Coronavirus and the end of the global supply chain

Coronavirus and the end of global supply chains
Coffee illustrates how complex supply chains have become ©MAURO PIMENTEL/AFP/Getty Images

Posted by Paul Simpson

Coronavirus has shown how fragile our cost-driven, just-in-time processes really are. With practitioners adapting to survive while planning more resilient systems for the future, will procurement ever be the same?

When the first container ship arriving from China at the port of Vancouver was cancelled in January this year, it didn’t seem particularly significant. By mid-March, when China’s struggle with Covid-19, aka coronavirus, had become so all-consuming that 30 more journeys had been cancelled, Vancouver’s port officials were facing a crisis of historic magnitude.

That consumer goods weren’t being unloaded from China as per the schedule was less of a concern than the fact that Canada, which usually filled those containers with lentils and peas, had two months’ worth of crops stuck in port (historically, roughly a third of Canada’s crops have been exported in containers). Imports were also disrupted: one local food company had to pay a premium for spices from Thailand which arrived a month behind schedule. Brazil’s coffee makers suffered too as the missing containers made it hard for them to ship their products to China.

The problems of countries and companies along just one shipping route indicate why some economists, notably Simon MacAdam at consultancy Capital Economics, are predicting a 20% dip in trade volumes this year. That is significantly worse than the last recession in 2009, when volumes fell by 13%.

The bottlenecks in Vancouver did not grab headlines in the same way as various countries’ difficulties in speeding up production of ventilator kits. But as Professor Tim Benton, research director of the Chatham House think tank’s energy, environment and resources programme, says, they remind us: “We have created a global supply chain that, for all its financial efficiencies, has very little resilience.”

Coffee is a case in point. One industry estimate, cited by The Economist, suggests that 29 companies across 18 countries need to collaborate to make “one humble cup”. That may, Benton observes, work financially for the companies concerned – and for consumers who can buy their favourite brand at a lower cost – but it cannot, in any true sense of the word, be described as efficient. A hurricane, strike or outbreak of coronavirus at any of those 29 companies could severely disrupt the supply chain, and the spread of the virus into Latin America has already led to huge spikes in commodity prices as buyers anticipate lockdowns and shuttered businesses. And that’s without the kind of surge in consumer demand that led to a rise of more than 20% in British supermarket sales during March 2020.

 

p18 Corona Virus map page

All those photographs of empty shelves, explicitly condemning shoppers for panic buying and hoarding, obscure the fact, Benton says, that governments are hoarding too. “Kazakhstan banned exports of wheat flour, Thailand has stopped exporting eggs, Vietnam has suspended rice exports and Russia is talking about limiting grain exports to protect supplies,” he says. “It’s not clear how many more governments will follow suit, but if they keep putting their nation first, the
situation can only get worse.” Protectionist policies, coupled with panic buying, could create a self-perpetuating cycle of rising food prices.

What many analysts referred to as the “hidden costs of globalisation” were becoming visible even before the pandemic struck. “There was a clear sense that we had reached peak globalisation,” says Andrew Missingham, the co-founder of creative management consultancy B+A. “The political shocks of 2016, protectionist trade policies and climate change were already asking fundamental questions about that model.” Some of the foundations which businesses took for granted no longer exist in a pandemic age. “If you look at a business like ours, for example, it was predicated on three factors – the internet, cheap flights and free movement of people – and two of those no longer apply,” says Missingham.

Since the last global economic crisis in 2007-2008, many parts of the procurement profession have performed Herculean labours, protecting profits, companies and jobs by cutting billions of dollars in cost from the world’s supply chains. They did that, primarily, by seeking out places where they could make things at the lowest cost – often in China – and minimising inventory by applying lean manufacturing or ‘just-in-time’ principles.

The result is a global supply chain that is interconnected, intricate and sometimes unfathomable. As Duncan Brock, group director, CIPS, says: “The interwoven nature of modern supply chains means it is almost impossible to say for certain just how reliant we are on China for manufacturing and assembly.” Companies that placed such trust in Chinese suppliers that they used single-sourcing now face severe disruption.

Diverse sourcing strategies

“One key lesson from the pandemic is the importance of spreading the risk,” says Tim Lawrence, supply chain expert at PA Consulting. “Companies should avoid clustering suppliers in one region and around similar supply chains, reconsider whether it makes sense to create isolated supply chains and understand the location risks in every tier of the supply chain. Your supply chain may not be as diverse as you like to think – for example, your alternative suppliers may themselves be reliant on tier 3 or tier 4 suppliers in the same region.”

The obvious, if laborious, way to avoid such problems is to map your supply chain. “It isn’t easy,” admits Lawrence.

“It took Airbus five years to do it with the A320 passenger aircraft. And supply chains change so fast that the map might be out of date on the day you complete it, but digital technologies – especially 5G, data analytics and artificial intelligence – are proving increasingly helpful. They can improve visibility and connectivity, generate early warnings, and help free up supply chain leaders to focus on the strategic issues.”

Strategic questions would include assessing when it makes sense to keep the supply chain within the business. “There are certain components that are so critical to the business that the most secure supply chain might be to vertically integrate them,” says Lawrence.

