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How to Manage and Overcome Disruptions in the Supply Chain

disruptions

How to Manage and Overcome Disruptions in the Supply Chain

Regardless of the type of disruption, supply chain resilience is highly dependant on several factors, one of which being reliable end-to-end visibility created at the first sign of trouble. Whether it’s a health crisis, a series of policy changes, or other forms of disruption, proactive rather than reactive measures are critical in staying afloat when facing a variety of disruptions or bottlenecks.

Disruptions in the modern supply chain are simply inevitable and require a different approach in data management and predictability to successfully overcome the challenge at hand.  By effectively utilizing technology tools available and developing a solid crisis plan can make a significant difference in recovery times.

Below is a helpful infographic from DiCentral breaks down various predictable and unpredictable supply chain disruptions and what it takes in the planning, reaction, and response stages of managing and navigating challenges.

shippers'

Shippers’ New 2020 Priorities

While cities and states are slowly reopening, there is still significant uncertainty surrounding the global economy and when we’ll head towards recovery. Shippers are experiencing never-before-seen challenges and, in maneuvering them, realize it’s vital to understand the change in consumer behavior and how it impacts the supply chain.

A recent Consumer Brands’ Association Coronavirus Survey found 68% of Americans are optimistic about the next 6 months and the United States’ ability to reopen the economy. Despite consumer mentality improving, shippers’ concerns on COVID-19’s impact on the supply chain remain top of mind.

While some industries experienced a surge in demand, including healthcare, grocery and consumer packaged goods (CPG), this hasn’t been the case across the board. Some faced a reduction or, in some cases, a complete halt in business. These new challenges and concerns have led shippers to shift their strategies and develop new priorities for the rest of 2020 and beyond.

Shippers’ Top Priorities

As reported in the recent Q2 2020 Coyote Curve Market Forecast, the truckload market has likely already hit the bottom in Q2 at a -9% spot rate, and contract and spot rates should more or less converge from here. Due to the circumstances, the rate environment will most likely be more forgiving than usual, but it will definitely be volatile; and, with rates regularly fluctuating, shippers must keep their key priorities top of mind.

First and foremost, shippers’ top priority is keeping their people safe during this unprecedented time. They’re also focusing on keeping team members productive despite disruption, making necessary strategic shifts in production, managing rapid and frequent shifts in demand, and maintaining operational efficiency.

The priorities for those experiencing an influx of demand are quite different from those seeing a decrease. Shippers in surging markets are focused on supporting frontline employees by ensuring their facilities have necessary crucial safety items like personal protective equipment (PPE), testing kits, and sanitization products.

The industries experiencing a downturn, such as durable goods, have been focused on keeping their businesses operating and their people productive. They’ve had to prioritize repurposing available capacity to streamline operations, while others have turned to private fleets to haul less-than-truckload or full truckload shipments. To support COVID-19 relief efforts, some industries even shifted their production lines completely, like automotive manufacturers producing ventilators or clothing manufacturers making masks and scrubs.

Other shipper priorities include managing increased production output, despite lower processing rates. These lower rates come from new facility regulations mandating safety procedures, social distancing, and fewer employees per shift, resulting in less efficiency. Shippers are also dealing with a less frequent transportation schedule and imbalanced inventory, adding to the struggle of keeping supply chains running smoothly.

A new 2020 for shippers

Regardless of the industry a shipper operates within, the outlook for the remainder of 2020 is much different than originally planned. The entire supply chain realizes the importance of developing new strategies to adhere to the current situation and prepare for future disruptions.

Shipping processes will inevitably change to improve supply chain visibility and automation and update future inventory and warehousing procedures. These new plans and strategies focus less on short-term, cost-based decisions, and more on proactivity, flexibility, and efficiency.

