JIT which stands for Just in Time has been a revolutionary concept in Manufacturing sector has been extended to supply chain systems to manage even the material procurement, warehousing and transportation. It has been widely put into practice by many percentage of companies. This takes into consideration the right amount of material with multiple interactive shipments with minimum storage concept. There have been many reviews on how the quality control is impacted by such concept and have been addressed widely with a more streamlined processes and business involvement like network tracking etc.

padlock-lock-chain-key-39624
Photo by Pixabay on Pexels.com

The recent episode with COVID-2019 (Corona Virus) has brought back the year old question on whether the zerp inventory concept in supply chain is good enough for the companies to manage or will it involve additional changes in the strategy. The reliance on cost and quality alone have given rise to the third dimension of suspectibility of disruption. With reports of more than 95% of Fortune 100 companies supply chains being impacted by corona virus it is now one of the most talked about topic on how to make supply chains withstand such issues be it virus output, terrorist attack or natural calamities.

There are have various strategies suggested to manage such threats like frequent monitoring controls in the supply chain and planning the network for such adversaries like by making Penalty costs or resource availability which are very good ways of assessing the impact. Besides those measures making the supply chain with back up strategies like multi location vendors with a split in the percentage of raw material or transportation companies across multiple regions one talked about strategy, however it has limitation if the tier 1 supplier enages same tier 2 supplier for material supply or relies on vulnerable areas. In those cases the complete supply chain visibility of your suppliers and their supply chain is a significance.

There are many software tools which offer multi stage inventory optimization like assessing the safety stock calculation at all demand locations intead of single stage safety stock calculation. However those consider networks at edges without considering the other points within those network, it might result in too low or too much stock calculation. The calculation of such network is based on inputs like Target service levels, violation costs and lead time, however we might include uncertainity factors into the calcaution to understand the impact. Simualation of virus outbreaks or natural disasters into multi echelon models can provde a way for resolutions.

Though there are literature available on impact of supply chain networks given a virus outbreak, substantial scope is available which can simulates such scenarios like virus outbreak impact on networks. Such models require simualtion of epidemic models coupled with Multi Echelon models. To actually predict the epidemic models you require basic inputs like Weather, infectious nature, population density coupled with socio-economic status etc, which when coupled with multi echaleon models will give a very good indicators for impact. The Key characteristics in multi echelon models include cost, lead time, structure, Capacity which when extended with Epidemic models  like disease spread or likelhood of distruption will give very good insight.

These type of models will be starting point since upcoming carbon pricing type of requirements also require modeling beyod simple inventory characterstiics like cost, time etc but also nature of the product systems and their carbon relasing potential which can be very high with developing countries and might be low for developed countries with sophisticated infrastructure. Which when coupled with mulit echaleon models will create models which will not only help in better preparting for future but ensuring security in years to come.

Thanks

Jayakumar

 

Leave a Reply

Close Menu
%d bloggers like this: