DPNC Global

Need for restructuring in Supply Chains due to Covid Effect

Covid has disrupted Global supply chains and prompted the need for restructuring supply chains. It caused Significant adverse effects on finance, lead time, customer production performance & Inventory.


Earlier, Countries which used to depend on other countries for their raw material and inputs realized how important is to manufacture regionally and develop regional supply chains or alternate supply chains, for example many countries used to depend upon China, now developing their supply chains regionally or from other countries like India. Businesses have also been facing threats of shutting down due to temporary lockdowns in countries where their key supply chain partners operate.


Production planning problems due to shortage of supply during a disruption period also led to product stock-out and short supply in the post-disruption period. Disruption recovery requires preparation of flexible recovery strategies that take different scenarios and challenges into consideration. This flexibility is necessary because the impacts of supply chain disruptions will vary.


Supply Chain techniques like Just in Time (JIT) has outlived its usefulness and contributed to the shortages experienced during the worst of Covid and also many industries are experiencing slow restart after covid.

The primary objectives of Companies post covid will be ‘safe business operations’, ‘uninterrupted business & manufacturing operations’ and ‘keeping logistics cost under control’.


Companies further should focus on following points to improve supply chains:

  • Planning: The businesses need to focus on procurement planning to keep manufacturing operations uninterrupted. Businesses need to plan in advance considering lead time and minimum stock levels to keep the supply chain moving.


  • Develop Alternate vendors: The businesses shall also continue to develop alternate vendors, so that in case of disruption in supply for one vendor could not interrupt manufacturing options.


  • Redefine safety stock level: The businesses shall analyse their safety stock considering lead time & criticality of material and revise them.


  • Reduce lead time: The businesses shall bring their back-end chains closer to them, geographically to reduce lead time and develop vendors regionally.


  • Logistics arrangement: The businesses shall effectively plan logistics arrangement for raw material and outward supply. Businesses shall develop relationship with logistics companies to provide logistics on time without raising cost.


  • Deploy Technology: Technology shall be deployed at each stage of supply chain for effective management like in planning of raw material.