Louis Aditya Prasethio, Head of Supply Chain, PT Parit Padang Global, a Soho Global Health Company (IDX: SOHO)
Global supply chain is facing the biggest disruption ever in 21st century due to COVID-19 pandemic. The situation leads to amplification of VUCA (Volatility, Uncertainty, Complexity and Ambiguity) which reflected in raw material scarcity, productions halt and finished goods stock out. Supply chain resilience becomes an emerging topic often discussed as an elixir for industries to thrive which eventually pushes acceleration in transversal communication between all chains known as supply chain visibility.
DEMAND PLANNING AS THE INITIAL KEY
Supply Chain process, according to SCOR (Supply Chain Operations Reference) model developed by Supply Chain Council, has 5 areas: Plan, Source, Make, Deliver and Return. Planning area as the upstream of the process that closely correlates with demand planning and forecasting is often the root cause of problems in supply chain. Efforts in demystifying the demand has evolved from simple statistics to big data and complex analytics leveraging latest technology in AI (Artificial Intelligence) and machine learning. Attempting to implement this technology requires very careful consideration as the resource and investment needed is often expensive. The major key is system integration to ERP (Enterprise Resource Planning) with high connectivity to next supply chain process from Source until Return while enhancing the fine tuning of forecasting process.
VISIBILITY TO STEP UP THE SUPPLY CHAIN RESILIENCE
While fine tuning of forecasting process is ideal in the supply chain process, COVID-19 pandemic requires rapid action which makes the fine tuning becomes much more difficult due to high uncertainty and slower speed. In this situation, neither forecast nor historical data can become reliable source to make supply chain decision. Connecting the dots between supply chains becomes more important than ever in order to survive. High supply chain visibility provides global view for supply chain decision makers to identify road blocks, constraints and often real demand which often located in the closest proximity to end customers. Velocity improvement of the communication exchange now also utilizes cutting edge method such as IoT (Internet of Things) to gather real time data.
EMBRACING SUPPLY CHAIN STRATEGY SHIFT: PHARMACEUTICAL INDUSTRY CASE STUDY IN INDONESIA
Since its initial case of COVID-19 in early March 2020, Pharmaceutical Industry in Indonesia started experiencing demand surge especially in medicines under Government guideline for first treatment for patients and supplements to boost immunity such as immunomodulators and vitamins. The high demand triggers bullwhip effect: raw materials and finished goods that once were out of stock now become abundant as the demand spike starts to diminish. These extreme supply chain scenarios finally pushes Pharmaceutical industry to focus on enhancing supply chain visibility starting from suppliers to distributors and eventually to wholesalers and pharmacies. Work from home mode as new normal working style has also accelerated online communications and improvement in data connectivity between supply chains. Combination of gathering market dynamic insights from consumption data in customer levels to understand demand more accurately and implementing more frequent planning in shorter horizon has enabled Pharmaceutical manufacturers pivoting to more resilient organization to face the VUCA situation.
Although the fight against COVID-19 pandemic is still not over, global supply chain has begun to find its way to respond and live with VUCA worlds. Supply chain visibility, with its role to illuminate and connect the chains, together with technology such as AI, machine learning and IoT, may become one of the key elements to win the battle.