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Debottlenecking the Strained Supply Chain during Covid-19 Pandemic and Beyond

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by Denver Brian Coorey

The SARS-COV-2 or the novel Coronavirus Crisis has pushed economies into recession or even depression by triggering economic downturns caused by long-orchestrated lockdowns that brought down International trade to a near standstill.

The Pandemic has changed the business environment for many organizations around the globe. As the acute restrictions and lockdowns created many urgent situations that required immediate attention in the early days of the pandemic, many companies now have begun to move to a “recovery mode” having started not only short and medium term, even long-term planning strategies. It is clear that companies have been faced with substantial business and operational disruptions which include mitigating the effects of reduced supply and stocks in hand, managing disruptions to logistical providers, reviewing contractual obligation and many more.

As a result of the closure of export customer facilities due to disruptions and lock down situations in the target markets overseas, revenues of our exporters/manufacturers reduced during the pandemic affecting cash flows and overhead absorption. However industries adapted fairly well by minimizing overhead costs and diversifying products and delivery channels to mitigate the adverse effects on the revenue, profitability and cash flows. Further, assistance by means of new working capital loans and extensions for existing loans were provided by banking sector as per regulator guidelines.

It is seen that the importance of supply chain resilience and risk management has become more apparent than ever before.

Nevertheless, badly affected companies need a vibrant revival strategy with a positive approach.

The Supply Chain and its current strained state

The movement of goods and services from the point of origin- POO ( Raw material/product supplier) to the point of consumption-POC ( consumer) involving various stages or phases is known as a Supply Chain. Further, it includes the flow of products, information and funds.

The objective of the Supply Chain is to fulfill the requirements of the customer by a smooth flow without disruptions and bottlenecks. As we are aware, during the pandemic most of the global supply chains have been disintegrated and disrupted. It can be a problem mainly related to product, information and most crucially funds.

Let me highlight some of the key areas with bottlenecks observed in the supply chain.

Demand Planning- it is hard to establish forecasts of demand as the future is unknown and unpredictable. Forecasts can generally deviate from the original projections as per its characteristics, but during this pandemic it will be further inaccurate. Historical data will not help establish demand forecasts during crisis such as a global pandemic.

Sourcing- Numerous tier 1 and 2 suppliers have gone out of business and supplier selection process has become a difficult operation. Availability of raw materials /products is lower than before.

Procurement- Decisions on what to buy, when to buy and how much to buy is somewhat questionable and risky as the organizations do not properly foresee the market future .We may use Material Requirement Planning (MRP ) software programmes to establish e buying decisions but inputs such as future demands, safety / buffer stock and the lead time will vary greatly and more rapidly due to the unfurling Covid 19 pandemic situation, hence the output from such systems too will not give the required authentic results.

Lead time- This has exploded due to overwhelming demands on one hand and the demand fluctuations on the other. It is observed that disruptions and delays in production, internal transport (haulage), booking of vessels, stevedoring, sailing times and also congestion in ports add to severe delays in lead times. As we all know currently there is a huge delay in shipping due to disruptions and restrictions in logistics all over the world.

Distribution to the final user/consumer – during the pandemic the objective of the distribution is not fulfilled. That is to deliver to the right place at the right time has somewhat not achieved during the pandemic.

Rebuilding the strained Supply Chain

We have identified some of the key areas of bottlenecks observed in a strained Supply Chain. Now let us see how the debottlenecking should progress in order to have a resilient supply chain.

Planning and Procurement- In a restricted supply chain operation, the organization should identify, carefully analyze and ascertain the “real” need of the raw material /products etc. Short and medium term planning is advisable as long term strategic planning should only be done if the Supply Chain Managers properly foresee the future of markets. What to order, when to order and How much to order should be determined by MRP using the basic principles of procurement such as future demand, stock in hand with safety stock, on way stocks, lead times prevailing during pandemic, production delays if any, port congestion and possible delays, transport availability etc.

Hence, identifying the correct order quantity is vital since it will reflect on the future stocks, production and distribution. During a pandemic, a robust plan may not be activated or fully implemented. It is desirous to evaluate real time data as far as possible. However, no ad hoc or haphazard planning should be encouraged. Further, it is important to formulate a contingency plan for emergency situations.

Sourcing- Supplier network to be updated to consider new sources if Tier 1 and 2 suppliers are not performing or if the prices have gone up tremendously due to the pandemic. Availability of the required quantities with supplier must be known prior to ordering.

Lead time- this is key as it has a lot of concerns from the raw material stage, production, transport to final destination. Estimated Time of Delivery / Estimated Time of Arrival (ETD/ETA) to be known and properly followed up with the supplier/ shipping agents.

Distribution- delivering to end user should also be planned as per the identified priorities. Distribution resource planning/Distribution requirement planning (DRP) through the system network will provide what to deliver, when to deliver and how much to deliver to the correct locations. Most importantly the inputs to the system must be accurate, specific and timely.

