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How Companies can Rethink Supply Chains to Deal with Disruptions

disruptions

How Companies can Rethink Supply Chains to Deal with Disruptions

The coronavirus has disrupted U.S. companies in many ways, and nearly three-fourths of them have seen their supply chain significantly affected.

While China has begun slowly reopening as the number of coronavirus cases there decreased in recent weeks, reports of the illness shot up in other countries, and the epicenter of the pandemic shifted to Europe and then the U.S. Thus, multiple supply chains have been compromised as the outbreak spreads, and there’s no telling when those links in the various chains will operate at normal capacity.

“There are waves of effects coming even if Chinese manufacturing gets back to full-go,” says Hitendra Chaturvedi, a professor at the Supply Chain Department of W.P. Carey School of Business at Arizona State University and an expert on global supply chain sustainability and strategy.“As the coronavirus has spread globally, drops in different trading partners’ ability to supply is felt everywhere.

“What this is showing, especially in the U.S., is we need to reassess supply chain strategy and make it stronger to withstand unforeseen, major disruptions.” Chaturvedi outlines some possible outcomes in U.S. supply chain strategy as a result of the coronavirus:

Learning that cost is not the only consideration. Chaturvedi says that when companies in the future plan their overall global supply chain strategy, they may decide that paying more to establish a more resilient and flexible process would be worth it by reducing risk. “Companies typically find the lowest-cost supplier, but if you have a single source, you’re vulnerable, and that’s what’s happening now,” Chaturvedi says. “This will move companies more toward mitigating risk. That requires making investments. They could stabilize their supply chains by enlisting alternative suppliers, boosting inventories or investing in more diverse ways of distribution.”

Localizing more manufacturing and transporting. “Dependence on China for their manufacturing has put small and midsize businesses in jeopardy,” Chaturvedi says. “The pandemic exposes the vulnerability of companies that rely heavily on a limited number of trading partners. What will result is businesses will look to restructure their global supply chains, and some companies will look at localizing more than they would have in the past. A shift in that direction had already started during the U.S.-China tariff fight.”

Planning for future disruptions. Another result of the pandemic’s impact on supply chains is it will compel companies to anticipate disruptions in the future and build in quick responses to their supply chain. This involves a process called mapping, in which companies engage suppliers in order to better understand their sites and processes. “It’s imperative for businesses running a global supply chain to be in the know about news that could cause disruptions,” Chaturvedi says. “You have to be proactive and not reactive. Knowing where the disruption will come from and how that will impact their products allows companies to lead time and the ability to create a mitigation strategy.”

Utilizing technology. Chaturvedi expects to see a rise in the use of AI, chatbots, the internet of things, and robotic process automation to facilitate supply chains. “This will be done not only as a pretext to bring manufacturing jobs back from China,” Chaturvedi says, “but also for purely selfish reasons because bots do not get sick.”

“The impact of the coronavirus pandemic on supply chains has given new meaning to the word ‘disruption,” Chaturvedi says. “We’ve never seen anything quite like this, and businesses can learn a lot from it that will help their supply chain process in the future.”

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Hitendra Chaturvedi  (www.wpcarey.asu.edu/people/profile/3541031) spent over 30 years in progressive technology leadership positions with Microsoft, Newgistics, E&Y e-Business and A.T. Kearney. Chaturvedi also built a $100 million software company in India, GreenDust, where he implemented proprietary reverse logistics software at Amazon, Flipkart (Walmart), Samsung, Panasonic and Whirlpool. A computer engineer with a master’s degree from Louisiana State University and an MBA from Southern Methodist University, Chaturvedi has been widely covered in the media and is a subject matter expert on global supply chain strategy, sustainability in supply chain, reverse logistics, ecommerce, artificial intelligence and machine learning. Now a professor at Arizona State University, Chaturvedi has been a visiting professor at Southern Methodist University, University of Texas-Dallas, Penn State and Purdue.

crisis

How Can Businesses Prepare For A Worldwide Crisis? 4 Tips To Survive.

The coronavirus that emerged in China is now shaking the world economy – including some major U.S. companies – and stoking fears of a global recession.

But, as companies go about mitigating damage, there are lessons they can learn to be better prepared for another rare worldwide crisis, says Hitendra Chaturvedi, a professor at the Supply Chain Department of W.P. Carey School of Business at Arizona State University and an expert on global supply chain sustainability and strategy.

“The coronavirus is an abnormal occurrence,” Chaturvedi says. “Businesses cannot completely insulate themselves from such events, but they can certainly reduce risk so it will hurt but not be life-threatening. The whole idea is, what is the strategic insurance policy against such unexpected events, and what is the cost businesses are willing to bear?

“We have had risk mitigation and disaster recovery plans for data centers for decades now. Why should we not have the same for our manufacturing operations?”

Chaturvedi offers these suggestions for companies to prepare for a worldwide crisis that could affect their business:

Localize more inventory. “Holding inventory in multiple locations closer to your customers makes sense in many cases, even if it may be costlier than in other countries,” Chaturvedi says. “I think companies in the U.S. will start to keep more inventories here as a reaction to the coronavirus.”

Localize core manufacturing. “If your current business relies heavily on products being made in China, you’re probably concerned right now,” Chaturvedi says. “Consider having a manufacturing operation in the U.S., or at least part of your operations here, so even though the cost may be high, business survival will not be severely impacted. It’s another way for companies to have more control when events happen out of their control.”

