Dealing With Supply Chain Disruption During Covid-19

Governments across the world are turning to experts within the technology and scientific community to provide models and simulated scenarios to help guide their decisions and policies during the coronavirus crisis... should business be any different?

The global outbreak of Coronavirus is affecting us all personally in many ways: our health, our income, our productivity and our behaviors. Similarly, almost all organizations are now experiencing radically different operating conditions and coming to terms with wide-ranging and unclear impacts on business performance.

Across industry, demand, production and distribution networks are slowing down at varying rates, but for some, such as those providing critical products and services (food, medicine, PPE & fuels), demand is soaring. Regardless of the challenges or opportunities these fluctuations present, supply chains across the globe are trying to re-establish balance against a backdrop of demand and supply uncertainty.

Speed of response is often crucial in this situation but is often hindered by slow decision making rather than a lack of execution agility. Analysis paralysis and fear of pivoting to capitalize and instead making a loss is a challenge faced by many supply chain leaders. This blog discusses how predictive simulation technology that governments are using to make plans can be used to remove this barrier and deal with the longer-term recovery uncertainly that will most likely result.

Even under ‘normal’ operating conditions supply chains are invariably highly complex processes, involving multiple organizations, stakeholders, supply and demand nodes, transportation links and fulfillment strategy choices; all of which need to be seamlessly brought together to ensure balance across production and delivery. Volatility spikes due to unprecedented virus hotspots and stockpiling across the globe have left many organizations with difficult choices about which products and markets to supply and how to fulfill their customers’ rapidly changing needs.

Questions such as deciding how and where to redeploy resources? Where are the excesses and shortfalls? What operational expenditure can be reduced to preserve cashflow without suffocating the business? and How do you embrace new ways of working to meet social distancing requirements? all need urgent and risk-mitigated answers.

So how do you move to a position where you are able to anticipate future states over various timeframes (next week, next month, 6 months out)? How do you plan now for the recovery period when lockdowns will inevitably be removed and when should you effect a ramp-up strategy?

Predictive Simulation Provides Clarity and Strategy

“Never has the need to be able to test and validate our decisions in a virtual world been as essential as it is now."

Rebalancing the supply chain and identifying the conditions under which networks are likely to fail is of the highest priority. Previous processes and policies are no longer relevant but testing new policies, rules and resource allocations in order to rebalance the network is filled with risk unless tested effectively.

Predictive digital twins provide business with a virtual sandbox to simulate future scenarios and understand how their decisions will make an impact over the coming weeks and months.

The same approach, expertise and technology is available to support and validate business-critical decisions that senior management teams need to make as they navigate through these difficult times and plot a course through what is likely to be an extended recovery period.

Predictive simulation lets you develop a playbook of operating scenarios to test, conduct ‘what-if’ experiments, discover new insights and stress-test your decisions in a dynamic, highly visual digital representation of your key processes. Plans can be analyzed and refined many times before committing to real-world action.

Access to the right ‘what-if?’ data ensures they can answer key questions about future scenarios and react quickly in the most efficient and strategically optimal way possible. Only by having access to predictive simulations of the future can crucial foresight be used to inform both tactical and strategic decisions of today such as:

• What products should we produce, where and in what quantity?
• What asset and resourcing levels will be required in the near and medium-term?
• Where should I deploy my people, will they need retraining?
• How soon and how hard should we plan to ramp back up?
• What internal risks can we eliminate and what external risks can we mitigate?

By providing answers to these questions and many others in areas ranging from fundamental business process changes through to radical new innovations or business transformation initiatives, Covid-19 crisis management teams can make smarter, calculated choices influencing both Capital and Operational Expenditure decisions that can not only reduce the impact of the immediate crisis, but give them a clear advantage for future growth as the world emerges from the current unprecedented situation.

Certainty in a time of Disruption

For some companies, answers to these questions may be readily available as they may have previously invested in digital models to fully understand and evaluate scenarios that affect their supply chain. However, as pointed out in Harvard Business Review, a large majority of companies are finding that “vital information is often not available or accessible across their global teams. As a result, their response to the disruption has been reactive and uncoordinated, and the impact of the crisis is hitting many of their companies full force.”

For organizations in this position, action should be taken now to find the right data and develop predictive models for their business.

Regardless of the questions at stake, predictive models that accurately reflect key processes and quantify key performance metrics are an asset that all organizations should have in their business planning toolkit. Such Digital Twins provide a proven decision support platform for analyzing future state scenarios that gives leaders a ‘playbook’ of options and strategies that can be applied during any uncertain or volatile situation.

“A 2016 Boston Consulting Group study that found that adopting digital supply chain technologies helped companies achieve, on average, 10% higher product availability and a 25% faster response to market changes compared to companies lagging in digitisation.”

These findings perfectly illustrate the importance of using Digital Twin technologies, such as IoT, AI and predictive simulation, during normal operating conditions. When major market disruption occurs however, these technologies can be what navigates you through the storm in far better shape than the competition.

Right now, many are considering how to best react; those leading the way out of the current economic dip will be planning for the future and evaluating new ways of working. Being able to understand the most appropriate business response with minimum risk, and avoiding any unforeseen issues will be key to justifying the unlocking of budgets that have likely been tightened due to the current crisis.

Whether you have such models already in use or need to rapidly develop them to assist your business planning, predictive simulation provides the best chance of successfully emerging from the Covid-19 pandemic.

To find out more about how predictive simulation can help you to manage your crisis decision making and post-crisis planning, whether you wish to re-model or start modeling your key operational processes – we’re here to help. Contact us today.

You can also find more about our approach to safeguarding business continuity for future resilience with RHDHV here.