In addition to above identified areas for de-bottlenecking, as Steve Jobs said the way to de-bottleneck a problem is to simplify, simplify and simplify the process. Reducing non-moving inventory as it releases more warehouse space and release locked up capitals, is one such area. Simplifying the supply chain and having a separate supply chain for different types of demand profiles can significantly reduce the clutter. It is noted that many top companies simplified their planning, ordering and distributing (delivery) using modern technology and further, outsourcing of certain activities are encouraged specially during the pandemic and beyond. In general simplifying means reducing the phases in the supply chain to fewer steps from supplier to customer.

Let me briefly touch upon the current most important and much talked, distribution of vaccines in Sri Lanka.

As I mentioned under the above demand planning, the “real” need should be identified, analyzed and ascertained considering most vulnerable groups, high risk groups/ areas, age groups districtwise, as per MOH areas , GN divisions, etc. It is needed to carefully follow the above procedure till the consignment is cleared for product release and distribution to identified locations. It is also important to formulate a contingency (alternate) plan if the existing plans fail.

The top management of organizations should take control of the Supply Chain during the pandemic and needs to manage and control the supply chain at every stage or phase ensuring the smooth flow towards the end customer. Supply Chain Management is key to the success and increased performance of a supply chain. Companies looking to change their supply chains should consider how to integrate elements and practices around environmental protection, product sustainability and ethical business practices.

Radically changing an existing supply chain is not as easy as it may sound as creating a robust and secure supply chain will need to balance the demands for cost efficiency. At the same time, new logistics considerations may also have an impact on supply chains and the changes thereto. In the short and medium term, it is expected that companies will begin to search for more diversified supplier base while looking to develop a flexible and a resilient but cost efficient supply chain.

In conclusion, may I suggest that companies appoint a facilitator/a senior manager, preferably a position in the board room that has the responsibility and authority to rebuild the supply chain and coordinate with planning, procurement, quality, production, marketing, sales and distribution or hire an external Supply Chain Advisor to inject best-in-class competencies into your Supply Chain team.

Companies that are faster in rebuilding their Supply Chains will have a competitive edge and will conquer a major market share.

(The writer Denver Brian Coorey is a Consultant /Lecturer on Supply Chain Management and can be contacted on suveentrading@yahoo.com)



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Business

DFCC Bank’s Ranwarama pawning facility lends a helping hand to those with urgent cash requirements

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DFCC Bank has increased the advances of its “DFCC Ranwarama” Pawning Facility as a solution for families to meet their urgent cash requirements as many families are experiencing financial difficulties due to the COVID-19 outbreak that has had a significant impact on the Sri Lankan economy.

Through this scheme, all Sri Lankan citizens over 18 years of age with the contractual capacity to declare themselves as owners of the articles can now pawn gold or gold jewellery. DFCC Bank accepts jewellery made of 18 Karat -24 Karat gold, with the articles being assayed using the latest available equipment. Items of 24 Karate will hold an advanced value of LKR 82,000/-, while 22 Karat pieces will hold an advanced value of LKR 68,000/- at an interest rate of 0.75% per month. Those who engage in these transactions are provided a maximum of 12 months to settle the pawning advances at their convenience.

DFCC Bank’s Ranwarama Pawning Facility offers many other special features including the highest advance amount at competitive rates of interest, confidentiality and guaranteed security for the articles, flexible payment plans with redemption options when required and redemption without prior notification. All of these facilities are available with no hidden charges, offering customers the best service available in the market.

You may visit a DFCC Bank branch closest to you to transact or visit the Bank’s website at www.dfcc.lk for further information. Customers can also contact DFCC Bank’s 24-hour contact center on +94(11)2350000 for further inquiries.

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HSBC Sri Lanka recognised as the Best Consumer Digital Bank by Global Finance

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HSBC has been recognised as the Best Consumer Digital Bank in Sri Lanka for 2021 by Global Finance at the World’s Best Consumer Digital Banks Awards in Asia-Pacific. While this is the bank’s fourth award win for this year, this also marks the 13th time that HSBC Sri Lanka has been named the Best Consumer Digital Bank, since 2006.

HSBC Sri Lanka is also the only market in Asia Pacific to win the prestigious award this year.

According to Global Finance, the global health crisis accelerated the need for digital and contact-free solutions by banks in helping create safe and efficient banking services for customers. HSBC Sri Lanka was quick to react in supporting customers in providing seamless digital bank offerings in an increasingly demanding environment, while ensuring customers have a secure banking service with a full spectrum of client-centric banking services.

Through its wealth of digital capabilities and offerings, HSBC allowed customers to adopt a mobile-first approach, and provide them with faster, easier and more secure banking services 24/7. The bank introduced a virtual on boarding capability for account opening, loans and credit cards supported by Adobe Live Sign, eKYC and virtual PINs to provide a seamless on boarding experience for customers. HSBC also offers credit card activation through SMS and an e2e virtual registration process for online banking, offering a virtual banking experience.