As global supply chains hit bottlenecks many neither envisaged or expected, Missingham predicts: “We will see a lot more decentralisation, regionalisation and localisation.” Some pundits have talked of a ‘great reset’, where reshoring becomes the new norm. In an increasingly automated workplace, labour costs are no longer as critical when locating factories. Last year, multinational toolmaker Stanley Black & Decker shifted production of its Craftsman tools from China to Fort Worth, Texas, without increasing costs.

Brock expects new sourcing strategies to emerge but warns that any ‘reset’ will take time: “This may be the last straw for global sourcing as supply chain managers look local but, to put this in context, 290 of Apple’s 800 suppliers are based in China so such a strategy would take years to implement.”

Diversifying a supplier base is not always straightforward. Companies may be required, Brock says, to form alliances within their sector to develop new sources of supply where choice is limited or existing suppliers are clustered in the same region. Unilever has opted to protect the suppliers it already has, announcing a £420m cashflow relief scheme to expedite payments to SMEs in its network and offering credit to small retailers.

Learning just in time

Just-in-time manufacturing – reducing inventories to 15-30 days of stock or even less – has been a multi-billion-dollar boon for the global economy. Lawrence does not foresee a wholesale rejection of just-in-time or lean, but a reappraisal based on a more realistic assessment of the potential cost to the business: “There will be certain components and materials where you decide that it is more efficient, in the broad sense, to have six to eight weeks’ stock than three or four.”

Popularised by Robert Hall in his 1987 book Zero Inventories, the just-in-time philosophy always sat uncomfortably alongside procurement’s cautious ‘just in case’ approach to buying inventory. Dazzled by the savings, many companies ignored the fact just-in-time made it much harder for procurement to understand how extensive, responsive and opaque supply chains really were. This truth came home in February when a South Carolina hospital ran out of surgical gowns. Its traditional supplier in China had contamination concerns over its stock – not related to coronavirus – but when managers tried to buy replacements, with the pandemic escalating, they struggled.

But in the middle of a crisis this severe, there is also a temptation to overestimate how profoundly our behaviour as individuals, companies and organisations will change. The 2007-2008 depression signalled, as so many people forecast at the time, the end of the road for a certain type of free market capitalism. It seemed a reasonable proposition at the time but it didn’t work out that way. The idea of getting back to ‘business as usual’ can induce a certain complacency.

In this crisis, many managers – not just in procurement – will argue that nobody could have seen this coming. That is true, up to a point. Nobody could have predicted how quickly and radically Covid-19 would change the way we live and work. Yet, for those companies which were paying attention, the signs were there to be interpreted.

The US grocery chain H-E-B began monitoring what was happening in China in the second week of January. After two weeks of analysing various sourcing reports and maintaining close, constant contact with companies in China, the retailer redrafted the disaster plans it had used for the swine flu outbreak in 2009 and Hurricane Harvey in 2017 to confront coronavirus.

As Craig Boyan, H-E-B’s president, told Texas Monthly: “Chinese retailers sent some pretty thorough information about the early days of the outbreak, how that affected grocery retail, how employees were addressing sanitisation and social distancing, how quarantine affected the supply chain, how shopping behaviour changed and what steps they wished they’d taken to get ahead earlier in the cycle.”

Using that information, H-E-B promptly took various steps: forming a remote working committee to coordinate policy and actions, reducing opening hours to give more time to put product on shelves, rationing certain product purchases and paying local beer distributors to bring eggs to its stores. Even so, Boyan admits, they did not resolve every challenge: “We’re still struggling to get eggs and we still have a hard time understanding why toilet rolls were the first things to go out of stock.”

Planning to fail

If the coronavirus is a black swan event, there is an obvious temptation to plan on the basis that it will never happen again – or at least not in our working lives. The call of the next quarter’s targets can often sound more compelling, but Lawrence says supply chain leaders need to change their mindset. “It is easy to focus on the small things that happen often, or may come up in the next three to six months, and plan scenarios for those, but to be honest you could delegate that task to the technology. As this pandemic shows, it would pay companies to look at the really big things that don’t happen very often and run scenarios for those.”

Understanding risk is partly about what supply chain leaders know but also, Missingham says, about what they do with what they know: “People working in supply chains are, in my experience, real experts in the people, challenges and opportunities they face – be that individual components or particular raw materials. The problem is that that knowledge is too narrowly held within organisations. In future, one of the important jobs for supply chain specialists will be to educate a broader part of the business.”

Covid-19 has shed an unforgiving light on every flaw in the world’s supply chain. The pandemic has shut factories, stalled shipments, fuelled labour shortages, closed borders and will, the United Nations estimates, cost the global economy at least $1trn. “In times of crisis and uncertainty, it is hard for businesses to plan but supply chain managers who act now and keep a close eye on such data as the purchasing managers indices as they make plans can mitigate the damage,” says Brock.

Yet in future, when supply chain leaders have the breathing space to think, let alone plan, for the long term, they might conclude that prevention is the best form of mitigation. Companies which neglect the opportunity to fundamentally rethink their supply chains do so at their own peril.

That is especially true, Benton argues, when it comes to defining a more sustainable, healthy and environmentally friendly food production system.

