Manufacturers leverage supply chain practices developed in response to COVID-19 to prepare for Brexit

The COVID-19 pandemic has affected many people across the world, one particular way includes supply chains, some people found they couldn’t buy pasta or loo roll, and it was the same for manufacturers, who suddenly had to change their strategies to ensure their supply chain during the pandemic.

There have been many challenges in the past for the manufacturing supply chain, such as the 2001 recession, SARS, 2011 Tohoku earthquake, 2016 oil crisis, and Brexit. Although there have been other pandemics such as swine flu and Ebola, the COVID-19 pandemic was nothing the modern world had ever seen before.Caption: A timeline of challenges for the Manufacturer’s supply chain Credit: WMG, University of Warwick

A survey by researchers at WMG, University of Warwick saw 249 mid to large manufacturers from food and beverage to automotive, and pharmaceuticals to electronical equipment and more industries respond to the survey about their supply chain resilience in the current state and future potential.

They found several impacts from the COVID-19 pandemic, including:


· 58% of firms ae still experiences a decrease in demand 3 months post lockdown


· 66-73% of firms have been effective to responding to increases and decreases in demand


· Buffer management, multi-sourcing and visibility were favoured over agile production networks


· Cash management and securing supply were critical initial responses to the covid-19 crisis


· 84% of firms found their planning systems were effective, but still required human intervention


· The most apparent bottlenecks to their supply chain was people issues, such as warehouse staff being in quarantine at homeCaption: Manufacturer’s responses to the survey in ‘normal’ operations Credit: WMG, University of Warwick

The researchers then assessed manufacturers supply chain resilience in three different times, business as normal, during COVID-19 and preparation for Brexit. For each time period they identified how 6 supply chain resilience practices that could be used proactively (pre-disruption), reactively (during and post disruption) or both. These included:

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1. Supply chain planning – demand forecasting and contingency planning (Proactive)

2. Visibility – Having access to real time data (Proactive)

3. Collaboration – Working with SC partners to deliver customer value (Proactive & reactive)

4. Buffer management – Utilising inventory and production capacity to enable material flow (Proactive and reactive)

5. Flexibility – Establishing multiple sourcing options (Proactive and reactive)

6. Adaptability – Transforming the SC in responding to dynamic business environment (Reactive

Caption: Manufacturer’s responses to the survey during the Covid-19 pandemic Credit: WMG, University of Warwick

)

In normal operation firms found their practices to generally be effective. However, there was opportunity for improvements in visibility and collaboration to support improved supply chain planning. Firms also said they have been effective in managing buffers in normal operation.

During the Covid-19 pandemic firms utilised supply chain planning as a response to the pandemic with effective planning systems reported by 84% of manufacturers. However, this still required a high degree of human intervention. Buffer management and flexibility were found to be less effective than in normal operations. The survey found that 55% of manufacturers used inventory as their primary buffer against disruption, with only 32% utilising flexibility within the agile production systems of suppliers. Inventory buffers whilst effective if the disruption creates an upturn in demand, can be catastrophic to cash flow if demand drops.Caption: Manufacturer’s responses to the survey in preparation for Brexit Credit: WMG, University of Warwick

Similarly to COVID-19 when it comes to Brexit they’ve found that an increase in collaboration has led to improved supply chain visibility and planning. However, the uncertainty of Brexit is a cause for concern in terms of supply base flexibility with firms unsure of what type of response will be required.

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Professor Jan Godsell from WMG, University of Warwick comments:
“It’s interesting to see that the lessons manufactures’ have learnt in developing supply chain resilience practices in response to COVID-19 pandemic are helping manufacturers to prepare for Brexit. However, the uncertainty of Brexit, particularly in terms of the impact of flow of material is challenging for developing supply base flexibility. Whilst manufacturers can proactively prepare for Brexit, a high degree of adaptability will be required to buffer against the unknown.

“All manufacturers should consider assessing their current level of supply chain resilience to identify the areas in which their current supply chain resilience practices could be developed. Working collaboratively with supply chain partners to improve supply chain visibility and planning are the key building blocks. More effective use of inventory and capacity buffers, and flexibility within the supply base can further improve resilience. Some disruptions cannot be predicted, and supply chains need to the capability to adapt.”

ENDS

20 OCTOBER 2020

NOTES TO EDITORS

High-res images available at:

https://warwick.ac.uk/services/communications/medialibrary/images/october_2020/manufacturing_timeline.png
Caption: A timeline of challenges for the Manufacturer’s supply chain
Credit: WMG, University of Warwick

https://warwick.ac.uk/services/communications/medialibrary/images/october_2020/manufacturing_normal_jpeg.jpg
Caption: Manufacturer’s responses to the survey in ‘normal’ operations
Credit: WMG, University of Warwick

https://warwick.ac.uk/services/communications/medialibrary/images/october_2020/manufacturing_covid_.jpg
Caption: Manufacturer’s responses to the survey during the Covid-19 pandemic
Credit: WMG, University of Warwick

https://warwick.ac.uk/services/communications/medialibrary/images/october_2020/manufacturing_brexit_jpeg.png
Caption: Manufacturer’s responses to the survey in preparation for Brexit
Credit: WMG, University of Warwick

Full report available to view at: https://warwick.ac.uk/fac/sci/wmg/research/scip/networking/9sept/scip_nw_-_frances_and_liu.pdf

FOR FURTHER INFORMATION PLEASE CONTACT:
Alice Scott
Media Relations Manager – Science
University of Warwick
Tel: +44 (0) 7920 531 221
E-mail: alice.j.scott@warwick.ac.uk


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