Separate R&D from manufacturing locations in other countries. “If it makes sense to maintain your core manufacturing outside the U.S., keeping research and development work closer to home ensures your future product development does not get impacted,” Chaturvedi says.

Invest in new technology for transparency in supply chain and disaster simulation. “Blockchain can easily provide transparency across the supply chain, Chaturvedi says. “Get visibility across at least tier 1 and tier 2 suppliers.

The more you know, the better you will be at spotting trouble spots and handling a crisis. Moreover, investing in Artificial Intelligence-driven risk simulation models based on numerous factors, including a global pandemic, nature events, or political instabilities may be a prudent choice. Just as schools conduct fire drills, companies should conduct pandemic drills as part of their risk mitigation and disaster recovery plan.”

“Events such as a worldwide health crisis are a standalone business risk and an amplifier of vulnerabilities,” Chaturvedi says. “The coronavirus may serve as another reason for companies to reassess their supply chain exposure. We often get complacent after a crisis settles down, but businesses who prepare for the next time will be in a stronger position to respond and recover.”

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Hitendra Chaturvedi (https://wpcarey.asu.edu/people/profile/3541031) spent over 30 years in progressive technology leadership positions with Microsoft, Newgistics, E&Y e-Business and A.T. Kearney. Chaturvedi also built a $100 million software company in India, GreenDust, where he implemented proprietary reverse logistics software at Amazon, Flipkart (Walmart), Samsung, Panasonic and Whirlpool. A computer engineer with a master’s degree from Louisiana State University and an MBA from Southern Methodist University, Chaturvedi has been widely covered in the media and is a subject matter expert on global supply chain strategy, sustainable supply chains, reverse logistics, ecommerce, artificial intelligence and machine learning. Chaturvedi is now a professor at the Supply Chain Department of W.P. Carey School of Business at Arizona State University.

climate change

Businesses Must Adjust To Climate Change; 5 Ways Toward Sustainability

As climate change causes worldwide concern and prompts calls for governmental action, consumers are putting the onus on businesses to step up their sustainability standards and practices.

A Nielsen survey, for example, showed that 81 percent of global consumers feel companies should help improve the environment. And with governments across the globe struggling to reach an international consensus on climate change, close observers of business and the environment, along with a high number of CEOs, agree: Private industry should take the lead in driving sustainability.

“Some forward-looking companies are seeing it’s an issue they can no longer ignore, morally and economically, and that you can go green and succeed in business,” says Hitendra Chaturvedi (www.hitendrachaturvedi.com), a professor at the Supply Chain Department of W.P. Carey School of Business at Arizona State University and expert on global supply chain sustainability and strategy.

“Business strategies must include sustainability in their core beliefs and practices. Part of the problem is that they are missing the simple, sensible ways that can drive sustainability and bring a return on investment at the same time.”

Chaturvedi suggests the following ways businesses can exercise sustainability practices to help fight climate change and connect with consumers:

Find the facts. “When a package gets delivered to you by an online commerce company, most people see the packaging as mainly contributing to the pollution, but that is not the case,” Chaturvedi says. “The packaging contributes less than 5%, but the main culprit is the returned/defective item which accounts for close to 50% of the pollution because it is not properly disposed of. I call it sensible sustainability. Identify and focus on low-hanging fruits.”

Seek education. “Finding the facts brings an important issue – education of consumers,” Chaturvedi says. “I see too many data points floating around that are put forth to create hysteria and are flat-out wrong, causing well-intentioned people to be waylaid in unproductive directions. Too many times this causes even a well-wisher of the environment to lose interest. We need a proper way to educate consumers about what is real and what is fake news.”

Implement business model changes. “Look at your business model holistically,” Chaturvedi says. “I propose a 5R model that simply, sensibly, and holistically integrates forward and reverses supply chain within any organization to ensure reduction in waste – and without sacrificing profits or competitiveness.”

Embrace technology. “It will lead to quick solutions to many vexing sustainability problems,” Chaturvedi says. “For example, advancement in technology has given us economically viable micro-factories to processing plastic waste, something that was not possible a few years ago. Now we can package it into a business model and scale it. Technologies like blockchain and dendrites will have far-reaching effects on sustainability as they will drive tracking and accountability.”

Find sensible solutions. “Sustainability needs sensible solutions, not a panacea, not motherhood and apple pie solutions,” Chaturvedi says. “We need solutions that are practical and profitable. We see many solutions that promise to solve the world’s pollution problem but are either one-off, or do not make money or both. We need businesses to step in and partner with scientists, universities, and government so a practical/viable perspective can be applied to sustainability solutions. A business will bring that perspective along with what can scale and what can not.”

“Businesses can see significant benefits, both economically and socially, from incorporating sustainable practices,” Chaturvedi says. “Some of the steps you incorporate can seem small at first, but day by day those efforts will produce great results.”

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Hitendra Chaturvedi spent over 30 years in progressive technology leadership positions with Microsoft, Newgistics, E&Y e-Business and A.T. Kearney. Chaturvedi also built a $100 million software company in India, GreenDust, where he implemented proprietary reverse logistics software at Amazon, Flipkart (Walmart), Samsung, Panasonic and Whirlpool. A computer engineer with a master’s degree from Louisiana State University and an MBA from Southern Methodist University, Chaturvedi has been widely covered in the media and is a subject matter expert on global supply chain strategy, sustainability in supply chain, reverse logistics, ecommerce, artificial intelligence and machine learning. Now a professor at Arizona State University, Chaturvedi has been a visiting professor at Southern Methodist University, University of Texas-Dallas, Penn State and Purdue.