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Amid Pandemic, Supply Chain Leaders Shift Priority from Lean to Stability [Report]

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Before the COVID-19 pandemic slammed business leaders across all industries, the manufacturing sector had largely evolved to operate with a focus on lean principles. Lean manufacturing meant having just enough employees and inventory while minimizing production costs and waste. This has been optimized through the use of artificial intelligence and the Internet of Things during the age of Industry 4.0.

While lean manufacturing figures to always be a set of principles that supply chain leaders will follow, a new report suggests that executives will move toward prioritizing stability and resilience over lean when it comes to their operations amid and after the pandemic eventually subsides.

On October 1, international law firm Foley & Lardner LLP released a report detailing a new survey it conducted of nearly 150 mostly C-suite manufacturing executives about how they see supply chains evolving post-pandemic.

Two main takeaways in Foley & Lardner’s “Global Supply Chain Disruption and Future Strategies Survey Report” suggest the move in prioritization from lean to stability and resiliency:

  • 70% of respondents agreed that, due to COVID-19, companies will reduce their focus on sourcing from the lowest-cost supplier
  • 62% expect the focus on just-in-time manufacturing models — which aim to reduce flow times within production systems — will likewise decrease.

Foley & Lardner noted that a similar perspective change was evident coming out of the 2008-2009 Great Recession, with calls for supply chain overhaul in certain areas, but those initiatives mostly dissolved when actually attempted.

“But 2020 is not 2009, and we may very well see companies follow through this time — especially if they see continuity of supply begin to overtake price as a key driver for success,” said Vanessa Miller, co-chair of the firm’s coronavirus task force and supply chain team.

Other notable takeaways from Foley & Lardner’s report include:

  • 92% of respondents are being proactive to create more visibility within their supply chains, including requiring more information on suppliers’ risk management and continuity strategies.
  • Of the survey respondents who have operated in China, 59% have either already withdrawn operations, are in the process of doing so, or are considering it.
  • Asked to identify the top technologies they are considering, 47% of respondents chose new tools or applications that improve supply chain visibility and tracking, while 39% chose operational analytics.

Image Credit: Photo by Chris Pagan on Unsplash

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