Clarkson University David D. Reh School of Business, 11/12/20 19:00–20:00
Joshua LaFave, host. Speaker: Farzad Mahmoodi, Ph.D
Video Link: https://www.youtube.com/watch?v=ZE343UPCMmw
Mahmoodi, Farzad. “Supply Chain Disruptions: Lessons from the Covid-19 Pandemic.” Clarkson University David D. Reh School of Business, 12 November 2020, Online. Keynote Address.
Notes:
1) “Supply Chain Disruptions are Common”
- Natural Disasters, IT Outages, Cyberattacks, Trade Policy Changes, etc..
- Most frequent disruptions: Oil, Gas, Auto Manufactures
- Longest Recovery time: Electronics, Aerospace
2) “Complexity of Global Supply Chain”
Industry | Tier 1 Suppliers | Overall Suppliers |
Auto | 250 | 18,000 |
Aerospace | 200 | 12,000 |
Technology | 125 | 7,000 |
3) “Mitigation Strategies vs. Contingency Plans”
Mitigation Example: Hershey has 6 months of milk chocolate inventory
Contingency Plan: Walmart distributors have ~2 smaller centers nearby
4) “Supply Chains are more vulnerable than ever”
- Efficiency introduces risk
- Lean/Just-in-time systems
- External Dependency/Outsourcing
5) How is COVID-19 Different?
- Length of disruption is longer than expected and unknown
- Various geographic areas impacted simultaneously across the globe
- Disrupted supply and demand
- Single positive case leads to a 1700% demand increase (Premier Inc, 2020)
- Plus bullwhip effect
- McKinsey & Company Survey (Q2, 2020):
- 73% encountered supplier issues
- 75% had transportation or distribution issues
6) Supply Chains were not Resilient
- Trucking or Port Bottlenecks
- Sick workers
- Export bans
- Panic-buying
- Over-reliance of offshore manufacturing
- Lack of transparency to assess existing supply
- Poor coordination between Federal and State agencies
Resiliency is hard to measure!
7) Resulting Turmoil
- China was sole source of many items
- 80% of face masks are made in China
- 80-90% of active pharmaceutical ingredients are made in China/India
- Calls for reshoring industries
8) Appropriately Resilient Supply Chains
Find a balance between risk and resilience.
Low Risk | High Risk | |
Low Resilience | Appropriately Resilient | Vulnerable |
High Resilience | Unprofitable | Appropriately Resilient |
9) Recommended Strategies
- Map/monitor supply chain networks
- Identify Tier 1 and Tier 2 suppliers
- Build redundancy into the supply chain
- Strategic safety stock piles (the earlier in the chain, the cheaper they are to maintain)
- Diversify supplier base
- Global suppliers from multiple regions
- Holistic Inventory View
- Achieve Network Agility
- Alternative manufacturing sites, etc…
- Validate demand
- Mitigate bullwhip effect (e.g. ordering 100 ventilators b/c you think they’ll send 10)
- Use tech solutions
- Clouds, 5G, Blockchain, AI, 3d printing
- Advanced Analytics (P&G)
- Component Database (Toyota)
10) Additional Recommendations:
- Government involvement to ensure resilient supply chains
- Better Fed/State agency coordination
- Better SNS transparency–not too early, but be ready to roll out information and supplies immediately when pandemic strikes
- Pandemics happen routinely (though far enough apart that people forget the last time or don’t think it will happen to them)
- Rethink resiliency at lower cost
- “Never let a good crisis go to waste” –Winston Churchill