Shippers have rewritten their 2020 plans to address these new priorities. While some tactics have higher initial costs, investing now will allow shippers to better recover from future disruptions. Other new strategies include:

-Collaborating with other shippers to garner insights and best practices

-Creating pop-up fleets at surging origin points

-Focusing productions on the lines making the most, the fastest

-Working with 3PL providers that offer flexible, instant capacity to haul freight

-Moving live-load pick-ups and deliveries into temporary drop trailers

-Reducing number of SKUs to eliminate unnecessary variety

What comes next

 Some shippers have found it easy to identify ways to better prepare their businesses for future disruption and have established new processes to do so. However, this doesn’t mean they have avoided uncertainty altogether. Shippers are asking themselves three key questions:

-How do I keep my employees healthy and safe?

-How do I keep my facilities up and running efficiently?

-How do I limit disruption to my supply chain?

Since COVID-19, shippers immediately made shifts to maneuver the unthinkable. Unfortunately, there is no clear answer as to when or how shippers will see less market volatility, and they may even see more complexities in the meantime. This brings additional geographic and industry disparities.

As the economy moves towards recovery, we anticipate a surge in demand and a corresponding increase in volume. Industries, especially those whose shippers slowed down, will have lean inventories and, when demand rises, need to increase production. While shippers’ results may differ from their original 2020 goals, we believe a recovery in consumer demand will be here soon.

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Nick Shroeger is the Chief Network Solutions Officer at Coyote, a leading global third-party logistics provider headquartered in Chicago. Since joining the Coyote team in July 2009, Nick has been a key leader in identifying challenges of the supply chain industry and developing and scaling solutions. In his current role, Nick leads Coyote’s research and innovation efforts for both shipper and carrier solutions as well as network connectivity with Coyote’s parent company, UPS.

supermarkets

From Physical Retail to Online Business: Marketing and Logistics Principles for Supermarkets

Supermarkets and retailers around the world began distributing goods via order channels over a decade ago, often as a future-oriented addition to a minor business segment, complementing standard services. As such, ordering online and receiving groceries via delivery is nothing new. Caught off-guard by the COVID-19 outbreak, however, supermarkets and food-retailers today are facing the challenge of switching their business model from physical retail to online order and delivery with unprecedented urgency. With physical distancing measures in place across entire countries, people increasingly prefer to avoid purchasing their groceries as walk-in customers to safeguard their health and well-being.

In this situation, the supermarket industry finds itself in a fundamentally altered market environment. The changes required from them are profound. Their typical infrastructure, such as buildings and storage centers, was strategically designed to walk customers through a supermarket, positioning products on shelves as per marketing and product placement logic, factors that become obsolete in an online retail world. What matters now is safe, reliable, and fast supply of customers’ online orders via dedicated distribution services. Logistics is at the core of addressing these challenges and the interface between marketing and logistics indeed becomes vital for fast implementation in the current scenario.

For a swift short-term switch, the prerequisites are two-fold: On the one hand, the supply of selected products needs to be covered either through local production or through available imports. On the other, a functioning online ordering front-end needs to be made available to customers. Yet, especially for supermarkets, it is the seamless and efficient operation of the “pick and packing” functionality that has now become the bottleneck.

This has several consequences that can be addressed: First, online supermarkets cannot provide the full portfolio of goods to their customers, at least for the time being. Sales analysis is required to meaningfully reduce the portfolio of products available online, and hence decrease the complexity of assembling orders later on. Amid the current circumstances, food and canned products will have higher importance than non-food items, and any of the latter to be upheld would need to be chosen sensibly. While customers may have less choice, portfolio reduction will help significantly in maintaining capacity for faster, more reliable physical delivery.

Second, shortened product portfolios can be divided into two categories: High runners and low runners. High runners are regularly purchased in high volumes, and their turnaround is quick. Low runners might be appealing in the physical retail world, but have less meaning in the current landscape. Third, high-running products within a simplified offering need to be stored differently for now. Usually, they would be placed decentralized along strategic points throughout the supermarket to attract attention. In a recalibrated setup, identified high runners need to be stored centrally in a dedicated area of the market where employees have unhindered access for fast “pick and packing”. Fourth, the commissioning time needed for workers to assemble an incoming order, needs to be kept as low as possible by minimizing physical distances required to walk.

Fifth, in packing the online orders received and getting them ready for dispatch, standardized package box sizes can be used to further reduce complexity. Just like in a game of “Tetris”, utilizing uniform cubic sizes will allow for packages to be stored in delivery vehicles in the most effective fashion. This is particularly relevant for food retailers that do not rely on third-party logistics providers for reasons of quality and food safety assurance.

