Coronavirus highlights weaknesses in supply chain management

The coronavirus pandemic created supply chain disruptions that the world had not yet experienced before, nor were they ready for. It highlighted weaknesses in the just-in-time/just-in-sequence manufacturing concepts and gaps in transportation capacity. Now, companies must find ways to overcome these issues to strengthen their current and future supply chain needs.

Coronavirus highlights weakness in JIT/JIS concepts

The manufacturing sector was hit hard by COVID-19. Factories of all kinds from garments to food to automotive were closed and supply chains around the world were disrupted.

Industries that rely heavily on the just-in-time/just-in-sequence (JIT/JIS) manufacturing models, such as the automotive industry, were hit the hardest. This is because for these industries any disruption in such tightly managed manufacturing will have an immediate and serious effect, explained Per Ädelroth, Chief Supply Chain Officer at Axis Communications.

The automotive industry has always been a pioneer in terms of globalization and JIT/JIS concepts. The coronavirus pandemic highlighted how vulnerable and highly susceptible this perfected concept is in times of crisis.

“Major supply chains broke down at short notice — sometimes with a time lag — and brought automobile production, among other things, to a standstill,” said Christian Wibbe, Member of the Management Board at Miebach Consulting. “In the past, existing inventories in these chains were systematically reduced to a minimum in the course of the increased implementation of JIT/JIS concepts and prevented an at least temporary bridging of supply bottlenecks without replacement.”

By highlighting the flaws of JIT/JIS, the coronavirus has forced companies to reevaluate these concepts. Instead, it has suggested that companies will need to diversify its supply and consider stockpiles to avoid future disruptions.

Transportation disruptions make open communication more important

A spotlight has also been placed upon the important role of transportation in the supply chain, as the large distances between suppliers and customers increase the risk of problems in the supply chain. These problems include supplier failures, temporary export restrictions in the supplier country, unavailability of involved logistics service providers, closures of source and/or destination ports, cancellation of flight connections, etc., according to Wibbe.

For Axis Communications, transportation capacity had the biggest impact on the company during the earlier stages of the pandemic — both for shipping components to manufacturing facilities and in getting products to partners and customers.

“A significant proportion of freight is actually carried on passenger airlines, and with national lockdowns and travel restrictions, capacity was suddenly and seriously reduced,” explained Ulrika Magnusson, Global Supply Chain Director at Axis Communications. By reacting quickly in looking at alternative ground transportation options Axis was largely able to address this issue.

Keeping open and regular communication with partners and customers is also key to setting expectations regarding any delivery delays. Good vendor communication during COVID-19 will keep them informed about what will be shorted or delayed, and give suppliers the opportunity to make necessary adjustments or find alternate sources if needed. This is especially important since the possibility of vendors being strained by material shortages or manufacturing shutdowns during the pandemic has exponentially increased.