This is article was written by Rocket Industrial's Director of Operations and Supply Chain, Brian McLaughlin.
COVID-19 has obviously made a global impact, affecting everyone and everything - including the global supply chain. Unfortunately, Europe and America underestimated the early spreading of the virus, and, as a result, supply chains were overwhelmed by the initial demand for health and wellness related products. As the crisis continues, the panic buying has subsided, and we now find ourselves in a tenuous position as the supply side continues to ramp up and the demand side is watching nervously to see what happens next.
What have we learned through this process and what paradigms have been challenged by the COVID-19 crisis? Four main lessons come to mind:
What happens in Asia stays in Asia.
1. The first lesson we learned is we’re all part of the same community around the globe. As events unfold in Asia, or anywhere in the world, related to viral/bacterial issues, we will be watching with much more scrutiny and interest. Signs of an illness spreading will lead to quicker responses in supply chains.
2. This leads to the second lesson. Dependence on foreign supply has always been a gamble but was easily justified by the low-cost of the items they supplied. Some companies will still choose that path, but companies that want to be proactive and armor themselves against the next pandemic will need to diversify and have legitimate and significant secondary sources readily available.
3. The third lesson is the vulnerability of the Just In Time (JIT) mentality. The Toyota way is still a staple of any relevant and modern supply chain. No doubt, some companies will continue to reduce their working capital to the bare bones in order to save some cash in the process – but as we saw with COVID-19, these events escalate faster than any supply chain can react. In order to better handle a future event, larger amounts of safety stock inventory will need to be kept on the floor, to provide that first line of defense. The extra inventory will provide a little extra time to react appropriately for the long term.
4. Systems need to be updated. Systems that dynamically detect and react to spikes in demand are a requirement. Demand ramped up so quickly that it was nearly impossible to throttle back the large volume of orders being placed. This allowed a minority of the customers to gobble up a majority of the inventory. By the time supply chains understood what was happening and put constraints in place, the inventory was gone.
Systems need to control the allocation process. Once the COVID-19 situation became clear, the allocation was controlled manually which was not as effective and placed an enormous amount of strain on customer service who had to police the orders.
The obvious next question is, knowing what we have learned, what has Rocket done, and what will Rocket do in the future to make sure that we’re the most prepared and dependable distributor/partner on the planet? Rocket is committed to making significant changes – both in how we source products and how we operate within our facilities.
For customers who are willing to pay more and reduce their risk to long supply chain interruptions, Rocket will be working with them to source North American PPE supplies for the critical items they need. These will be specific categories such as gloves, masks, gowns/lab coats, plus any other items that are critical to their operation. This will help Rocket diversify its sourcing and better protect our supply lines in the future.
• Rocket will willingly hold more safety stock on critical items which will help stave off stock-outs and provide more time to react to a fluid situation. Time is critical, especially in the early onset of an event, and this will provide Rocket and its customers an added layer of security knowing they can continue to run, uninterrupted, for a significant period of time.
• Rocket will react sooner to possible global impacts, and reasonably ramp up inventory in light of new developments overseas.
• Rocket has already made several adjustments to make our operations more resilient and dependable during a pandemic situation.
• Employees are asked to take their temperature before coming into work
• Any signs of symptoms and employees are asked to stay home until symptom-free for 3 days
• All Rocket personnel honor the 6-foot social distancing rule
• When within 6 feet, masks are worn
• All fork trucks have Clorox wipes that are used to keep the touchpoints clean
• Touchscreens are wiped down when done for the day (tablets are not shared)
• Handheld scanners are wiped down after use
• Staggered lunches so social distancing can be practiced in the break room
• Follow social distancing when possible
• Visitors are required to wear masks
• Rocket is adding functionality that will look at each order line and immediately flag outliers. This will force manual intervention to look at and approve unusual/large orders.
• Rocket is adding functionality to its ERP to monitor and control allocations to historical levels.
COVID-19 has exacted a terrible toll in both lives and dollars around the world. As a global community, we have all paid a steep price for the insights we have gained and at Rocket we’re determined not to forget, dismiss, or ignore them. Bolstered by improved sourcing, operations, and systems, Rocket’s supply chain is now more formidable, resilient, and dependable than ever.