As he says: “The question is not ‘will it happen?’ The question is ‘when will it happen?’ We could have started to create a sustainable, equitable and nutritious food system in 2003, after the outbreak of SARS. It could happen now or it could happen in 10 years’ time when the next crisis occurs, but for the sake of our health, and the health of our planet, it cannot not happen.” What goes for the food industry, you suspect, goes for the other sectors of the global economy.

Article originally published on https://www.cips.org/supply-management/analysis/2020/april/the-end-of-the-global-supply-chain/

Supply chains have been changed, possibly forever

1 - SupplyChain-01

The competition is no longer between brands or even between companies; it is between supply chains (networks). Supply chains in the time of coronavirus have changed, possibly forever. MARZIA STORPIOLI reports.

Supply chain management has been likened to a philosophy, a concept rather than an essential service.

Historically, companies relied on strong brands and good products to win over the consumer. Competitive advantage was gained by the organisation based on the strength of its brands and its reputation for quality products.

But as the COVID-19 pandemic continues its inexorable march across the globe, supply chain management is no longer being considered merely a concept, but rather a life-saving essential service used for the cohesion of all supply chains so that they may work in concert with one another in order to satiate the needs and wants of people and businesses at all times, including times of crises.

It’s useful to remember wars have been won and lost by the implementation and control of either effective and efficient supply chain management, or the lack of using it to its full potential, as was experienced during the Napoleonic Wars and World War ll. There is little doubt that the post-COVID-19 world will be decidedly different to life as we knew it prior to this scourge befalling us.

There’s no doubt most nations were caught unprepared by its rapid advance. In South Africa, consumers – like those across the globe – adapted their buying behaviour to “cope with this rapidly evolving situation”, as Nielsen researchers put it.

Retail outlets – supermarkets, pharmacies and wholesalers – were unable to satisfy consumer demand for sanitiser products, demonstrating the inability of supply chains within South Africa, and globally, to respond to a meteoric increase in demand for hand washes and sanitiser products, household and industrial bleaches and surface cleaning solutions driven by the global crisis.

Just-in-time (JIT) and lean manufacturing, once seen as the pinnacle of achievement in supply chain performance, may no longer be effective. They were implemented across most global supply chains in the face of mounting pressure to reduce supply chain costs – the aim being to continually strive for increasing levels of efficiency while reducing costs overall.

Efficient, but not robust

These supply chains are operating on razor-thin margins, so much so that they are no longer robust and unable to respond to ‘shocks’ in the system, and have limited capacity to respond to disruption in their supply chains. They are efficient, but they are not robust.

If the disruption continues, eventually these supply chains will stall – manufacturing will stop due to a lack of raw materials or spare parts.

Today, companies that achieve a sustained competitive advantage (Zara, 3M and Dell) are those who have invested significantly in developing responsive logistics capabilities. They are demand-driven and designed from the customer backwards (rather than from operational capability forward – forecast driven). Their supply chains are agile and responsive to changes in consumer behaviour.

Talking of consumer behaviour, self-preservation reigned ahead of South Africa’s national lockdown as the ‘haves’ stockpiled goods at the expense of the poor, the needy, the aged and the sick.

Imagine if the world did not have an effective and efficiently run supply chain to constantly channel food, fuel and other essentials to replace those that have been exhausted because of this ‘feeding frenzy’. There would be further chaos, indescribable misery, an uncontrolled mortality rate and above all, a world economic recession that would surpass the 1929 financial crash!

With the pandemic spreading to South Africa a few months after the initial outbreak in China, Nielsen was able to research global markets, delivering insights into how retailers are dealing with challenges brought about by coronavirus.

Turning a crisis into an opportunity

The research shows that retailers are facing three primary challenges: insufficient inventory of some categories, difficulty in logistics and distribution, and inadequate staff to deliver orders.

Those able to organise resources and respond actively to the epidemic and launch measures to “help turn crisis into opportunity” will thrive. These, Nielsen reported, included “flexible co-ordination of participants in the supply chain, ensuring the efficiency of product supply, showing care and concern for employees, rationally deploying staff, adjusting the store’s operating hours, expanding businesses through online channels and in community and strengthening corporate brand marketing to enhance consumers’ trust and creating a favourable impression”.

Nielsen has identified six key consumer behaviour threshold levels that tie directly to “concerns around the novel coronavirus outbreak. These thresholds offer signals of spending patterns, particularly for emergency pantry items and health supplies with these patterns being mirrored across multiple markets”.

SupplyChain 2

As African countries such as South Africa and Kenya announced their country-specific responses to the outbreak, Nielsen found that global consumers were adapting their purchase behaviour to cope with the rapidly evolving situation.

“As patterns begin to emerge in response to news events of this nature, it will be imperative for companies to learn from these scenarios so they can sustain growth even in times where COVID-19 is deeply impacting people’s lives. These patterns will help provide leading and trailing indicators to those trying to understand how people will respond as developments continue to play out at different times in different countries,” said Scott McKenzie, Nielsen’s global intelligence leader, adding that this would be critical to understand as stores worked to maintain supply levels of in-demand items.

