Ready to exit the Corona Shutdown?

The right post-Corona decisions

Are you ready to exit the Corona shutdown?

Corona has progressed from being a remote danger in China to an acute pandemic – with profound consequences for the economy worldwide. The effects of the Corona virus require corporations to make far-reaching decisions. On the one hand, these involve immediate operational measures to cope with the current lockdown. On the other, long-term and strategic decisions need to be readjusted or entirely new ones need to be in place – for the period after the exit.

From basic operating procedures to globally connected processes – the upheavals that COVID-19 has caused in all sectors and industries are unparalleled. The demands on logistics and production are currently changing at a daily rate due to the breakdown in supply chains, the loss of sales markets as well as to major shifts in demand.

 

Aspect #1:
The impact of Corona on long supply chains

The COVID-19 pandemic clearly demonstrates the weakness of long supply chains and how vulnerable they are to disruption. It has suspended global commodity flows, thus disrupting the system of the global economy which is based on a division of labor:

  • Halts to production in China lead to non-delivery which consequently disrupts production in other regions.
  • Transport problems due to border shutdowns and restrictions lead to a bottleneck in resources.
  • National demand has also led to a low export rate for goods that are in high demand.

In order to counteract quality problems, halts to production or even a production standstill due to disruptions in the supply chain, several measures are required in logstic planning. The following matrix demonstrates possible measures – including their advantages and disadvantages , i.e. the aspects which need to be considered in the planning process:

 

Measure 1:
Diversifying supply sources

 

Measure 2:
Increased stocks

 

  • Advantages
  • – Resource needs are safeguarded
    – Protection against non-delivery
  • Disadvantages
  • – Lower discounts
    – More work in the areas of administration and quality management
    – Higher quality risks
  • Advantages
  • – Protection against production losses
    – Resources are safeguarded
  • Disadvantages
  • – Higher inventory and warehousing costs
    – Higher risk for scrapping
    – Re-evaluation of the question: Which parts need to be stocked and in which quantities?
    – Which storage space should be used?
    – How should the distribution network be built up?

How can OPTANO help?

The main question at the moment is what the optimal logistic strategy is when exiting the shutdown. Fast implementation and a rerun of the planning – taking changed environmental influences into consideration – increase corporations’ flexibility. By using OPTANO as a planning tool, this is easy to implement with scenarios (what-if analyses) as a basis for analysis and planning. Additionally, OPTANO supports you in your decision-making by

  • simulating the effects of diversifying supply sources
  • balancing conflicting objectives (safety/costs)
  • determining the optimal number and distribution of suppliers
  • determining the buffer stocks for relevant parts
  • determining the optimal locations for storage space
  • optimizing the distribution network

Aspect #2:
Changed sales markets in the Corona crisis

COVID-19 does not only have an impact on purchase markets and supply chains. The effects of the pandemic are palpable in sales markets, too. Corporations should be flexible in their dealings in order to adapt to shifts in demand at short notice and ensure that they don’t miss the following chances during the crisis:

  • Adapt capacities to the new challenges. Whereby you have to ensure that you produce what is required with as few resources as possible in order to keep costs at an absolute minimum.
  • Ensure that the production with its existing facilities meets demand as best as possible. Which bottlenecks can be avoided?
  • A further option is meeting the increased demand by producing replacement products in the short-term. These options can be quickly be considered in your planning with the aid of scenarios.

Decisions with regard to the current manufacturing situation have to be made at short notice. However, even more important are the decisions that need to be made for the period after exit so that you can quickly restart your production based on  demand. The matrix shows which measures enable this – taking all aspects into consideration.

Measure 1:
Changing the product portfolio /mix

Measure 2:
Plans for starting production

  • Advantages
  • – Better capacity by manufacturing alternative products
  • Disadvantages
  • – Replanning the production process often means largely deviating from the original plan
    – Planning how to optimally deploy resources and personnel is very time-consuming
    – The workload for starting the manufacture and quality asurance of new products is high

  • Advantages
  • – The demand to ramp up production correspondingly after the crisis
  • Disadvantages
  • – Uncertainty about the best time to start production
    – Uncertainty about the general conditions on starting up
    – How should the distribution network be built up?

How can OPTANO help?

A time to start production has not yet been scheduled. However, as you need to plan in advance, businesses are forced to consider ramping up production at an early stage. OPTANO can support this process by

  • compiling robust production plans in a very short time
  • short-term rescheduling, taking all general conditions and strategic business objectives into consideration
  • offering sound recommendations for action to accomplish the planned measures

Summary:  Ready for the post-Corona period

The Corona crisis has clearly demonstrated that changes can occur from one moment to the next. The economy and society cannot keep up with the dynamics of the virus. Now everybody has to prepare for the era post-Corona in order to counteract the impact of the crisis.that changed  Take advantage of the opportunity that changed markets have to offer: Make sure you’re more prepared for change than anybody else.

 

Act now! Contact us today.

OPTANO can help you create the best plans for your business. Together we can find the best decision!

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