On this closing of yet another week of a non-stop COVID-19 coronavirus news cycle, we wanted to provide our Supply Chain Matters readers with updated snippets related to our streaming industry supply chain focused commentaries, specifically to added learning.
Reinforcement of the Positive Contribution of Supply Chain Capability
Supply Chains do Matter in the ability of businesses to respond to market threats and opportunities. Prior investments in enhanced planning, visibility and response management capabilities matter as-well.
Last week, there was compelling evidence of such capabilities as global consumer product goods manufacturer Procter and Gamble reported the company’s recent fiscal third-quarter financial performance.
Results were headlined as impressive and included a reported 6 percent boost in organic sales, with record manufacturing volumes, specifically in the March period. As industry readers are well aware, a growth number in such times is indeed impressive.
P&G’s CFO indicated in the analyst briefing that the company’s largest North American plants shipped 22 percent more cases in March than the monthly average of the previous year. Supply chain organizations globally delivered similar records, with many facilities operating in 24-hour production where possible.
The company’s E-Commerce business reportedly grew 35 percent on a global basis.
As the disruptive situation in China became more visible, planning teams were expecting organic sales in that country to be down as much as 20 percent for February. According to the CFO, through incredible efforts, China sales turned out to be down just 8 percent in the region.
A company statement included in-part: “We are in an unprecedented time in the world, and P&G people are stepping up in unprecedented ways.”
A reporter for the Cincinnati Business Courier noted: “In seven years of covering P&G for the Business Courier, I’ve never seen numbers like these.”
The P&G global-based supply chain management community can take a bow for their extraordinary efforts over the past three months, under unprecedented challenges.
Kudos to P&G’s sales and operations and supply chain planning teams, along with manufacturing and logistics fulfillment.
Our community of supply chain management can rally of one or perhaps many case studies yet to come on how the supply chain rallied in agility and responsiveness to make a difference.
Healthcare Focused Supply Chains
Since our last editorial commentary reflecting on developments among Healthcare Focused Supply Chains, including personal protective equipment (PPE), global media outlets have reported multiple stories depicting what many have pinned as a “wild west and dysfunctional” saga of developments.
In the United States, lack of proper planning and emergency stockpiling of essential medical product needs has pit individual U.S. States and municipalities against the federal government. Action by the Trump Administration to reallocate needed PPE inventories among global sources has upset other foreign nations desperately needing such supplies. In early April, President Trump ordered restrictions on U.S. exports to other countries.
The Wall Street Journal reported that the U.S. government recently placed orders for more than $110 million worth of N95 protectives masks, with upwards of 80 percent placed with suppliers that either had never done business with the federal government or had previously taken on smaller supply contracts that did not include medical supplies. Most all of these orders involved premium pricing, reported as $6 per mask, which would have cost less than a dollar each during normal times.
Attempts to dramatically step-up patient testing of virus infection continued to be hindered by ongoing global and regional shortages of required reagents and testing kit supplies.
Individual states and municipalities, likewise being forced to procure needed PPE supplies for local needs, were faced with the reality of attempting to do business with suppliers or middlemen never dealt with before, with questionable history, and with demands for up-front cash payments without the ability to inspect inventory for proper specification.
Likewise, across Europe, incidents of criminals exploiting market shortages for profits, orders being suddenly cancelled, and inventories being reallocated to another buyer willing to pay a higher price, along with alleged fake companies and websites are constantly reported. The Irish Times reported in late March that part of a humanitarian shipment of PPE equipment sent from the government of China to the government of Italy at the height of the virus outbreak, were later located in a Czech Republic warehouse held by speculators attempting to sell the inventory to Britain’s National Health Services.
Governments are being forced to ship needed PPE supplies in special private or military aircraft out of fear that inventory in warehouses or shipping docks will be stolen or sold to other governments. Agencies relying on global transportation and air freight providers have now discovered that China has begun limiting air freight carriers and international airlines to restricted daily flights. Some air freight rates out of China have reportedly quadrupled from that in January,
Questions of performed due diligence abound, yet in the current extreme condition of global demand far outpacing available supply, primal instincts of a market opportunists abound, including criminal behavior, fraud and theft and other elements.