South Africans entered threshold #5 ‘Restricted Living’ on Friday 27 March 2020. Consumer behaviour at this stage was characterised by severely restricted shopping and constraints due to supply shortages, delivery fulfilment challenges and caps on product quantities, Nielsen reported.

SupplyChain 3

The lessons learned

Of the retailers surveyed by Nielsen on their attitudes towards business for the rest of the year, 67% said they would make efforts to expand online channels and accelerate home-based business / retail warehouse layout.

“Fifty-three [percent] said they would change their product mix according to the shopping habits of consumers and increase the inventory and on-shelf number of health, disinfectant and protection products,” Nielsen reported. “Forty-three percent of the retailers say that they would work on their supply chains, especially those for fresh food, strengthen the ties with various brands and enhance communication efficiency.”

Don’t be distracted by the ‘shiny new objects’ arising from the advance of technology

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The ‘father of open innovation’, Henry Chesbrough, has just published a follow-up to his ground-breaking first book. He believes business must extend beyond the creation of new technologies, to also include their broad dissemination and deep absorption, in order to prosper from new technologies. GLENDA NEVILL reports.

‘Open innovation is a term used to promote an information age mind-set toward innovation that runs counter to the secrecy and silo mentality of traditional corporate research labs.’ ~ Wikipedia

Right now, think tanks and scientists and researchers across the globe are collaborating in the search for a coronavirus vaccine (or cure).

This is a timeous reminder, says Irving Wladawsky-Berger, Research Affiliate at MIT’s Sloan School of Management and Fellow of the Initiative on the Digital Economy and of the MIT Connection Science initiative, that the open innovation model is “the perfect vehicle for today’s fast-moving environment, which includes the current race for a coronavirus vaccine”.

Wladawsky-Berger was blogging about adjunct professor and the faculty director of the Garwood Centre for Corporate Innovation at the Haas School of Business at the University of California, Berkeley, Henry Chesbrough’s second book (the first was Open Innovation: The New Imperative for Creating and Profiting from Technology, published in 2003). Seventeen years after his groundbreaking publication first hit the stands, Chesbrough authored the follow-up, Open Innovation Results: Going Beyond the Hype and Getting Down to Business.

In it, he writes: “We must extend beyond the creation of new technologies, to also include their broad dissemination and deep absorption, in order to prosper from new technologies. We distract ourselves with the ‘shiny new objects’ that arise from the advance of technology.

“All too often, the front end of the innovation process is not connected to the businesses that are to commercialise any new technologies. To realise the potential from exponential technologies, we must refocus our attention on the things that really matter in innovation (instead of simply starting another one and blithely ignoring what happens afterwards). That will require us to rethink innovation, both inside organisations and in society as a whole.”

Essentially, he argues that generating technology alone is not enough. It must also be broadly disseminated, and then absorbed and put to work before its full value is realised. The three facets of innovation, he says, are generation, dissemination and absorption. He uses real examples of global businesses to illustrate both successes and failures of open innovation.

 

Closed innovation principlesOpen innovation principles
The smart people in the field work for us.Not all the smart people work for us, so we must find and tap into the knowledge and expertise of bright individuals outside our company.
To profit from R&D, we must discover it, develop it, and ship it ourselves.External R&D can create significant value: internal R&D is needed to claim some portion of that value.
If we discover it ourselves, we will get it to the market first.We don’t have to originate the research to profit from it.
The company that gets an innovation to the market first will win.Building a better business model is better than getting to the market first.
If we create the most and the best ideas in the industry, we will win.If we make the best use of internal and external ideas, we will win.
We should control our intellectual property (IP) so that our competitors don’t profit from our ideasWe should profit from others’ use of our IP, and we should buy others’ IP whenever it advances our business model.

Source: openinnovation.eu

The H&M story

The global fashion brand and its foundation wanted to reinvent the fashion industry (a ‘planet intensive’ industry), and turn it into one that eliminates waste. H&M collaborated with Accenture and KTH Royal Institute of Technology in Stockholm to apply and accelerate innovation at scale through a Global Change Award. It offers an innovation accelerator and coaching to help the winners turn their ideas into reality, while Accenture delivers knowledge and insights into the future of fashion and retail. Analytics and thought leadership are used to identify the trends shaping sustainable fashion, and Accenture creates reports on the trends in circular fashion and open innovation to share with the broad industry.

Keeping within the concept of open innovation, H&M has also opened up its supply chain to rivals. Using Treadler, its B2B service that helps clients “accelerate sustainable change”, it will “enable its clients to benefit from H&M Group’s expertise, long-term supplier partnerships and strategic sustainability work, thereby helping them to overcome initial business barriers and accelerate sustainable change”.

“We see the opportunity to utilise the full potential of H&M Group’s extensive investments and progressive sustainability work by catering to clients’ needs and contributing to driving long-term growth for H&M Group, while driving change in our industry. In discussions with other companies, we have experienced a demand for these kinds of services,” said Gustaf Asp, managing director of Treadler, in March. Treadler will “initially work on a small scale and provide a service that is tailored to suit the need of each client, covering all steps from product development to sourcing, production and logistics”.

