Virtually any company that relies on a supply chain that includes supply, production and distribution flows is being affected by the Covid-19 pandemic. Even the giants have not escaped, as they have had to deal with the so-called “bullwhip effect”, in which the drop in demand and the reduction in production are at odds with each other. In other words, the two ends of the process react at different rates due to a delay in understanding market behavior.
Thus, it is easy to understand that, in a globalized world, where the production and marketing chain involves more than one nation, all countries end up being economically affected – in other words, it is a “bullwhip effect” on transcontinental proportions. This moment was already expected by many analysts and consultants, because for a long time institutions underestimated the potential risks to the organization. Therefore, this is the time to think about what the future of the Supply Chain will be like.
The future of chain collaboration
There is a lot of talk about the “new normal” and the transformations that the world – especially civil societies – will undergo. In a way, what many analysts expect is that these changes will also occur in the institutional market and lead to a reorganization of priorities. The traditional Supply Chain model, used by thousands of large companies, is a long-standing problem, and one that has always been on the verge of “exhaustion”. And that is where the new coronavirus crisis comes in, because this work methodology has indeed proven to be problematic and has the potential to negatively affect the company’s identity.
Furthermore, inspired by maquiladoras, today's organizations have sought to allocate their production centers in regions with better tax benefits, low-cost labor, few environmental regulations, easy access to raw materials and highways and transportation routes. However, there are expectations that a reverse movement will occur, characterized by a closer relationship between production and supply. The benefits to be acquired include a better balance and equilibrium between risk, cost and supply flexibility, in addition to a reduction in the “bullwhip effect”.
One change that has been talked about in the market and can be implemented now is bringing suppliers closer to the decision-making processes and order planning. The exchange of information and data between vendors and suppliers can be very enriching and add value to the business, as the company has the possibility of better managing its demands and, consequently, production, inventory and distribution. In other words, there is an improvement in the understanding of real-time signals, as inventory and sales data become more closely linked to purchasing processes.
It is therefore a question of adding human knowledge and expertise to Digital Transformation processes, so that the connection between people and machines can become the solution to avoid crises involving the supply chain. There is a claim in the market that the Supply Chain can influence consumer happiness, increase revenue, reduce costs and manage risks. In other words, together with human intelligence, it has all the potential to become a robust, transparent and sustainable operation.
Thus, we can summarize that expectations for the future of the Supply Chain are based on the reduction of geographical distances, the creation of a supply chain with more autonomy and the modernization of internal operations, valuing human expertise. In fact, changes needed to be made in this sector for a long time and the crisis caused by the Covid-19 pandemic made this clear to those who had not yet seen it. This is the time to carry out diagnostics of your organization's supply chain and, based on this, promote the creation of strategies that will change the future of your company.