Sixth, physical delivery of the commissioned orders should be prioritized and planned in a calculated way. Typical linear concepts such as “first order in, first delivery out,” will not be efficient under the current circumstances. Seventh, because of the reduced product portfolio, the products offered should not be static, but optimized on a regular basis. In other words, the now required short-term shift should not limit the industry to short-term thinking. Requiring customers to order in excess of minimum order amounts, imposing high delivery charges, expecting customers to accept long delivery times, accepting the jamming of orders, amongst others pitfalls – all of which we are currently witnessing internationally, can be avoided by emphasizing the outlined marketing and logistics principles.

While it is clear that supermarkets are at the heart of consumer goods supply during the current pandemic, it would not be reasonable to compare them with established online giants such as Amazon and others. Their business model and logistical setups are different, from the outset. This naturally calls for customers to exercise patience and good-will with their supermarkets for a while. Supermarkets are logistical hubs, run by people, for people, through people, even if for the time being, they may appear as an anonymous online screen only.

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Frank Himpel is a faculty member of the Engineering Management and Decision Sciences division at College of Science and Engineering at Hamad Bin Khalifa University in Qatar. Prior to moving to Qatar with his family in 2018, Frank served as a professor of business administration and logistics in Germany, where he also received his academic degrees. His research into aviation and air transportation management has taken him to several countries around the world.

 About Hamad Bin Khalifa University

Innovating Today, Shaping Tomorrow

Hamad Bin Khalifa University (HBKU), a member of Qatar Foundation for Education, Science, and Community Development (QF), was founded in 2010 as a research-intensive university that acts as a catalyst for transformative change in Qatar and the region while having global impact. Located in Education City, HBKU is committed to building and cultivating human capacity through an enriching academic experience, innovative ecosystem, and unique partnerships. HBKU delivers multidisciplinary undergraduate and graduate degrees through its colleges, and provides opportunities for research and scholarship through its institutes and centers. For more information about HBKU, visit www.hbku.edu.qa.

How to Be a Strong Leader during Coronavirus

The economic and social uncertainties that the coronavirus pandemic has precipitated all over the world have created new and harsh challenges for political, religious, community, and business leaders. No one saw the current pandemic coming, so not many leaders were sufficiently prepared for it. But then, a leader must lead regardless of how unprepared or inexperienced.

In the business world, leaders are struggling to cope with the new realities of social distancing and the increased need for remote working. This is a time when business leaders need to inspire hope among their employees, even as they struggle to keep their businesses afloat. It is a time when leaders need to take quick actions that will save supply chains from collapsing. Consumer trends are changing faster than ever experienced before, and businesses must keep up with the trends or risk running out of business. Indeed, difficult and important decisions must be made and made fast. But how can a leader inspire hope during these difficult times?

For a start, business leaders must work closely with all stakeholders- governments, clients, partners, investors, and employees- in monitoring the virus and prioritizing everyone’s safety. At the same time, they must try to cushion the financial future of their organizations and employees. Strong leadership skills have never been more relevant. Here are 5 strong leadership skills that will help you provide the leadership that your employees so desperately need:

 1. Have a compelling and consistent message

Communication in times of crisis is way more demanding than during any other time, particularly because your subordinates must believe in your message first before agreeing to abide by it. You need to inspire hope that the current crisis will come to an end soon, but then the people you are inspiring are convinced otherwise. People are desperate for “the normal” so that they can go back to pursuing their careers and lives, but then their optimism is gone. Their only hope is that their leaders can chart a path forward, but then most of them don’t trust anyone who has the right answers to this pandemic. You will have a better shot at inspiring your staff if your actions and body language are consistent with your words. This is the time to leverage the experiences, values, talents, and qualities that your juniors appreciate about you. Build your message around those qualities and be consistent while at it.

