Reflecting on COVID-19’s impact as we positively move forwards

The COVID-19 crisis affected us all on multiple levels – as businesses, as families, as individuals.

2020 HAS been one of the strangest years in our lives. A small virus originating in China has become a massive Black Swan, whose ominous wings have spread across the world, and temporarily or even permanently paralysed many business operations, supply chain processes and even strained sociopolitical relationships across the globe – especially between China and the USA. The relatively calm global economic seas have experienced unsettling churn and uneasiness prevails.

 

We have come to realise globally how potentially vulnerable we are as businesses and individuals to both information and disinformation – and how information dissemination and the ‘mass media’ instantly impact our daily lives as well as our supply chain operations in real and often unimaginable ways. Life changed drastically and almost ‘overnight’, and we were all exposed to our personal, business and supply chain vulnerabilities.

Supply chains supplying essential medical items were initially stretched beyond their limits at the beginning of the lockdown, even in more sophisticated first-world nations like Italy, leaving the end-customers grappling with the dangerous, and at times lethal, consequences of supply chain failures. Essential food stuffs and pharmaceutical items quickly disappeared from shelves in many nations, only for shelves to remain empty for weeks and even months to come. Stock replenishment was often slow and cumbersome. Retailers were exposed to costly obsolescence challenges, overstock and understock situations, and the real challenge of selling through their stock on hand. Some nations coped better than others. Some businesses coped better than others. Some supply chains coped better than others. Some families coped better than others. And I was left wondering why.

Initially, the first thought that came to mind was survival of the fittest. The fittest supply chains survived best and some even thrived during the crisis – some made even greater profits during the ‘silly serious season’ than prior to it. There were winners, and there were losers. The healthier and fitter the supply chain, business, family or individual, the better he/she/it coped. This led me to a key question: What is a fit person? And what is a fit business or supply chain?

I concluded that the same principles that apply to a fit person generally applied to a fit supply chain. Ten key dimensions came to mind as I analysed fitness in general and explored parallels with supply chain fitness in particular. The fit individual or supply chain is (1) flexible, (2) adaptable, (3) stable, (4) agile, (5) strong – mentally, socially, physically and spiritually, (6) disciplined and remains focused amidst a crisis, (7) follows regular healthy routines amidst a crisis, (8) is proactively well trained and ready for a change, the unexpected or even a crisis, (9) is resilient and copes better with a storm, and (10) has good coping mechanisms, thus enabling them to take the crisis head-on and not cower away from or succumb to the crisis. The fit – as defined by the 10 dimensions above – survived and thrived better than the unfit during the crisis.

Right at the beginning of the crisis my eyes were open – watching supply chain movements and which companies were ready and coping better than others. I recall watching Coca-Cola trucks making plenty of deliveries early on in the crisis – with their focused drivers wearing face masks and getting the job done. Replenishing stores and filling shelves. They had decided that they were not going to be the losers. Clearly, they had been proactively well trained to handle such a crisis and took it confidently and relatively easily in their stride. They were not reactive, but proactive and ready. Similarly, other strong businesses like Domino’s Pizza coped better than expected as home deliveries soared and created new challenges – and their business model shifted overnight from in-store sales to out-of-store sales and home deliveries. No doubt the C-Level operations directors were doing their best to adapt to the surge of home deliveries, with the confined and fixed resources of a limited fleet of personnel and vehicles to make these home deliveries.

The business model was turned on its head and supply chain operators simply had to ‘cope’. Business ‘unusual’ replaced business as usual.

Some businesses suddenly made a bold attempt to start and initiate their online businesses from scratch – only to discover that a new online division of their business took more planning, thought, calculating and practical realism than was initially expected.

‘Solvency’ and ‘staying liquid’ became key business words as cash flows and bottom-lines were quickly and suddenly impacted. Solid integration and collaboration of one’s business with supply chain partners and suppliers became even more important than during times of normal business operations. We needed them and they needed us. Three-to-five-year planning horizons suddenly gave way to more reactive one-year planning horizons, which were more reactive and less proactive, which invariably is not great for bottom-line profits nor sustainable long-term growth. But managers and leaders of production plants, operations or supply chains often have to think on their feet and adapt to the ‘game’ on hand, just to survive, before they can think about strategic chess moves ahead. Coping with the here and now took precedence over coping with tomorrow and the long-term future. The ability of management and workers, business systems and short-term strategies, and supply chain operations to quickly adapt to the new game and make the sudden and necessary shifts determined who were the winners and who were the losers. Ultimately, the business winners during the COVID-19 crisis were simply those who adapted and changed according to the new global rules of the game the fastest.

Supply chain directors and CEOs of multinationals with a global footprint soon discovered that the practical day-to-day realities of globalised supply chains do matter and cannot be taken for granted. Integration and mixing and matching demand with supply became harder to manage, especially for gold coin and bar dealers who simply ran out of stock overnight, as mine after mine was closed in South Africa and across the globe. The journey of gold from the mine to the vault became a complex labyrinth – and somewhere between the mine and the end- customer, gold got lost in the maze of movements. The ripple effect of supply was felt right across the gold supply chain from mining to production, to slag supply of gold bars ready for refining, to transport and delivery of finished goods bars and coins from global mints to downstream dealers and traders, to out-of-stock situations for end- customers. Those ‘out-of-stock’ online postings on countless websites across the globe were now starting to impact the end-customer. And the demand dilemma made gold skyrocket towards $2,000 per ounce, up from $1,500 an ounce at the start of 2020. The major precious metals shift in gold, as smart investors moved to gold as a safe haven during a crisis, accentuated just how little gold supply there really is in the world from a supply chain point of view – only four Olympic swimming pools of gold held in total by all individual investors combined with sovereign wealth and federal reserve funds across the whole planet. Talk of a situation where demand out-strips supply and you have a perfect recipe in the making, and it is called gold. Gold certainly emerged from the COVID-19 crisis as a winner and will be for the decade to come.

Multinational CEOs also discovered that supply chain partnerships and collaboration mattered more than they might have realised during these times of crisis. One of my close friends, a CEO of one of the world’s leading diamond companies, was faced with a twin-pronged supply chain challenge: real upstream diamond supply challenges on the one side, and then countless stores which closed down in Europe and other parts of the world on the end-customer side. A ‘double-whammy’ which required smart manoeuvring and management on both ends of the supply chain simultaneously – which stretches the supply chain skills and dexterity of even the smartest and most skilled of supply chain managers and CEOs.

Although traditionally many diamond buyers like to do so in-store, they noticed that due to global COVID-19 travel restrictions, online spending on jewellery from reputable suppliers in particular actually increased. So whilst in-store sales shrank, online sales flourished. The realities of matching the online demand with steady

supplies from the diamond mine accentuated the complex diamond domino effect and also created a temporary bullwhip, making the concertina effect of significant supply chain vibrations harder to manage – as online orders pulled the whole supply chain, creating vacillations and spikes and troughs that were not easy to manage. All supply chains, from farms to factories, from grocery stores to luxury stores, from hospitals to airlines, were greatly impacted by the crisis, and had to make quick adjustments just to survive and stay profitable. Some were winners, and some were losers. •