The Amazon story

Amazon relied on open source innovation to build the capability of its cloud based voice service platform, Alexa. In an article on Open Innovation within Business Ecosystems: A Tale from Amazon.com, published on researchgate.net, writers Isckia Thierry and Denis Lescop detail how the massive tech and ecommerce company used outside developers to create “more than 30 000 skills for Alexa, allowing the customers to control more than 4 000 smart home devices offered by 1 200 unique brands”. Amazon, they point out, “has to rely on open source innovation to ensure widespread adoption of the platform”.

Recently, Amazon opened a 966 square metre cashier free grocery store in Seattle. As the Wall Street Journal reported, the store will “serve as a showcase for its technology as it seeks to sell its system to other businesses”. The technology would likely be offered as a service, either under a licensing or profit sharing model. Currently, twenty-five smaller Amazon Go stores operate in the US.

The Philips story

Back in 1998, Philips established the Philips High Tech Campus. The idea was to centralise its research and development in one place. Later, it was renamed High Tech Campus Eindhoven after Philips allowed access to other companies and a technical university. Philips was able to use knowledge and insights from other experts, a “fruitful and intriguing experiment in open innovation”, as Atte Isomäki wrote in a blog on the Viima platform.

As an example of useful open innovation collaboration, Philips launched a joint venture with the technical university and other organisations to tackle major challenges such as affordable access to high-quality healthcare and energy-efficient lighting for densely populated cities. “This is a great example of open collaboration between the private and public sectors in order to cross-link research topics and knowledge to make amazing discoveries,” Isomäki wrote.

It also has MiPlaza, an open innovation lab where companies can develop applications using Philips research. In return, Philips can use the lab inventions to improve its own products.

The Netflix story

Back in 2006, Netflix launched an open innovation challenge, the Netflix Prize, open to the public. It wanted to find a filtering algorithm to improve user movie or series suggestions by 10%. There was a $1 million prize attached. Forty thousand teams from 186 countries entered.

In just under three years, two teams managed to live up to the challenge. “However, as the algorithm of the grand-prize-winning team was too costly to engineer, Netflix decided to go with one of the runner ups instead who had an improvement rate of 8.43%,” Isomäki reported.

“Netflix’s R&D open innovation challenge targeting the public and professionals on the field was quite successful in the end,” he reckoned. “The only problem was that the original execution of the challenge did not appropriately account for potential privacy concerns. On a positive note, Netflix were also able to find talented programmers and market their product and new suggestion feature.”

So what of marketing and open innovation? Certainly from a PR perspective, the wider outreach is a major plus. And for brands, there is recognition in a positive light, which increases brand value, something vitally important in competitive markets.

Back to Chesbrough and his new book. Last word goes to Carlos Moedas, EU Commissioner for Research, Science and Innovation, who wrote: “Henry Chesbrough has this unique ability to transform complex concepts into messages that everyone can relate to. ​Open Innovation Results ​links for the first time the effects of the financial crisis on innovation and therefore on long-term productivity. It is a must read for politicians, policy-makers and business leaders that want to make a difference by designing the right policies that drive not only the generation of new ideas but more importantly their broad dissemination and adoption by society.”

IMM Graduate School is offering fast-paced express courses that you can do in less than 1 week for just R475 per course while in lockdown

Supply Chain Management during the COVID-19 pandemicCovid-19 is here and it’s not going to disappear overnight. South Africans still have a long way to go in the fight against the corona virus before life returns back to normal. With the country in lockdown for 21 days, millions of South Africans are beginning to feel the pinch as businesses start to cut salaries and in some cases jobs.

Tammyn Gregory shared her story with us:

“I work in the hospitality industry. The emergence of Covid-19 in China and the steady spread across the globe already impacted our sector even before the first cases were reported in South Africa. The company I work for caters primarily for the international market and as a result, reservations were greatly impacted by the travel restrictions being put in place in Europe and other regions to combat the disease. Then, when lockdown happened the business was closed, and our salaries were cut. With no income, indefinitely, its hard to tell when or if things will return to what they were.”

Tammyn, like many others in this situation was devastated and at first felt hopeless, fearing not having enough money to meet basic monthly commitments. This reality hit hard. Fortunately, Tammyn realised she needed to do something to pull herself out of the hollow pit she found herself in. “I needed to do something to fill my time, and the first thought that came to mind was to use this time to upskill myself. I have always had an interest in the online space and how to use this to market and promote business. With marketing in mind, I decided to look into the IMM Graduate School, as I have often heard friends and family mention that they are the best in this field.”

The IMM Graduate School is a respected distance learning provider and is one of the few learning institutions that was not impacted by the lockdown. Students all over the world have been able to continue with their studies, uninterrupted online during this period. The IMM also decided to respond to this crisis proactively by unbundling some of the modules from their academic programmes into shorter online express courses to allow all those in lockdown to upskill themselves in preparation for future career challenges.

“I am so excited about the courses I have found on the IMM Graduate School website. I am suddenly facing these months of downtime in a totally different light and look forward to learning new things and growing in a different direction. The skills I gain from the courses I have selected will open all sorts of opportunities for me. I could apply this knowledge in my current place of work, but should it be necessary, I could move into a totally new and exciting venture running my own business in website design and digital marketing.”

There are 20 online express courses to choose from. Each one should take no more than a week to complete. They include video content, recorded lectures and a quick quiz. On completion students can unlock an IMM Graduate School skills badge to add to their LinkedIn profile.

