The Covid-19 pandemic and the resulting shutdowns are testing every supply chain on earth.
Just three months ago, supply chains were still working as usual, with immediate and emerging problems either being solved, avoided or excised.
But then this once-in-a-generation event, cascaded across the world, and every supply chain is facing both common and unique challenges. How they handle each of those challenges will determine if they stand any chance of survival.
For me, the singular revelation from this pandemic is that our supply chains are too complicated, even when they don’t need to be. This is especially true for essentials such as food, water, medicine and medical equipment. An inefficient supply chain is just not a simple annoyance. It is expensive, stressful and at times dangerous, especially when its products are bare essentials.
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Even though the Digital Age was meant to simplify supply chains by making it easier to cut across unnecessary nodes, it did not happen. A small business, say a kiosk, still has multiple supply chains for the many wares it stocks. Nearly every product for sale has to be sourced and delivered through a different supply chain.
Each supply chain has its own realities and complexities meaning that if it is cooking oil you miss today, it might be salt tomorrow. While this was not a major problem in the pre-pandemic reality, because there was no common existential threat, competitors used the same models too. It has now become a primary weakness in responding to the global shutdown.
A simple rule of the thumb is that the more intermediaries there are in a supply chain, the easier it is to fail.
In the kiosk scenario, which also applies to many things we need right now, there are different supply chains for perishables, dry foods and other wares. This is also true for market scenarios, where the variety of things on offer have different supply chains, each complicated in its own way. While two people selling cabbages side by side, for example, might be offering the same vegetable, it is more likely they source from different suppliers.
There’s a logic to this, at least in a pre-pandemic reality. Differentiation of product and price depends heavily on what kind of a supply chain exists behind it. This means that sellers will seek lower prices for better products. But in a situation where nothing changes, it is possible that they end up within the same complicated supply chain, but see it from different sides.
What the pandemic has done to global supply chains is emblematic of the future. For decades, disruption to supply chains was used to describe what the mobile and digital age had done to traditional brick and mortar enterprises. In most pre-pandemic analysis, cutting out the middle man was as simple as connecting the producer to the seller, and the seller to the consumer, as directly as possible.
The truth is that technology didn’t get rid of unnecessary nodes in supply chains, and in some cases, only complicated it further.
It might even have made it easier for them to collude at a larger scale, making it harder, for example, to guess the price of tomatoes in the market today even if you bought them a day ago.
We have been living in a world where a car supplier is simpler to understand, and offers greater traceability, than the food we eat.
In the current semi-lockdown in Kenya, coupled with a halt on global travel, the value of efficient supply chains has never been clearer. At the beginning of this decade, we collectively thought that we would have time to rethink the supply chain model. But the pandemic makes it an emergency, rather than a long term plan.
This is not just about profit margins. At the basic level, it is about what happens when the guano hits the air cooler. How do you ensure product quality, reduce cost and meet deliveries when transport networks are shut down and players in the supply chain have closed shop?
One way is to reduce touch points as much as possible, identifying and removing all unnecessary ones so that it is easier, for example, for your drivers to be where they need to be long before curfew.
Another more critical one is to be proactive on public health measures within your supply chain, so that your driver does not end up at a police roadblock without proper documentation.
Adapting is not a choice anymore, though it was at the beginning. It is now a daily endeavour, and impossible to achieve if your supply chain is too complicated to change direction in good time.
Lesson learnt in this pandemic is that less is better. The more touch points you have in a supply chain, the easier it is to fail.
[Written by Mesh Alloys an entrepreneur and Founder of Sendy. [email protected]]