The tragic outbreak of the Coronavirus has again demonstrated the need for ever vigilant health care services and fast response. It has demonstrated that supply chain interruptions from a manufacturing excursion to a port strike to an infectious disease outbreak require two actions from any firm: preparation and response. In both cases, without a digital representation (supply planning and demand management) of your supply chain, you are operating in the dark. Such “models” augment intuition.
Over the last week, the Coronavirus has taken center stage in news reports as the details and spread of this dangerous and disruptive virus are regularly updated.
The human impact is substantial and sad. The actual details of the science, epidemiology, and health care response are fascinating and critically important. An important component of the impact is on supply chains or demand-supply networks (DSN). In some cases, it is demand (examples: oil, air traffic, cruise lines, and gambling) and others it is critical component supplies. For example, Hyundai Motor will suspend all domestic production.
This supply chain interruption as with small ones (manufacturing excursion), port strikes or other disasters such as the Tsunami in Japan in 2011 all raises the same critical questions for any firm that are divided into parts: preparation and response.
- Where are the most vulnerable or risk point in the DSN?
- An assessment of which factors you will live with and which you put in place contingency (alternatives) for, essentially how much insurance can I afford?
- For the risk factors, the firm will live with – have a list of options.
- How do I best respond to the current interruption?
- What actions should I take in what order?
- What is the anticipated impact of the set of responses?
- How do I adapt the response as new information becomes available?
In all 7 action items, without a digital representation (dynamic central planning engine) of your DSN including a best in class demand management application you are driving blind.
What makes this particularly challenging is experience or intuitions have less value since the playfield has changed. It is a bit like changing how the chess pieces are permitted to move. This investment is critical to ensure intelligent responses make the best use of experience for new circumstances.
“Complexity exists whether you ignore it or not, best not to ignore it.”