Tammyn knows this is not going to be an easy journey for her, but she plans to be disciplined in her approach to her studies. “What really appeals to me about these courses through the IMM, is that I will be able to study from home and I have access to an online tutor if I need help.”

Unique to the IMM Graduate School, subject and industry experts that have contributed to the course content and development are also head tutors. This gives student the opportunity to receive feedback from experienced professionals as they progress through the course content.

“If I look at these circumstances that I have found myself in, perhaps this is the catapult that I have needed to steer me and direct me on a new journey.  I can’t wait to expand my knowledge and to let my creative juices flow.  I have extensive experience in my industry, and I know that the new skills I learn on this course will enable me to apply my knowledge in a new and exciting direction.”

Tammyn certainly is living for today, and planning for tomorrow. You can too. Get to the IMM Graduate Schools website and select a course that will catapult you into a new direction. Make your time in lockdown count!

Supply Chain Management during the COVID-19 pandemic

Supply Chain Management during the COVID-19 pandemicThe COVID-19 virus has brought humanity, as we have come to know it, to its knees. Where kindness, sharing and caring once prevailed, now self-preservation reigns in shopping malls throughout the world as the “have’s” stockpile their larders with vitals at the expense of the poor, the needy, the aged and the sick. Shopping trolleys are filled to the brim not because there is a dire and urgent need to satisfy physiological needs but rather the wanton greed to plunder shopping shelves without giving any consideration for the shoppers in the queues behind them.  Imagine if the world did not have an effective and efficiently run supply chain to constantly channel food, fuel and other essentials to replace those that have been exhausted because of the “feeding frenzy” of the uncaring and those who have sufficient funds to purchase what and when they like and the transport to procure such offerings. There would be further chaos, indescribable misery, an uncontrolled mortality rate and above all a world economic recession that would surpass the 1929 financial crash!

Historically, Supply Chain Management (SCM) has been likened to a philosophy… a concept rather than an essential service. As a relatively new mindset, it incorporates thirteen logistics activities and business processes to ensure cohesion amongst supply chain members and a continued flow of products, information and money. Wars have been won and lost by the implementation and control of either effective and efficient Supply Chain Management or the lack of using it to its full potential as was experienced during the Napoleonic Wars and WW2. There is little doubt that the world post-COVID-19 virus will be decidedly different to life as we have come to know prior to this adverse scourge befalling us. Therefore SCM will not be considered merely a concept but rather a life-saving essential service that will be used for the cohesion of all supply chains so that they may work in concert with one another in order to satiate the needs and wants of people and businesses at all times, including times of crises.

Besides the challenges brought upon us by the current pandemic, what other challenges are looming in the years ahead? Some of the key issues (certainly not all) are:

  1. Technology (automation, robotics and the 4th Industrial Revolution). According to Klaus Schwab, the Founder and Executive Chairman of the World Economic Forum (2017), the 4th Industrial Revolution is characterized by “… new technology fusing the physical, digital and biological worlds, thereby impacting on all disciplines”. With the ease of new entrants into the market and capturing it (it took Facebook 6 years to generate $1billion and Google 5 years), new entrants will generate more products, which will need to be warehoused, transported and distributed. This will add an immense amount of pressure on existing global and national supply chains, thereby necessitating a SCM revolution that will be able to cope with such metamorphosis;
  2. Pressure on the reduction of costs and the increased desire for quality. Herein lies the greatest paradox of all as consumers and business customers demand low prices for products and services, yet insist on increased quality. With the ever-escalating price of fuel, vehicles and running costs, supply chain members are going to have to seek ways to maintain and if possible, decrease their cost. This could be achieved by vertical integration, horizontal integration (by buying competitors to enjoy economies of scale) and the use of fuel-efficient and sustainable vehicles and even self-propelled trucks (already being used) to reduce labour and associated costs;
  3. Globalisation and the effective and efficient management of the elongated and complex supply network. Lengthy supply chains are fraught with risk and uncertainty, especially in this turbulent and uncertain world we all currently reside in. Here risk management is going to play an important role in identifying and mitigating risks (supplier risks, supply risks and interest rate risks etc.) so that global business may operate under an umbrella of relative certainty;
  4. Shorter lead time as a result of consumer demand and rapid changes in consumer behaviour. There is no doubt that we live in a world for the need of instant gratification. What we see today is what we buy today, especially as a result of consumers having access to virtually unlimited credit. We therefore buy what we want even though we cannot afford it. The rapid changes that are taking place in consumer behaviour as a result of AI’s impact on the generic consumer behaviour process (desire for products and services are created and not identified as per the process) are also fueling the need for a more agile, responsive, sustainable, customer-centric and cost-efficient supply chains. Where once agility was sufficient to satisfy needs, how much quicker must organisations produce and distribute goods so that they may arrive at the Right place, to the Right person, in the Right condition, at the Right time and at the Right price?
  5. Effective inventory and throughput management in a global context. With a world exploding with over-population and the need for finished goods and services, the question is how much inventory should an organisation carry? It is a well-known fact that carrying too much inventory incurs additional carrying costs whilst carrying an insufficient quantity increases the likelihood of retail outages and escalated order costs. With most forecasting being historically inaccurate, how can organisations prophesize future demand so that capacity can be managed to meet such demand? Some pundits see the solution to be JIT production and distribution whilst other see the answer to be further collaboration and integration, increased information sharing and joint demand forecasting amongst all players in the supply chain. Whatever the solution may be, throughput management needs to be “managed” so that the Rights that are reflected above may be realised otherwise customers will migrate to competitors that can offer quicker response times and miniscule outages; and
  6. Build ‘robustness’. A robust supply chain is one that can withstand ‘shocks’, such as the current disruption caused by the COVID-19 pandemic. In their search for continuous improvement and reduction of costs, what the acclaimed writer Margaret Heffernan calls ‘the myth of infinite efficiency’, supply chains that have adopted Lean or JIT methodologies now find they lack robustness.  They have no ‘extra’, there is no slack that can be used to mitigate the effects of the unexpected.  This essential characteristic has been driven out by the persistent downward pressure on costs.  These businesses operate on razor-thin margins (of time, of money, and of resources generally) and their supply chains are not robust – they are very exposed to disruption.  Supply chains need to build robustness by balancing cost-efficiency with flexibility and resilience.  They need to develop stronger relationships with other chain members instead of focusing on extracting the lowest prices from them.  The future is becoming more difficult to predict and forecasting less effective. Disruptions and unforeseen events are inevitable.  Supply chains have become longer and more complex.  Unless they gain robustness, these supply chains will not be ‘fit’ enough to mitigate the risk of crippling disruptions.