During normal times, strategic sourcing and procurement processes include supplier intelligence due diligence and supply chain risk assessment as a fundamental requirement. Today’s advanced Cloud and data management technologies can search multitudes of global wide supplier data sources to profile specific supplier capabilities. State, local and government procurement teams often lack such technology investment. This virus has presented extraordinary challenges to processes not designed for such procurement practices. Even businesses that have such capabilities are likely finding that the fast-moving dynamics of this market are such that availability of the most up to date data and insights is challenging.
Thank goodness for the many local manufacturers, businesses and services companies that have marshalled their resources, facilities and digital based innovation efforts to produce some of the needed PPE inventory needs in local manufacturing facilities, 3-D printing labs, sporting goods and apparel shops.
The ever-building reality are the stark realizations that healthcare supply chains have developed far too much over-dependence on global-based sourcing, and that medical emergencies, either local or global in perspective, require core domestic supply chain capabilities. That is sure to be the learning.
Online Grocery and Food Delivery Supply Chains
Last week we featured our industry specific commentary: COVID-19 Response- An Opportunity Lost for Many Online Grocery and Food Delivery Providers.
Our editorial commentary addressed how across the United States, European countries and Great Britain, the COVID-19 coronavirus shelter in residence mandates has caused many at-risk considered consumers to seek out the services of online grocery and food delivery services providers. However, most all of these provider’s online systems and fulfillment resources appear overwhelmed leaving a lot of disappointment and frustration. An opportunity to shine and establish a new loyal following of shoppers has been temporarily lost and the residual memories could hamper future growth prospects for many months to come.
Part of the challenge related to the sheer numbers of added people required to either shop for consumers, pick and pack online orders or deliver goods to store parking areas or individual residences.
We opined that another underlying problem was the ongoing replenishment breakdowns still occurring among select food supply chains. Consumer based panic buying literally drained replenishment networks. Many nationwide as well as local grocery and food retailers continue to experience empty shelves and limited inventories weeks into sheltering mandates. Even mighty Amazon has succumbed to frequent out-of-stock conditions for basic goods.
The latest developments are additional announcements from Amazon, Walmart, Instacart, among others, to recruit even more front-line fulfillment people.
After reaching the goal of hiring 150,000 additional people six weeks ahead of originally stated goal, Walmart announced late last week plans to hire an added 50,000 workers in order to keep-up with the sustained online demand for grocery and other items.
In March, Amazon announced intent to hire an additional 100,000 full and part-time workers to meet surging needs in online fulfillment including its Amazon Fresh unit. Last week, the online retailer similarly indicated that not only was the initial hiring goal achieved, an additional 75,000 workers will be recruited.
Not to be undone, Instacart upped the ante in announcing intent to hire an additional 250,000 workers over the next two months after hiring 350,000 in March. The added hiring is specifically directed at six regions experiencing the highest demand for grocery delivery services.
At a time of exploding unemployment levels across the United States and other countries because of COVID-19’s economic impacts, online providers should be applauded for incrementally hiring in excess of one million additional workers to respond to an explosion in online buying.
Not to be the grinch, but this strategy of adding all of these additional workers into the challenge has to also include efforts among food-based supply chains to be able to move needed products to retail channels. With increasing reports of troubling virus outbreaks among meatpacking and consumer products production facilities, and with global suppliers and farmers struggling with impaired supplier, logistics and transport networks, the challenge requires a holistic set of strategies. Reports of farmers having to discard crops and dairy supplies because of a lack of labor, logistics and transportation coordination are the signs of fundamental needs requiring nationwide actions and response.
The obvious first step is added testing for the virus, continued diligence in monitoring outbreak levels, and addressing and responding the underling core challenges of moving essential food products to retail channels.
The post COVID-19 compilation of supply chain planning, process and customer fulfillment capabilities will take added time to resolve and address. Learning will continue as to what was effective and what was not.
In the meantime, indeed, let us continue allocate people toward opportunities to make a difference to address systemic supply chain fulfillment needs.
© Copyright 2020, The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.