2. Be empathetic

You will need to make tough decisions during this crisis, but you must always come from a place of empathy. This is a time when your listening skills for managers will be put to test like never before; a time when you have to understand the feelings and experiences of your juniors before making any decisions. Such skills will help you detect fear and agony in the questions your juniors ask, so you are able to empathize with everyone and give the right directives. Note that it is natural for some of your juniors to feel like you don’t have answers or good enough solutions to their fears. If you are empathetic, however, you will understand their paranoia and skepticism better and that will enable you to package your solutions in a way that inspires hope in the midst of the paranoia, doubts, and hopelessness.

3. Be tenacious

Strive not to be overwhelmed by the challenges this pandemic has brought. Let everyone see your determination in defeating this disease and its ripple effects. Being tenacious includes thinking long-term and helping everyone around you to see the bigger picture, even when the present reality seems so bleak and unsettling. As much as you need to be reactive when handling problems as they come, you need to be responsive as well. That is how you will convert your employees and people around you to be believers and followers. Of course, the solution lies far into the future but it is only through your today’s tenacity that the future everyone wants will be achieved.

4. Be truthful

There is a lot of misinformation doing rounds on social media and that has led to confusion. Don’t fuel that trend. Be straightforward and honest in your messages, focusing more on how the virus can be defeated.

5. Ask for help when you need it

The people you work with have almost the same dreams and ambitions as you. They also have ideas that could help you navigate these murky waters of the COVID-19 era. That is why it is okay to go to them for ideas on how to move forward.

Conclusion

With a little more courage, emotional intelligence, and integrity, you will easily navigate the current coronavirus crisis. Remember to care for the people around you and to communicate effectively and with clarity. We shall overcome!

human

A Human Perspective – Global Business in the Post COVID-19 World and The New Norm

There is little doubt that our economy will not be the same in the post novel coronavirus world. American businesses long have shown the scars of national trauma: Devastating fires, for example, spawned major factory regulations. World War II hastened the entrance of women into the workforce. September 11th drastically heightened security protocols. Analysts say the novel coronavirus pandemic could push broad societal shifts and human behavior. There will essentially be a “new norm” where new businesses will start, others will thrive, and many will disappear. As human beings in this New Era, this article will identify how the human perspective will influence business and consumer trends.

One of the most apparent human factors consumer impacts from the coronavirus outbreak is a shortage of toilet paper stemming from panic buying originating from video’s that went viral such as this one from Australia.

However, upon a human perspective evaluation, there is a supply chain shortage of toilet paper, not an inventory shortage. Consumers are now buying for their homes as the toilet paper supply in offices, restaurants, airports, hotels, and schools go unused.

Other observed human factor trends are a shortage of Viagra where Pfizer is allegedly at full production capacity of Sildenafil at its Amboise France Facility (Now managed by Fereva). Lastly, figuratively related, in Food Science, packets of yeast are also at shortage levels as homebound bakers now have more time on their hands to take the time required to bake fresh bread.

Lastly, the best performing commodity during this epidemic has been frozen concentrated orange juice rising over 20% (Akin to the 1983 film Trading Places)

The most significant impact economists say will likely be dramatic losses in local retail and dining options, with millions of jobs disappearing as the most prominent and wealthiest companies — especially those that do much of their business online — extend their gains. Giants such as Amazon, Walmart, Target, and Costco — and the rest of the industry. Companies selling groceries and staples are thriving, while the rest are barely hanging on.

Telework, online education, and streaming video services have grown sharply, while movie theaters, schools, and traditional workplaces close their doors. Some will never reopen in a world where the shift from real to virtual suddenly has gone into overdrive. In the entertainment industry, Universal Pictures announced this week that its animated adventure “Trolls World Tour,” due for release in April, instead will be available for streaming. Such shifts, if they take hold long term, could imperil movie theaters, especially small and independent ones that run on narrow margins based heavily on concession revenue.

Virtually any business practices, such as remote work and the online medical visits or telehealth, which were slow to win widespread adoption because of behavioral inertia, will now speed adoption of such unfamiliar ways of doing business. Any traditional face-to-face encounter — going to an accountant’s office, sending children to class, traveling for a business meeting — will seem less necessary as more remote options become publicly acceptable and widespread.