The industries that are most at risk are:

  1. The transport industry as it will be faced with ensuring that the above Rs are implemented and controlled. As a result of AI, it is estimated that by 2025 thousands of motorcars and trucks will be driverless. The negatives from a trucking perspective includes job losses, less ownership and the possibility of hacking and cyber-attacks. In the summer of 2015 (the year Tesla was launched), two hackers demonstrated their ability to hack a moving car; controlling its dashboard functions, steering, brakes etc. all via the vehicle’s entertainment system (Schwab, 2017). It is believed that all modes of transport (especially road) will be faced with shorter lead times, which will certainly burden transportation and the rest of the logistics functions;
  2. Manufacturing as it depends on raw materials, components and spare parts to produce goods and services via the transformation process. As markets expand exponentially and as 3D printing becomes more of a reality than a rarity, product design and production could be performed at a consumer’s home. Eventually it could even become an office or even a home appliance. If this is the case then the demand for logistics services such as transportation, warehousing and demand management could even decrease in line with the reduction in production; and
  3. The services industry. It is estimated that 85% of all jobs in the USA are service oriented. As there is such a wide spectrum of service providers ranging from hotels, hairdressers, hospitals etc., the growth of services and service providers will increase exponentially with an associated decline in manufacturing (as a result of 3D, robotics, and outsourcing etc.), This will put a burden on the supply chain as it will have to keep up with such growth in the service industry.

Distance Education Rises to the Occasion during the CoVID-19 lockdown

Distance Education Rises to the Occasion during the CoVID-19 lockdown

Distance Learning, the Keeper of Higher Education during a Worldwide Pandemic

The challenges facing institutions of Higher Learning during the CoVID-19 lockdown have left many with no option but to turn to online learning to avoid disruptions to learning and teaching programmes across the globe.  Fortunately, the IMM Graduate School has not been caught off guard during the Coronavirus pandemic, nor has it been left scrambling to keep learning and teaching going. For the most part it is business as usual.

We have already spent the past several years, implementing cutting edge online learning principles, and as such “going online” has meant minimal disruption in our learning environment designed and built to encourage optimal student engagement for critical thinking and problem solving. For a number of years already, we have been embracing technology to provide opportunities for students who would otherwise not have the opportunity to study.

We have also during this time considered, monitored and reviewed various aspects impacting learning and teaching in the online environment to find what works best for distance students. In so doing, we have been able to fine-tune the online learning and teaching experience by acting on the feedback of all role players to our digital learning and teaching environment.

The attitude that online learning is a ‘watered down’ version of ‘real’ education couldn’t be further from the truth and such attitudes have the potential to compromise quality. Higher Learning Institutions, Industry and students all need to reflect on their own attitudes to online education. More and more, online learning is proving to be the better solution.

Digital learning and teaching do have some challenges, but also comes with many added advantages and provides a valuable alternative to traditional classroom-based models. Given current learning conditions (in our lockdown situation), South African Learning Institutions, students and teaching staff are being forced to become familiar with the digital education space. Just as with every other industry in 2020, education can never go back to what it was just a few short weeks ago.

Going online is not only a matter of, uploading the ‘paper version’ onto a learner management system and continuing with learning and teaching activities as would be the case in a classroom. There are a number of important points of consideration in digital learning and teaching.

For students who are not used to distance and/or online learning, social distance could present a challenge.  Distance institutions are acutely aware of this and any distance institution worth their salt will build mechanisms into their courses to reduce the sense of distance and isolation and to create a sense of community among students who are geographically far removed from each other. For Students at residential universities catapulted into distance learning, the sense of distance and isolation may be more acute.

