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  •  12/20/2021

Lessons from the COVID - 19 Pandemic: Why does Supply Chain Risk Management matter?


The Covid-19 pandemic is a unique situation as most companies are prepared for supply chain disruptions in case of natural disasters, but what should be done in case of a pandemic? The Covid-19 crisis made it necessary to adopt a different way of thinking as its impact unfolded in multiple ways. We still are unaware if we are past the worst or the worst is yet to show up. 

Amid all the uncertainty and chaos caused by the Covid-19 pandemic, government lockdowns, border shutdowns, and systematic health and safety concerns continue to test the supply chain globally. Surrounding by such chaos and multiple challenges, how should businesses change their risk management approach to the supply chain?

Supply Chain Risk Management is all about the plans and strategies to build a resilient supply chain. Resilience and risk management are often used synonymously, but there is a difference. While resilience is about the elasticity of the supply chain and the speed of its recovery amid crisis, risk management successfully helps protect the company from supply chain disruption by forecasting and predicting possible disruptions. Proactive management of risk is what a robust supply chain is. 

The prediction and forecast of risk are not always very predictable but managing old risks while identifying new ones in an interconnected world is important globally. A company should always expect and prepare for possible supply chain disruptions while being physically and digitally connected. When data is readily available, machines and people can work together to leverage information while optimizing fulfilment strategies. 

Identification of risk threshold requires a company’s leaders to ask themselves a few questions: 
  • In case of a natural disaster, will it be able to deliver products efficiently and quickly?
  • In case of a pandemic, how will we source each part?
  • In case of destruction of the warehouse, how can another warehouse help seamlessly continue manufacturing protocols?
From the questions above, corporation leadership had to reevaluate the entire supply chain management from thoughtful planning to risk management to analytics to resilience to inventory policies and much more. In the past decade, strong commercial results and cost efficiency were the highlights of having a strong supply chain. With new risks such as the pandemic, necessary plans and strategies arise. 

Following are a few key lessons to take away from the pandemic that affected the supply chain globally:
  • Look for a Manufacturing Partner – A functional manufacturing partner can help companies move past the hazards of disruptions in the supply chain. A resourceful manufacturing partner can provide access to regions, resources, and industries that the company didn’t have access to on its own. Such partners can also help cover up for the company’s vulnerabilities and weaknesses by helping with flexibility and risk management. 
  • Explore Multi-Sourcing – Thanks to the pandemic, companies are now more worried about not being dependent on a single source. When options are limited, having the power to quickly select qualified suppliers to further keep your products' schedule on is essential. Having multiple sources per part is a necessity for a successful supply chain. OEMs recognized that if they fail to manage everything diligently and strategically upfront, any disruption soon can be disastrous as they are typically more sensitive to sourcing everything. 
Therefore, designing and developing with high levels of resilience and a strong network of supplier relationships results in a supply chain that doesn't react adversely to external shock. The strategy will be different for each company, but analyzing and examining multiple supplier relationships, locally, nationally, and globally, will help stabilize or balance the risk of disruptions.  
  • Investment in Updated and New Supply Chain Technology – Quarantine, government lockdowns, along health risks disrupted the flow of the usual supply chain. But as more companies are recovering and rebuilding from the adverse effects of the pandemic, they are investing in new and better supply chain technology. This new technology will help with supply chain visualization and optimization applications. 
Supply chain network optimization helps with supply chain risk management as it imagines multiple disruptions that could hamper the usual flow of the supply chain. This optimization typically involves a combination of supply chain analytics and extensive data and insights that provide an overall snap of a company's supply chain. It hadn't received enough attention before the pandemic, but companies now are to recover and avoid such disruptions shortly. 
  • Use a Predictive Supply Chain Risk Management Initiative – A company may form a team of predictive supply chain risk management which may include teams involved in the management of events like natural disasters, sourcing shortages, etc. which will help companies achieve an enhanced level of efficiency along with fine-tuning their supply chains, inventory management, demand planning, logistics, and shipping. 

At present, USI has established a long-term, stable partnership with many world-leading electronic product brand customers, mainly providing them with WiFi modules, UWB modules, smart wearable product modules, and fingerprint sensor modules. Meanwhile, USI is also exploring the application of miniaturization and developing modularized products such as System-on-Module (SOM) in industrial electronics and automotive electronics.

According to Manufacturing Market Insider (MMI), USI leads competitiveness among industry peers by ranking 12th in the global EMS & ODM industry in 2020. USI has 27 manufacturing and service sites globally in 10 countries and regions across Asia, America, Europe, and Africa. With more than 24,000 employees worldwide, our professional teams can provide complete solutions and serve well-known brand customers on a local basis.

 

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