An economic silver lining will emerge for janitors, child-care workers, grocery store clerks, and servers who will be able to demand higher pay and better working conditions in the post-coronavirus world, some analysts predict. Many have called these workers “heroes” in the crisis.

It’s impossible to say what ripple effects these massive disruptions could cause. One analyst pointed to groceries: When few people opted for home delivery, the scale of the enterprise ensured the costs were high, and availability was low. But as crowds of people opt for delivery, the route drivers will grow denser, and customers will expect everything is dropped off at home. Deliveries of items that were generally in-store purchases — fresh foods, prescription drugs — could usher in new economies of scale.

Businesses dependent on prime real estate and bringing people together could be especially vulnerable as people opt against public gatherings, including shopping at malls. That could have other impacts, too: One analyst said he suspected conspicuous consumption — high fashion, expensive sneakers, sparkling jewelry — might suffer when people “don’t have anywhere to parade.”

Other firms may become winners, too. Blue Apron, the food-delivery service, struggled for months to convince investors that people would pay $60 a box for all of the ingredients they need to make home-cooked meals. But the firm saw its stock price skyrocket more than 500 percent last week amid a flurry of new interest. The company said it is hiring workers at its fulfillment centers in California and New Jersey to meet demand.

But as surgical masks become desperately desired items, schools from Japan to Ireland sit closed, airlines scrap flights, trade shows are canceled, and stock markets plunge, the pandemic seems likely to alter the contours of globalization and human behavior. However, one thing we all can agree is human beings will prevail over the virus. As the Great Winston Churchill said: If you are going through hell, keep going.”

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Frank Orlowski is an accomplished Senior Finance Executive and Board Member with more than 25 years of success in the pharmaceutical, medical devices, contract manufacturing, and healthcare industries. Leveraging extensive experience leading manufacturing, operational, and financial strategies across 35 countries.  Frank has also implemented over 30 FCPA Compliance/ Controls Remediation and Certification Programs across 25 countries.

Contact:

Email: frank@ationadvisory.com

Website: www.ationadvisory.com

uncertainty

Your Enemy is not Uncertainty, but Complexity

As a nation, we look to the economy to answer our basic questions about the future. What will fluctuations in global markets and supply chains bring? How will the dollar recover from the circumstance of a stalling consumer market? And what impacts, if any, will change the way we do business? As spring approaches, the anticipation around these questions builds. We watch for signs of our shuttered economy lurching back into motion.

Businesses, much like individuals, have coping mechanisms when faced with a crisis. There are ways to build a business contingency plan, even with unforeseen challenges. Some industries have not dusted off their plans since the financial crisis of 2008, and there is anxiety around what it means to enact it. But the truth is: business contingency plans are built precisely for moments like the spread of COVID-19. And while words like “unprecedented,” “alarm,” and “volatility” rule headlines, reactivity is not how businesses run. It is through preparedness and foresight. It is with a business contingency plan.

While no leader takes comfort from enacting their company’s plan, the ability to swiftly empower crucial business functions with ease is possible. Uncompromising company and financial data security and work-from-home procedures are not mutually exclusive. A bit of knowledge is required to migrate an office environment to the home without opening new vulnerabilities.

Divide and Conquer

Dividing and conquering is the oldest trick in the book for any opportunist looking to damage their business. Security hackers and other ill-intentioned opportunists look for times of organizational chaos to strike. They trust that business leaders have overly-divided their attention and that employees will not adhere to traditional protocols for data security or safe treatment of sensitive information.

There are also a substantial number of leaders who will focus on the uncertainties of the future, preventing them from seeing vulnerabilities that are right in front of them. This, of all things, means that many companies and their leaders must know the enemy is not the distractionary dips and dives of the economy, but the complexity of an organization that prevents it from responding elegantly to uncertainty. Military strategist Sun Tzu of The War of Art provides insight into how we should prepare for battles with the unknown:

“Know the enemy and know yourself; in a hundred battles, you will never be in peril. When you are ignorant of the enemy, but know yourself, your chances of winning or losing are equal. If ignorant both of your enemy and yourself, you are certain in every battle to be in peril.”

