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FEATURE THE SUPPLY CHAIN


Hope for the best, plan for the worst


Coronavirus has impacted businesses the world over. Some have had to adapt their business model to respond to a drastically changed market, while others have had to simply weather the storm. Here Jeff Brind, Rebound Electronics’ chief information officer looks at how businesses can learn from the pandemic’s effects and the importance of strategic risk management and planning


T


he measures we have all had to take for our safety, such as lockdowns


and social distancing, have hampered how the way supply chains operate, and have made things very difficult for the electronics industry as a whole, with these restrictions stacking on top of pre-existing problems such as component shortages and lengthy lead times. Component supply was already a


problem before the pandemic, with many products suffering lengthy lead times due to a shortage of key components such as MLCCs. This demand has also increased during the pandemic, as people confined to their houses have invested in electronic entertainment systems, such as the Nintendo Switch, which experienced a sales increase of 166% from last year. Labour shortages have also affected


production significantly, with many employees having to be away from the workplace, to maintain a safe working environment. Due to these staff shortages, many factories have had to operate with a reduced production capacity, and some have had to shut down altogether. In addition, it is now taking even longer to obtain components as travel to and from certain countries is restricted, regions are shut down and freight capacity is decreased. All of this should point businesses


towards reviewing their risk management processes seeing how they


12 OCTOBER 2020 | ELECTRONICS


can better prepare for future supply chain disruptions. You may not be able to predict what


will cause the next major disruption to your supply chain, but you can put protections in place by taking the following steps:


CARRY OUT A RISK ASSESSMENT For many, Coronavirus has been an eye- opener, exposing the parts of their businesses that were most vulnerable. Carrying out a thorough risk assessment is the first stage of preparing for future disruptions and doing so requires identifying potential risks at each stage of the supply chain, not just with your business.


CREATE CONTINGENCY PLANS From the risk assessment, you must then work out how you would address each risk. For example, what will be your plan to obtain components if one supplier further down the chain had to cease operations? You must have a flexible approach for your contingency plan to work and you will need alternatives for all of your suppliers, even those with whom you have a longstanding relationship.


DIVERSIFY YOUR SUPPLY CHAIN One thing that you can do to protect your supply chain against disruptive events is to diversify it across different countries and companies so that if travel or trade restrictions come into force in


one of your locations, you still have others that you can source your components from.


PLAN HOW TO MAINTAIN CASH FLOW It’s important to maintain cash flow during supply chain disruption, so you need to have plans in place to facilitate this. Start with an internal evaluation of your assets, cash reserves and sources of liquidity and create a cash flow management plan so that your business can keep running even during times of crisis.


ASSESS HOW YOUR BUSINESS CAN BE UPDATED One thing you may want to assess when planning for future disruption is how your business can be updated, as this could help to protect you. A lot of AI systems and IoT devices can help to automate and streamline certain administrative processes that are costing you time and money. Many of these systems can still be operated remotely if you need to limit the number of employees on site. Planning for disruption to the supply


chain by assessing risk and creating contingency plans will be an essential practice for those looking to navigate the current climate and whatever the future brings.


Rebound Electronics www.reboundeu.com


/ ELECTRONICS


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