COVID-19 REPLENISHMENT PLANNING IMPACT & RESPONSE PLAN

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The COVID-19 virus has necessitated a lockdown for a minimum of 35 days in South Africa resulting in significant consequences for supply chains. Organisations will have to be nimble and smart to minimise the impact on business operations and to adapt to anticipated consumer demand changes.

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Demand patterns are expected to shift in the future with the already fast-growing e-commerce sector predicted to explode. Demand will also reduce on many products as disposable income declines and unemployment levels increase. Organisations must adjust their demand to streamline their operations inline with this new reality

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Supply plans, namely inbound raw materials, production plans and procurement of finished products will all need to be realigned to the adjusted demand plans. Numerous factors impacting supply due to the virus and corresponding risks will need to be considered to ensure continuity of supply.

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Changes to market dynamics
The new consumer market for our products needs to be understood.
Consumer demand changes
Product level customer demand must be re-analysed & forcasted. 
Changes to market dynamics
The new consumer market for our products needs to be understood.
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Changes to supply dynamics

Determine how suppliers have been impacted & can they deliver reliably.

Source country legislation

Has the supplier’s legislation changed affecting delivery reliability or cost.

Logistics and lead-time impact

Plans must accommodate changes to logistics and total lead-times

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1

Assess

Current operations need to be assessed and response plans need to be generated for all supply chains
2

Sense

Requisite adjustments to supply chain components and products need to be sensed to improve plans
3

Shape

Conduct analysis and scenario planning to determine how to shape demand and supply to minimise risks
4

Measure

Develop balanced scorecards to track performance and measure the effort from planning changes
5

Execute

Execute the plans and drive incremental improvements across all supply chains to drive sustainability
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Automotive Assembly Example

The Automotive manufacturing environment has the ‘’firm order period’’ as part of the monthly ‘’material supply schedules / releases’’ issued electronically by OEM’s on their tier-1 Suppliers. This is typically for a 3-month firm-period where the OEM needs to ‘’commit’’ to the call-off volumes and the Suppliers have to “accept” that they can deliver. The suppliers would already have procured the raw materials & sub-components, from their tier-2 Suppliers.

The anticipated significant ‘’market demand’’ changes will now require adjusted ‘’OEM Sales forecasts’’; which in turn will result in revised ‘’Production schedules’’. That notwithstanding, the OEM’s are ‘’locked’’ into the 3-month firm period of component call-off, which would have been issued prior to the COVID-19 lockdown. Thus, the OEM’s will still need to build those units (to stock holding) because they already have the raw materials & components, heading there way.

This may require Demand Shaping through various means, including and most specifically ‘’vehicle sales discounting practice’’ in order to minimise finished vehicle storage deterioration? This may then also necessitate additional undercover parking for the finished vehicles - another planning requirement and logistics consideration.

Needless to say “It is difficult to stop the ‘’sausage machine’’ – once it is fully loaded & running at TACT time!”

Jamie Wates
Jamie WatesGeneral Manager: Inventory Analyticsjwates@nebulagroup.co.za
082 781 0931

We care about your business, people and the environment. Let our experienced IA Practitioners empower your Supply Chain Planning team through collaboration to minimise risks and drive results through this major disruption. Please contact Jamie Wates to find out more.

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  • Nebula Inventory Analytics (Pty) Ltd

 

 

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