Supply Chain Management in Covid-19 Outbreak Environment

What is Supply Chain?

The supply chain or logistics network is the name given to the entire systems of organizations, people, technology, activities, and resources that cover the movement of products or services from the supplier to the customer.

In the process of supply chain activities, natural resources, raw materials and components are turned into finally products and delivered to the end customer. 

Within the whole of the relationships and links that form the Supply Chain, there is a movement towards suppliers, manufacturers, distributors, wholesalers, retailers and final consumers. 

Theoretically, in the supply chain system, used products can re-enter the supply chain at any point where residual value recycling is appropriate.

Each link of this chain follows each other regularly. Similarly, we can say that Supply Chain has certain stages in terms of business processes. Valuable processes such as production, stock management, material supply, distribution, sales, supply, customer relationship management ensure the functioning of the Supply Chain.

Benefits Of Supply Chain Management

• Provides higher customer satisfaction
• Provides the best fulfillment of orders 
• Costs decrease in logistics items
• Increases efficiency and capacity
• Allows to better meet demand forecasts
• Delivery performance gets better
• Supply cycle time is shortened
• Provides production continuity
• Resists sudden changes in the market
• Saves total costs 

For any company that produces the business, the cycle begins with the purchase of goods and a good planning of the entire procurement process is ensured by good supply chain management. Businesses that cannot manage the procurement process, face a difficult process, such as not being able to deliver the orders, due to the lack of input despite their intense orders. For example, cargo companies, which are faced with excessive demand produced by people who do not want to leave their home due to Covid-19, receive intense criticism due to delivery delays.

Basic Stages of Supply Chain

Demand and order management: Organizing business activities to meet orders from customers quickly and smoothly.

Procurement: It is the best quality, fast and healthy supply of all products and materials required for production.

Planning: It is the right planning of the entire production process together with the cost calculations in the business activities.

Production: It is the most important process on the business side of the Supply Chain. It is the conversion of the previously purchased material with the right tools into a product with low waste in the required performance and time. In the economic literature, production is explained as everything aimed at increasing the quantity or benefits of goods and services.

Stock (Inventory) management: To determine the stock levels of all necessary materials in accordance with the prepared production plans and to ensure efficient management.

Warehouse management: Constructed with inventory management for businesses; managing how and inventories are stored; It is the planning and cost of the processes such as storing the finished products and keeping them ready for shipment.

Shipment (Transport): It is the management of the process of delivering the finished products ready for sale from the warehouse to the customer.

Supply Chain In China After The Covid-19

Before the virus started in China spread to the world, many companies stopped production in China, closed their stores and offices, and ended supply of goods from China.
These developments, which endangered the sustainability of the "Just In Time" production model, forced companies to seek new supply sources outside of China.
International procurement began to turn to cash because there was uncertainty in the market. This meant that non-cash suppliers stopped operating activities and one of the ring in the supply chain broke.
After the Covid-19 outbreak spread all over the world, the supply chain was inevitably broken in some sectors, as firms could not find new supply sources.

Covid-19 Effects Based On Basic Stages Of Supply Chain

Demand and order management: People who did not want to leave their home due to a virus infection turned to online orders. This means excessive demand and workload for online trading companies, logistics staff and related units that deliver the product to people.

Purchasing: The sale of products such as medical masks, overalls, breathing apparatus has been stopped for foreign sales. Some countries also monopolize domestic sales. Various countries also confiscated their goods, although the medical devices paid by the receiver country. The insecurities caused by these examples also made it impossible for companies to access raw materials.

Planning: As there was uncertainty in the market, it also caused uncertainty in the financial planning of business activities.

Production: Although the most important process of the Supply Chain on the business side is production,enterprises have become unable to produce dueto lack of raw materials, healthconcerns of workers, curfew.

Stock (Inventory) management: It has become impossible for firms whose financial and production planning to deteriorate to continue their stock management. Because stock management depends on production.

Warehouse management: Since there is no production, there are no ready-for-sale goods. This has also made warehouse management impossible.

Shipment (Transport): There are no available-topromise goods due to production problems. Even if a good is ready for shipment, the shipment stage also depends on the people. People who should not leave their homes will not be able to carry out their shipment.

The reason why the procurement activities are called a chain is that the disconnection at any step, as seen, makes it impossible for other steps to take place. The Covid-19 outbreak did not cause a disruption in supply of basic needs as a result of the direct interventions of the countries, but we can say that the supply chain was broken in most goods and services.

Some Suggestions For Supply Chain

• Companies should identify existing or potential product supply disruptions throughout the entire supply chain and make an inventory.
• For example; Companies cooperating with the plants where production stops in China should plan the process until these facilities start working again. Accordingly, it is necessary to support the suppliers, make plans against the situations where the product cannot be supplied, make pre-orders and organize the transportation systems to manage the intensity to be experienced with the start of production.
• In this period, with the start of online sales of products, companies should make plans against the intense order of other companies that want to stock.
• At the same time, companies may need to make medium and long-term stabilization plans, develop their business networks and find new sources of supply. These steps are also important for the supply chains of companies to be healthy beyond the COVID19 crisis.
• Consumer demand has declined in China, but demand has not disappeared entirely. People turned to supplying their needs with online ordering to get food and so on. This reveals that companies should invest in online and multi-channel distribution management.
• Additionally, in our country, 47 million tons of fresh vegetables and fruits are produced annually, reaching 80 billion lira. Fresh vegetables and fruits suffer significant losses from the field to the table. Research reveals that losses amount to an average of 15 to 30 percent. Considering that 25 percent of our total fresh vegetable and fruit production is perished every year, the amount of this loss is approximately 20 billion TL. From this perspective, it means that we pay almost twice more for the fruits and vegetables we eat. A short supply chain needs to be established for the safety of products and for the prevention of losses. Short supply chains are easier to control.

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