distribution warehouse with trucks awaiting loading.

The COVID-19 pandemic has and will continue to change the way society interacts.  From the ways we hold staff meetings to ordering groceries and completing everyday tasks, jobs and activities, everything will look at least slightly different for the foreseeable future.

This will then become the “new normal”, particularly as it relates to purchasing and consumer behavior. Consumer demand has drastically changed because of isolation and social distancing brought on by the coronavirus and it will result in growth for some categories with a decline in others.

We’ve already seen consumer demand shift dramatically for products that were once plentiful and readily available. Puzzles, for example, are now in high demand as a time-consuming, but homebound, acceptable activities, as are DIY house projects and home exercise equipment across the country. Home cooking, crafts and DIY are other examples of growing trends. The increase in demand for the engineered parts and assemblies that support these industries will put a strain on supply chains which are now being depleted at an exponential rate.

The Beginners Guide to Outsource Manufacturing

In March and April consumers began hoarding toilet tissue, paper towels and disinfecting products. Store shelves were barren and even toward the end of April cleaners, disinfectants and hand sanitizers were nowhere to be found. As states modify and implement stay at home and public distancing policies facemasks which fall under the Personal Protection Equipment acronym PPE including isolation gowns are scarce with hospitals and the entire healthcare industry scrambling to find any they could acquire.

Moving forward, businesses will have to radically adjust forecasts to factor in new safety stocks when considering the “New Normal” of both professional and consumer requirements. This will lead to new shifts in product development lead times while critical inventories are replenished.

Supply chain planners will have to identify inefficiencies and extra cost found in excessive inventory. Purchasing departments may not have the luxury of maintaining high inventory levels as cash flow projections become built into every strategy. Companies sourcing from Asia, however, may not be able to implement JIT (just in time) programs due to high minimum order requirements (MOQ).  It’s important to re-visit inventory planning during a crisis. Preparations to build supplies for a potential post rebound will require keen analysis.

With an increasing number of countries forcing quarantine, the entire transportation model is at risk. More importantly, adjusting to the “New Normal” of consumer demand will force the hand of many companies to re-evaluate lead times particularly when sourcing from China. The need for more agile supply chains and a potential backlash in sentiment for China will force decision-makers to consider sourcing in SE Asia as well as re-shoring what makes sense.

An effective supply chain anticipates changes in customer demands by studying the market landscape, demand planning, communicating with customers and implementing swift action to support manufacturing.

In the future, companies will be forced to quickly shift to new supply chain planning in order to better weather any unforeseen black-swan events that could otherwise leave their supply chains in shambles.

Resources:

distribution warehouse with trucks awaiting loading.
Container ship and transport aircraft in export and import business and logistics. Shipping cargo to harbor by crane. Water transport International. Aerial view and top view.

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