This is the third in a three-part series about managing the long-term impact of COVID-19 on capital projects. Read part one, a discussion about changes to managing capital projects, here; and part two, a discussion of force majeure contractual language as it applies to COVID-19, here.
COVID-19 has proven a dire disruptor of the global supply chain. Combined with the war in Ukraine and sanctions against Russia, our tightly interdependent international supply chain has been threatened. Now more than ever, knowledge, flexibility, and creativity are critical to overcome supply chain challenges.
For decades, supply chain organizations have employed traditional strategies to improve their customers’ bottom lines. Those processes, which must be re-evaluated in today’s market, include the following:
Just-in-time (JIT) delivery can be as simple as delivering goods directly to the hook of a crane for installation. A broader JIT practice taps vendors to store key materials for owner organizations; this reduces the owner’s need for dedicated warehouses to store large quantities of raw materials, parts, or components. Today, that JIT strategy may fail to support fabrication schedules or delivery needs. Under current market conditions, owners should consider storing more materials themselves to avoid shortages.
Global sourcing has yielded a much larger pool of available manufacturers and suppliers than in days past. These days, successful global sourcing requires a keener understanding of suppliers’ processes, capabilities, and manufacturing locations. It also requires a thorough evaluation of potential challenges—e.g., municipal lockdowns, sanctions, and port or logistics issues—that could negatively impact delivery. Additionally, owners should examine their own processes for expanding sources to meet delivery needs. This necessitates a complete and continuous adherence to the internal approval process for securing alternative supply sources.
Leveraging spend involves organizations reducing their traditional supply base to secure better price, delivery, service, and quality. This strategy proved effective when the global supply chain operated routinely. In today’s changing market, owners should explore options to establish multiple supply sources and thus expand their supply base.
With proactive planning, flexible project execution, and vigilant attention to detail, owner organizations can meet the new supply chain challenges. To accomplish this, they must:
In particular, owner organizations should ask these important questions:
Overall, increasing your company’s knowledge of the global supply chain, being flexible to new and changing norms, and considering creative alternative solutions can help you meet and beat supply chain challenges. COVID-19 and subsequent global events have rocked the supply chain boat—but we are capable of righting it and restoring an even keel!