Powering up supply chain management during the ‘pingdemic’

Renewed instances of empty supermarket shelves in recent months have brought back memories of panic-buying during the onset of the Covid-19 pandemic in March 2020 for many consumers. This time, the ‘pingdemic’, created by a dramatic surge of notifications by the NHS Track and Trace app for key workers to isolate as a result of a close contact, is placing strain on supply chains as the number of available employees to transport goods and services dramatically reduces.

It’s the latest in a string of challenges that UK supply chains have faced in recent years, having already come up against the impacts of Brexit, such as a shortage of truck drivers due to EU nationals leaving the UK, and the blockage of the Suez Canal in March of this year. With the immediate threat of reduced stock on shelves, the UK Government recently announced a series of exemptions that will apply to key workers, with double-vaccinated staff able to continue working as opposed to self-isolation.

The impact of supply shortages has however already been felt, with the Consumer Prices Index exceeding 2% in the 12 months to May 2021, and rising inflation typically leads to increased supply chain costs. Reducing the impact of this chain reaction is crucial to ensure supply chains remain viable and efficient, and organisations can take some key steps to mitigate the risks.

 

Communication is key

Vital to battling the effects of the ‘pingdemic’ is the need for organisations to have open and honest conversations with suppliers. Taking advantage of existing strong relationships allows businesses to gain as much advance notice as possible of impending price increases and gives them the time to assess how these can be reduced. Constant open dialogue allows management to forecast price changes and communicate this information to other process areas in the business, such as sales, manufacturing and inventory management.

In times of instability, engaging with suppliers is key, but doing so requires the right team in place. Bolstering the employee base with workers that can tackle more administrative tasks frees up time for strategic buyers to focus on the supplier relationship. Expanding the team will also be vital to tackle the staff shortages created by the ‘pingdemic’ and ensure that operations continue during absences. Education also provides great value to management teams. Knowing how market pressures are impacting on suppliers is key to determining the strategy behind how best to approach them. This could even involve the business helping out in terms of supply during times of pressure.

 

Managing disruption with technology

Half of the battle against the impact of the ‘pingdemic’ is down to effective communication, but harnessing technology applications is the other piece of the puzzle in tackling supply chain disruption. Significant levels of money and time are frequently spent on ERP solutions, and it’s little surprise due to their ability in managing day-to-day supply chain operations. The true value of an ERP solution however is the strain it can take when factors outside of the norm occur, particularly as recent issues have materialised quickly and have impacted greatly on lean, just-in-time type chains.

Modern ERP solutions are pivotal in supporting all supply chain management styles within organisations and possess functions that are frequently under-utilised in mitigating supply chain risk. Quota arrangement functionality allows the purchasing organisation to split supply of a material between two or more suppliers at chosen proportions. As demand translates to purchase orders, the ERP is able to automatically determine, based on the percentages of business already established for each supplier, who receives the next PO.

However, organisations need to remember the importance of having agreements in place with suppliers to understand their potential capacity at short notice in the case of a breakdown of a previously established source of supply. Ensuring that this is arranged with the appropriate ERP technology driving the process gives the best chance for supply chain disruption to be avoided.

 

Making mitigation possible

When supply chain disruption occurs, ERP solutions also allow organisations to see the resulting impact of delayed deliveries. Analytical tools and stock requirement lists, powered by machine learning and artificial intelligence technologies, can reveal when stock is dangerously close to running out, which production lines will be affected and identify the customer orders that will not be fulfilled. It also facilitates insight into revised availability to help those difficult conversations with customers in the case of stock being unavailable. It can also help the reprioritisation of fulfilment to more strategic customers where challenges arise.

Being able to mitigate supply chain risk has been vital requirement over the course of the Covid-19 pandemic, and this has proven to be no different during the challenges presented by the ‘pingdemic’. To remain resilient in times of pressure, organisations need to adopt honest communication with suppliers and make the most of the technology solutions available. As a powerhouse of information, an ERP solution helps drive these insights to deal with unprecedented challenges.

 

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