What the pandemic taught business about supply chain resilience

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.