Category Management – COVID is Now Normal for Supply Chains

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I know, I know.  We’re all tired of COVID but it’s safe to say that we will have to live with the impact of COVID on our supply chains for a very long time.  And prudent Supply Chain/Sourcing professionals are quickly realizing that these changes are going to be much more lasting and have started adjusting their strategies accordingly.  I was recently talking to a Director from a prospect (Hi K.S.) who admitted that because they had the least amount of disruption in their supply chain, they gained a competitive advantage and market share during the last 18 months.  We held a Chief Procurement/Supply Chain Officers meeting in April of 2020 and here are some of the slides from then:

This a real oldie but goodie slide and it keeps on staying relevant.  What we said in 2020 and way back is still true.  Many challenges that we try to manage risk around are Predictable and Inevitable.  The impact of Hurricane Ida was terrible and totally Predictable.  However, the loss of life along the gulf shore was remarkable because this time they had built a robust levee system around NOLA and it held.  We had finally learned that hurricanes were going to keep coming and they were going to continue to be more intense.  Watch for a similar response along the East Coast soon.

Another slide from the summit was this one:

Unfortunately, what we said in this slide has also held true mostly.  Let’s look at each  quadrant.  The entire top left has come to pass.  While our anxiety level may have come down momentarily, with the current surge, we’re right back in it?  What is also remarkable is the increasing collaboration between organizations, their suppliers and their customers.  We keep hearing of many initiatives including all three and hope to have a success story to write about in the near future.  Bottom left is the same.

I think you would agree that the top right has also held true.  Remote work is now routine.  Telehealth has gained a strong foothold – even with consumers.  Quick call to check in, get medicines updated and no waiting in the doctor’s office surrounded by sick people and hoping you can make it out of there in less than an hour (good luck.

Almost the entire bottom right is also still relevant.  Health care capacity was not and is not close to meeting surge demand.  WE HAVE ALREADY RUN OUT OF HEALTHCARE CAPACITY!!  And if that’s true in the US, imagine what it looks like across the world.  It’s a classic supply chain problem of surge capacity?  Wedding venues are now booked through 2023 which is nothing but the pent-up demand.  Weddings booked a few months ago are now being cancelled and will continue to do so putting even more pressure.  The price of chicken wings at a reception was $6 PER WING!  That probably has more to do with a shortage of chicken wings (is the world even worth living in if you can’t have wings???) and you’ll be hearing more about that soon from us.  We refuse to stay quiet on this issue.

Here’s another interesting slide:

And this we can personally attest is true.  We have had to incorporate a number of these for every single client since and even prospects like the one I mentioned above who have already started looking at their supply chain and Value Drivers differently.  The collaborative behavior I was talking about above is where our client is collaborating with their customer and their suppliers to move production out of China because geographical dispersion has become a key risk mitigation strategy for them.  Having multiple suppliers who are geographically concentrated is no longer a viable strategy even though it may be the lowest TCO.  And by the way, that is exacerbated when you start to factor in climate change.

While we take no pleasure in claiming how right we were in April 2021, we do want to emphasize that those that are moving faster than others are creating true competitive advantage for their company through their Supply Chain/Sourcing function and are being recognized by it – and about frigging time too (pardon my Hindi) 😊

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Dalip Raheja is President and CEO of The Mpower Group (TMG). Dalip has over 30 years of experience managing large organizations and change initiatives. He has worked across the spectrums of supply chain management, strategic sourcing, and management consulting.
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