The COVID-19 pandemic is the largest supply chain disruption in modern history. As society slowly reopens, there is still uncertainty across sectors and supply chains that are still catching up. To better understand the ongoing implications of COVID-19 as a global supply chain disruption, we are speaking to a number of industry experts on how to think about the current disruption and what to do about it.
This week, Rodney Manzo, Founder and CEO of Anvyl, talked to us about why contingency planning may be more important than ever—even as society reopens—and what preparedness means for businesses and the supply chains that support them.
Our favorite takeaways from Rodney are:
- The risks of inertia and doing nothing
- The impact of a good plan and the right technology
- The future of supply chain is tech-enabled
Is there something about COVID-19 as a supply chain disruption that has surprised you?
Supply chain is being taken way more seriously now because people understand what it is. As a supply chain practitioner, that’s fascinating.
For many consumers, whatever supply chain processes are in place, have failed them—goods aren’t getting to where they’re needed. So for the first time, the world is paying attention.
Businesses are trying to understand everything they can to fast-track and improve what they’re doing. “What’s always worked” isn’t working anymore for many brands; more businesses are cutting through the inertia and looking for ways to create new energy and movement within their businesses.
“What’s always worked” isn’t working anymore.Rodney Manzo Founder and CEO, Anvyl
Before the pandemic, innovation was slow—there wasn’t a forcing function to look at new ways of doing things. Now, a lot of businesses are looking for tech-forward solutions and ways to be flexible (a concept not usually associated with supply chains). It’s amazing how quickly that change happened.
How are businesses being impacted by COVID-19?
Anvyl is a supply chain technology. We connect brands to thousands of suppliers across more than 30 countries—a network that includes tier-one to tier-three suppliers. That level of connectivity means we have a lot of data flowing through our platform which has provided a level of visibility and context into how COVID-19 as a supply chain disruption has evolved.
For example, there are roughly 51,000 tier-one suppliers in Wuhan Province, where the virus first appeared. That extends to hundreds of thousands of tier-two and tier-three suppliers that are vital to production. So, you can start to see why it was such a major hit to the supply chain.
What we saw originally was more than 93% of factories shutting down almost completely, which delayed exports by 21 to 28 days in January and February. Then, we saw roughly a two-month recovery because China was able to shut everything down. Other countries aren’t able to do that, so the global impact has longer-tail implications, even as society starts to reopen.
What has been the key to managing the disruption?
It varies. The pandemic is the biggest supply chain disruption in recent history. This extends beyond our customers, but the organizations that have a deep and tested contingency plan in place fared well.
On the other side, brands that weren’t prepared had to scramble. Many are still triaging production, logistics, and distribution. Without a plan, the impact is bigger, more chaotic. The reality is that everyone is impacted by this—no matter who you are. It’s just relative to how prepared you were to begin with.
What types of brands will survive?
It’s never been easier to start a company, but it’s never been harder to scale. eCommerce has created an entirely new world for businesses. Those that are stuck in their old ways, won’t make it.
There are three things that hold businesses back: inertia, lack of competition, and lack of connectivity. Organizations that are resistant to change—that aren’t actively looking for ways to update systems and processes—are being left behind. The competitive landscape is only becoming more crowded, and the ability to connect to the internet, wherever you are, is enabling businesses to operate much more quickly. Not long ago, factories couldn’t connect, and now they’re blazing.
It’s never been easier to start a company, but it’s never been harder to scale one.
But, the businesses that have resilient and diversified supply chains, that were able to act fast, are now operating ahead of the rest. I recently spoke to Michael Corbo, Chief Supply Chain Officer at Colgate-Palmolive. They have an incredibly robust contingency plan. He walked me through the complexities of knowing every single backup detail, but said the result is flexibility, which is invaluable.
Colgate is one of the biggest brands in the world, and they figured it out. When COVID-19 hit, they rerouted production from China to North America and back again as different regions were impacted. Having that level of flexibility is insane. And if a business like Colgate can do it, anyone can
Having that level of flexibility is insane. And if a business like Colgate can do it, anyone can.
Society is reopening. Are supply chains ready?
Companies are still being hit. China shutting down was unnerving for a lot of businesses and there’s still so much uncertainty ahead. Things are improving as the economy reopens, but until we have a vaccine, there are so many risks.
Consider distribution. What if someone at a fulfillment center tests positive and that location has to shut down? What if that’s your only fulfillment center? That’s still a major concern for supply chain leaders.
We aren’t through the woods yet and I think that’s what’s causing a lot of these companies to truly think about contingency planning so they can be successful no matter what. And, many businesses are figuring out how to build the plane while flying. We can’t afford to wait until this is all over to assess and make plans. It must be iterative.
We can’t afford to wait until this is over to assess and make plans. It must be iterative.
In contingency planning, there are four critical aspects to consider. The first is understanding your supply chain. The second is looking at the components for which you can create redundancies (suppliers, warehouse providers, carriers) and have them ready and prepped. The third is assessing what you can do now to increase your safety stock—holding more inventory and allocating it across different locations. And the fourth is implementing iterative technology that unlocks visibility and enables you to be nimbler. All of these things can happen now.
In contingency planning, there are four critical aspects to consider … All of these things can happen now.