In Sri Lanka more than 90% of its personal customers now use digital channels including mobile banking, e-wallets, real-time cash deposit machines and other digital services.

Nadeesha Senaratne, Country Head of Wealth & Personal Banking said, “We are truly honoured to be named the Best Consumer Digital Bank in Sri Lanka for 2021 by Global Finance in recognition of our digital capabilities, and delivering important everyday services and features that customers need and expect. As a leading international bank, we are putting the power of our bank in every customer’s pocket, with easier and more secure digital banking. We want to take the hassle out of everyday banking, and enable customers to easily manage their money online, from opening a new account in a few clicks, to making real time payments and accessing credit.”

Senaratne added: “We’re also blending the power of technology with the expertise of our people and empowering our frontline teams with the latest data and insights tools, to be better-equipped to check customer satisfaction in the moment, to understand, and respond to their evolving needs and give customers excellent service.”

Winners were selected by a world-class panel of judges and entries were judged based on the strength of strategy for attracting and servicing digital customers, success in getting clients to use digital offerings, growth of digital customers, breadth of product offerings and evidence of tangible benefits gained from digital initiatives.

Earlier this year, HSBC Sri Lanka was also named International Bank of the Year by Asiamoney and Finance Asia respectively, and International Retail Bank of the Year by Asian Banking & Finance.

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BoardPAC appointed Strategic Partner of Commonwealth’s Business Network – CWEIC

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BoardPAC, the Sri Lanka-based multinational Board meeting automation solutions company, has been appointed a Strategic Partner of the Commonwealth Enterprise and Investment Council (CWEIC), the organisation officially mandated by the Commonwealth Heads of Government to promote trade and investment between the 54 Commonwealth member countries.

This prestigious appointment will see CWEIC relying on BoardPAC’s award-winning solutions to conduct board and committee meetings with members and maintain relationships across the Commonwealth network at a time when the global pandemic’s complete disruption of business activity has resulted in a surge in the demand for efficient board meeting automation.

The Company said the partnership will also effectively promote the BoardPAC platform to new users and facilitate its expansion into new territories and focus markets. BoardPAC already has a global user base in excess of 50,000 and a presence in more than 40 countries.

Noting that BoardPAC’s latest partnership serves as yet another testament to the quality of its solutions, BoardPAC Co-Founder/CEO, Lakmini Wijesundera stated: “Our growth plan includes expanding our worldwide network, and our strategic alliance with CWEIC will strongly help us extend our presence into Commonwealth territories. The strategic cooperation between CWEIC and BoardPAC is especially relevant in light of the worldwide pandemic, and the emerging need for secure remote working and filling the void in virtual board meetings.”

CWEIC Chairman, Rt. Hon. Lord Jonathan Marland said: “We are looking forward to work closely with BoardPAC. The alliance will not only help CWEIC to conduct virtual board meetings securely and safely, but also align ourselves with all governance, risk and compliance as well as environmental, social, and governance frameworks.” Echoing this sentiment, CWEIC Deputy Chair, Sir Hugo Swire stated: “We are excited to partner with BoardPAC and extend modern digital governance and compliance solutions to organisations operating in the Commonwealth.”

Disclosing that BoardPAC’s excellent track record inspired confidence within the CWEIC to implement its solution on a global scale, CWEIC Chief Executive, Samantha Cohen CVO added: “We’re delighted that BoardPAC, one of the most renowned virtual board meeting automation providers in the world, joined our network of Strategic Partners. BoardPAC will add significant value to our board and committee meetings, allowing the CWEIC to conduct meetings with its members throughout the Commonwealth more effectively. The partnership also demonstrates the opportunities within the Commonwealth, and the confidence businesses have towards the Commonwealth and CWEIC.”

A commercial, not-for-profit membership organisation, the Commonwealth Enterprise and Investment Council’s network includes around 100 business and government Strategic Partners (members) including Standard Chartered, Zenith Bank, Trade & Investment Queensland and the Government of the Maldives from 30 countries and territories. Every two years, CWEIC hosts the Commonwealth Business Forum in association with the host country of The Commonwealth Heads of Government Meeting (CHOGM).

BoardPAC is an award winning, multinational, paperless board meeting automation solutions provider, recognised for driving simple, secure, sustainable and experiential communications for Board and Executive members. Leading corporates such as Petronas, Deloitte, EY, Mercedes Benz, Prudential, Hong Leong Group, Stock Exchange of Malaysia, Central Bank of Sri Lanka, Bombay Stock Exchange, Bank Negara, Maybank, Power Grid Corporation of India, Colombo Stock Exchange, and Sri Lankan Airlines are just some of BoardPAC’s success stories, and the Company said the partnership with the CWEIC will pave the way to several more high-profile additions to this list.

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