What the pandemic taught business about supply chain resilience
The world of procurement was turned upside down by supply shocks in 2020, but lessons learnt from the pandemic could improve supply chains in the long run
Many aftershocks of the coronavirus pandemic are starting to ease, but the impact on procurement and supply chains, which keep the planet running, remains significant and will be felt long into the future. But not all consequences of COVID-19 have been negative and some are transforming supply chains for the better.
Faced with severe supply disruptions, closed borders and panic buying stoked by fear of the unknown, supply chains have been stretched to near-breaking point. Quick thinking was necessary to keep the world stocked with everything from personal protective equipment (PPE) to toilet paper.
Internet content delivery network providers such as Akamai battled to build new servers to meet spikes in data demand as we worked from home, but the parts required to build servers couldn’t be shipped around the world.
Rewriting of rules caused by COVID were not just short-term fixes. Some of the emergency measures put in place by the world’s biggest companies to tackle this once-in-a-generation supply chain disruption actually improved efficiency. Here’s how some firms adapted.
Lessons learned for supply chains
“Overall, the supply chain has worked for years,” says Kevin Sample of GHX Europe, which works with the NHS to build its supply chain of vital medical equipment. “Has it been the most efficient? I’d say no. But I think we’ve never really seen the impact those efficiencies could have on patient care until the pandemic came about and those impacts were felt across the board.”
The supply chain for the NHS, pre-pandemic, was a variable beast. While there was a central purchasing hub and logistics solution for many goods in the NHS – in England, NHS Supply Chain, and in Scotland, the National Distribution Centre – NHS bodies have never been compelled to use the hub as their sole source. “Some bigger organisations have always been able to source goods better than NHS Supply Chain have been able to on some occasions and they negotiate their own contracts,” says Sample.
Likewise, the level of tech sophistication in the supply chain has been vastly different depending on the sector of the health service. Some bodies had robust technological trackers to forecast and manage demand, and to handle expiry of equipment, while Sample concedes “other people are doing it on the back of a fag packet”.
The pandemic’s impact on medical procurement
But when the virus hit, things needed to change. The NHS Supply Chain was “pretty much on its knees at the beginning of the pandemic”, says Sample. “They really struggled.” The media reports about PPE shortages were abundant in the early days of the pandemic, showing the signs of trouble.
But then they mounted a comeback, scrapping old rules and ways of working and introducing new ones. The Department of Health and Social Care implemented a push model, centrally sourcing goods and providing them based on the idea of demand or communication from trusts.
The NHS also introduced two new portals for requesting goods in the supply chain: one for PPE and one for intensive care unit equipment, both of which were stretched during the pandemic. “The fact it wasn’t as robustly data driven as it could have been before is a flaw,” says Sample. “What has been highlighted is there is an appetite for something a little more sophisticated in demand management. I think the realisation of the power of data has come to the fore.”
Smaller changes also have been implemented in response to the initial hurdles the NHS Supply Chain stumbled over in the early days of the pandemic. When medical staff needed to order new items, they couldn’t easily search for them in global or national catalogues. Now the NHS is aware of the need to link up databases and track items, offering alternatives where needed.
Flexibility in the supply chain is key
Alternatives were crucial in other areas too. “We were hit with several challenges due to border closures,” says Marco Querzoli, vice president of product supply in Europe, Middle East and Africa at Kimberly-Clark. That required the manufacturer of sanitary and cleaning products and medical instruments to throw out the rule book built up over decades and move to a much nimbler supply chain. “We embedded flexibility in a way we didn’t know we could until it was called upon,” he says.
Traditionally, Kimberly-Clark would spend months considering any shift to the type of products it offered or the way it routed its supply chain worldwide. Factories in certain countries would only produce products for that market and no others, though this had changed in recent years in Europe due to geopolitical issues, including disputes between Ukraine and Russia, Turkey and the world, and the looming shadow of Brexit. Five or six-ply toilet tissue would only be made in German factories because UK consumers wouldn’t want it.
That’s now changed. “It’s about embedding flexibility in your asset so if you have a problem and I have to respond to a panic in one place, I can expand capacity in another place,” says Querzoli.
And it happened without the layers of bureaucracy and approval previously required because there simply wasn’t time. The company cut, in some cases, 80 per cent of its product lines to focus on keeping supply going. “The debate internally that might have previously taken quite a long time was done very easily,” he says.
It’s a move Kimberly-Clark is making permanent as they’re simplifying connections between suppliers, planners and manufacturing teams, and standardising platforms. Reworking the supply chain seems difficult, until you’re forced to do it. “We’ve learnt there is much more potential inside the supply chain we can gain, if we start to think from a different point of view,” Querzoli concludes.