Why is planning so critical—especially now?
Because anything can happen. What if there is a second wave? If you’re a retailer, what if a second wave hits during your busiest time of the year and all of your sales move online or not at all because you weren’t prepared … again?
The only way to improve your supply chain is to plan, replan, plan, and replan. If you aren’t doing that constantly, you're failing.
The only way to improve your supply chain is to plan, replan, plan, and replan. If you aren’t doing that constantly, you're failing.
You must have contingencies in place at every single stage of the supply chain. If a second wave hits, it shouldn’t matter. If you have demand for your product, you should have a plan to meet that demand. Again, way easier said than done and there are a lot of complexities to consider, but as a supply chain professional, your job is to never have a shortage of product.
The biggest risk right now is doing nothing. For a lot of businesses, there hasn’t been that immediate need to change how things have been done—going back to that point on inertia.
As a supply chain professional, your job is to never have a shortage of product.
In [Anvyl’s] world, our number one competitor is an Excel spreadsheet. Those can’t scale. They don’t unlock silos. But, a lot of businesses have managed well enough using that level of technology, until now.
When I was an operator, I remember being able to only do so much and only see so many things. Eventually you log off for the day or it’s the weekend, but technology doesn’t sleep. It can continually compute and analyze and provide data that no human could ever—in a million years—be able to do.
If you’re relying on manual processes to manage your supply chain, it isn’t going to work—especially as business gets more and more complex. To thrive in a hyper-competitive environment, you have to realize where to augment the process and the human component with technology.
Will DTC stick? Have shopping behaviors changed forever?
Years ago, I went to Harry's Shave Club because I believed online shopping was part of the natural progression of retail. And when I was in charge of Harry's global supply chain, I saw the evolution first hand.
Brands have such an opportunity to build an amazing ecosystem around them that supports direct-to-consumer sales, or building channel partnerships or your own brick-and-mortar stores. There’s an opportunity to create so many touch points.
I see the pandemic as a forcing function to finally accelerate the online portion of the retail ecosystem. Especially now, when no one is really leaving their houses. We can all thank Amazon for that. I want fast, free delivery, but I also don’t want Amazon to be my only option.
I see the pandemic as a forcing function to finally accelerate the online portion of the retail ecosystem.
If you can create a great customer experience through service and communication, you’re going to survive. Brands are seeing new customers come in, and if you do a few things really well, then you could win a new customer for years to come.
When it comes to total behavioral shifts, I just think of the time-savings—getting dressed, getting in your car, driving, getting out of your car, walking through the store, standing in line. You don’t have to do that anymore.
Because of the pandemic, more people are realizing the benefits of online shopping. More people are seeing how meaningful the time-savings really are, and that time is money. There will be a mix of in-store and online shopping, but it won’t go back to how it was. There will definitely be a shift because of this.
The supply chain needs tech, but what kind?
Brands need options and they need visibility. Maybe a brand doesn’t have to stick to a single supplier, but can instead expand and work with more suppliers to be more agile upstream when a backup plan is needed. With the right tools for supply chain visibility, it’s easier to recognize when that backup plan is needed—with better visibility comes better decisions.
With better visibility comes better decisions.
Companies will start looking for systems and solutions that can give them those options and provide flexibility, visibility, and collaboration—that’s going to be critical for companies moving forward.
What does the future of supply chain look like?
It’s technology-enabled. There have been a lot of conversations around the benefits of vertically integrating the supply chain, at least in response to a disruption like COVID-19. But that isn’t economically feasible—for almost anybody.
There is this notion of a vertically integrated technology supply chain, though. With a suite of supply chain technologies and platforms, you can integrate the data to gain that visibility that we talked about earlier. From sourcing and production, to shipping and transportation, to warehousing and fulfillment, it could all be seamlessly connected. That would give you the same level of visibility you’d have if you had a traditional, vertically integrated supply chain.
With a tech-enabled supply chain, you wouldn’t need to do that. The systems would connect the dots for you.
If you had a system—or even a portion of your supply chain that was managed digitally, you could see when a particular component goes down. Instead of managing that manually, you’d be able to rely on systems to optimize a new path while maintaining operations, in spite of the disruption.
Today, most supply chain leaders would have to pick up the phone or write an email to solve a problem like that. With a tech-enabled supply chain, you wouldn’t need to do that. The systems would connect the dots for you.
About Rodney Manzo, Founder & CEO of Anvyl
Rodney Manzo is an experienced leader in supply chain and operations with a demonstrated history of launching products around the world. Prior to founding Anvyl, he was the Senior Director of Supply Chain at Harry’s Grooming and a Global Supply Chain Manager at Apple. Rodney is skilled in Operations Management, International Supply Chains, Cost Negotiations, Analytical Skills, Systems Engineering, and Team Building. He is a strong operations professional with an undergrad degree from West Point and a MBA focused in Finance/Operations from Columbia Business School.
Anvyl is a cloud-based supplier relationship management platform that allows companies to manage suppliers, oversee production, and house historical product data from procurement to delivery of inbound goods. The collaboration engine easily integrates with most ERPs, providing teams with better visibility, operational efficiencies, and smart automation for every part of the supply chain.