Having a business contingency plan is only the beginning. Redraw your battle lines when uncertainty strikes, and you will unmask the hidden areas that need better solutions.

Strategies for reducing business complexity:

Strategy #1: Define ‘new normal’ from the top down, but bring insight from the bottom up

Your employees will not naturally intuit where the new boundary lines exist. Spell it out so that everyone is on the same page. Barring in-person meetings, you may need to host a company-wide Zoom call with a panel of C-Suite leadership to reassure, set new expectations, and answer questions.

Most importantly, leadership should use this as a chance to gather further information. Seek out the experiences of those who serve your customers directly to get their perspective. How are customers responding to the shift? What are their emerging needs, and is there a niche there that your industry can uniquely fill? Keep your company’s ears to the ground.

Strategy #2: Banish organizational drag through automation.

In environments of economic hardship, businesses with leaner operations and less organizational drag do better. Cutting out redundant manual processes is crucial to eliminating complexity. A business contingency plan will help enact the first line of defense for your business. However, this is not all you will need. The second wave of reinforcements is crucial to keep your business advancing through times of uncertainty.

Automation is your greatest ally in this fight. Now is the time to abandon stale processes. If they’re manual or paper-based, requiring cartons of messy file work or repetitive wet-ink signatures, its time to rethink. Lean heavily on electronic AP solutions, which can clear up the bottlenecks choking out crucial supply chain relationships.

Never in history has the value of a swift and reliable supply chain been more evident than now, as hospitals face shortages of both personal protective equipment and crucial medicines. Industries are re-learning a valuable lesson: that while necessity is the mother of invention, the cost of waiting to innovate can be incredibly painful.

Strategy #3: Reach for a sturdy bottom line more than blue-sky profits

This year is unlikely to offer many sunny prospects in the realm of profits. Yet cost-cutting initiatives will provide the kind of stability a company needs to make impressive cumulative gains in the coming years. What does this mean? Playing defense isn’t your only strategy. You can also cut costs to preserve the liquidity you do have.

With electronic tools already up and running for staff communication or remote meetings, it’s time to ask yourself how you might unburden other areas of the office from slow performance inefficiencies. What is sending through the mail that could be automated? How might making payments to suppliers electronically cut back on paper check costs? Explore every avenue for cost savings. There are many electronic solutions at the ready to lift manual-based work with minimal if not zero downtime for your business. Now is the time to employ these solutions and not hold back when better-designed options exist.

Strategy #4: Invest in secure solutions without needing to hire more IT

Everyone at this point could do with one more great IT hire, but the point of a business contingency plan is to be resourceful with what resources do exist. Making quantum leaps from the office to a remote setting is much easier for companies who have already made steps toward digital transformation.

Instead of losing more time to processes like answering phones, getting approvers to hand-sign checks, and sending paper mail to closed-up company headquarters, make them digital, with greater control and traceability. Fraudsters’ potential access to your systems diminishes when you have greater visibility and fewer cooks in the kitchen. Higher thresholds for security mean that problems or threats are identified in real-time and careless or lagging processes fall by the wayside.

Strategy #5: Innovate, innovate, innovate

It’s tempting to lose steam during a crisis and consider it the wrong time to try creative solutions, but the logic doesn’t stand. Now is absolutely the time to try new things.

Since volatility has introduced new stressors into the equation for your business, the target has shifted. A brand new segment of the market may have just locked into place in the form of potential customers. You have the potential to attract them by showing that you understand their needs quicker than anyone else in the space. This requires agility and a bit of risk, but it’s a risk worth taking, even under present circumstances. Innovation isn’t an optional advantage in times of plenty. Innovation is essential to the survival of every business.

In the words of Sun Tzu, “In the midst of chaos, there is also opportunity.” Do not take advantage of the chaos, but respond with resilience to its demands.

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Lauren Ruef is a research analyst for Nvoicepay, a FLEETCOR company, with years of experience conducting market research and crafting digital content for technology companies.  Nvoicepay optimizes each payment made, streamlines payment processes and generates new sources of revenue, enabling customers to pay 100 percent of their invoices electronically, while realizing the financial benefits of payment optimization.