile levels of customer demand (68%)
From a sector perspective, 80% of organizations in retail, consumer products and discrete manufacturing are reporting a negative business impact. However, only 30% of life sciences organizations have seen a negative impact.
Recovery is slow
It has taken between three and six months for 55% of organizations in the survey to recover from the disruptions this year. And another 13% expect to take six to twelve months to see recovery.
“Enterprises must rethink their supply chain strategy and determine the right level of resilience that they are prepared to build into their value chain, ensuring that this is embedded throughout research and development, planning and execution,” says Roshan Gya, Global Head of Operations Transformation for Capgemini Invent.
To help companies recover Capgemini’s offers best practices of a resilient supply chain::
- Contingency planning: anticipating crises and running simulations to improve crisis response
- Localization: prioritizing localization as well as regionalization of supplier base and manufacturing footprint
- Diversification: prioritizing diversification of supplier base, manufacturing and transportation options
- Sustainability: prioritizing sustainability across the supply chain to withstand environmental and regulatory disruptions and meet evolving customer expectations
- Agility: prioritizing flexibility in production and decision making, and displaying agility in shifting to new business models
- End-to-end cost transparency: accounting for costs with a clear picture of risks associated with low-cost strategies
- Visibility: emphasizing on data-sharing with partners and having full visibility of the supply network
Looking at the first three areas above, 84% are taking measures to build capabilities citing improving crisis-preparedness as a priority post-COVID.
Additionally, 65% of organizations are either regionalizing their suppliers or investing in localizing their suppliers and manufacturing base to reduce risk. They are also diversifying their supplier base (68%) as well as their manufacturing base (62%).
However, the study found that only a small proportion have the necessary levels of supply chain agility (21%), optimization of end-to-end costs (20%) and visibility (9%).