Also important is how the rapport between lecturer or tutor and student is initiated and maintained. In a distance learning environment, there is not the luxury of sitting in a group, discussing challenges. Several mechanisms to create a sense of community need to be built into an online course. Creating an online social presence of the lecturer goes a long way to making students feel more secure. Many are turning to webinars as an alternative to the contact class. But you need to consider, how to adapt learning and teaching in webinars to ensure that students are meaningfully engaging with their study material and their teachers?  In the classroom, teaching staff tend to use lecturing as the method of teaching.

Then there is the question of how study material needs to be adapted to make sure students are fully engaged in the absence of a regular contact class. Learning material must be designed to encourage active learning. Technology provides diverse opportunities to design learning resources which are almost 3D in nature and most certainly more interactive than textbooks and class notes.

The digital space has opened up a whole world of opportunity for authentic real-world learning and teaching that produces 4th Industrial Revolution work-ready graduates, whether the world is in crisis or not. The IMM Graduate School has embraced these opportunities, and is continuing to provide fully accredited, internationally recognised distance education during the lockdown and beyond.

What’s Your Company’s Emergency Remote-Work Plan?

What’s Your Company’s Emergency Remote-Work Plan
Photo by Thought Catalog on Unsplash

This week, the coronavirus (or Covid-19) took a more serious turn in the U.S. with warnings that it could very well impact how, when, and where we work:

“Disruption to everyday life may be severe,” Dr. Nancy Messonnier, director of the CDC’s National Center for Immunization and Respiratory Diseases, cautioned at a news conference Tuesday. “Schools could be closed, mass public gatherings suspended, and businesses forced to have employees work remotely.”

The global spread of the virus may be a moment that reveals whether employers are ready to respond rapidly to unexpected workplace changes. Business travel could decrease or come to a full stop. More employees may need to work outside of local “business hours” and use video conferencing to operate across time zones. And, if it gets bad enough, many could indeed be asked, or request, to work remotely.

Are organizations ready? Chances are probably not. But even for those open to rethinking how the work would get done, are they ready for the inevitable post-crisis question: “Why don’t we do this all the time?”

How do you prepare your organization to not only flexibly respond to this potential disruption, but also to use it as an opportunity to reimagine work broadly? Here are five steps to get started:

  1. Acknowledge the possibility that all or part of your workforce may need to work remotely.

Hoping and praying it doesn’t happen, or simply ignoring it, is not a strategy. Neither is handing everyone a laptop and saying “Go work someplace else” on the day they expand wide-scale quarantines. Plan as if the only way to remain operational will be for as many employees as possible to work remotely. Gather a cross-functional team together now that includes business-line leaders, IT, HR, communications, and facilities to start to plan for different scenarios and optimize execution, should circumstances require a rapid response.

  1. Map out jobs and tasks that could be affected.

Note which roles and duties: 1) Can be done, even partially, without a physical presence in the workplace, 2) Cannot be done, even somewhat, outside of the physical office, and 3) Not sure.

Challenge any potentially inaccurate default assumptions about specific jobs you may have thought couldn’t be done remotely. And for those in the “not sure” column, be willing to experiment. For example, for years, I’ve been told, “Administrative assistants can’t work flexibly.” And, for years, I’ve worked with teams of administrative assistants to prove that is not true. Yes, certain tasks they complete require physical presence, but those can be planned for. The majority of their tasks can happen effectively outside of the traditional model of work and benefit the business.

  1. Audit available IT hardware and software, and close any gaps in access and adoption. 

Assess the comfort level with specific applications, such as video conferencing and other collaboration/communication platforms. Where you find gaps, provide training and opportunities for practice before people need to use them. Real-time mastery is not optimal and is inefficient. Identify devices owned by the organization that people could use and clarify acceptable “bring your own” phone and laptop options. Determine if there are any data-security issues to consider and how best to address them beforehand.

  1. Set up a communications protocol in advance.

This communications plan needs to outline: how to reach everybody (e.g., all contact information in one place, primary communication channels clarified — email, IM, Slack, etc.); how employees are expected to respond to customers; and how and when teams will coordinate and meet.  

  1. Identify ways to measure performance that could inform broader change.

After the flexible response period is over, this data will allow you to reflect on what worked, what didn’t, and why. The data will also prepare you in advance to answer the inevitable question once the crisis has passed, “Why don’t we do this all the time?” Depending upon the outcomes, you may decide to continue certain aspects of the flexible response permanently. For example, perhaps you cut business travel by 25% and substitute video conferencing. You determine afterward that about 80% of those meetings were equally as effective virtually. Therefore, a 20% decrease in business travel will continue, but this time as part of the organization’s sustainability strategy to cut carbon emissions.

Global health emergencies, like Covid-19, are scary, disruptive, and confusing for everyone. And if you plan and nothing happens? Then, at minimum, you have an organized, flexible work disaster response ready the next time there’s a challenge to operational continuity, which chances are, there will be.

Article as posted in Harvard Business Review

Yost.C (2020) What’s Your Company’s Emergency Remote-Work Plan <https://hbr.org/2020/02/whats-your-companys-emergency-remote-work-plan?ab=hero-main-text>.  [Accessed 03 March 2020].