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COVID-19 and operations and supply chain management: Sri Lankan context

Background: Sri Lanka and COVID-19

The COVID-19 pandemic which is an ongoing pandemic affected almost all the countries and businesses. As of November 12th 2020 more than 52.0Mn cases detected and more than 1.2Mn deaths reported due to this virus. Despite the health concerns this out break created social, economical and financial issues. Countries trying to bring down the count of infected people by implementing social distancing, curfews and locked downs. This affects the business operations and created adverse impact over the supply chain as well. The first COVID-19 case in Sri Lanka detected on 27th January 2020 and two months locked down implemented from March 2020 to May 11th. Most of the organizations specially small and medium enterprises not prepared to face the situation and it’s affected the income and profits of the organization and lead to salary deductions and layoffs. People who work for the daily wages who depend on that daily income and the economic activities of almost all the key industries severely affected.

Operations management is all about managing the above mentioned transformation process with the help of primary and secondary value adding activities. Operations Management helps to improve the productivity as well as quality within an organization. The main role of operations id to create value  and the transformation process mentioned can be viewed as a series of activities along a value chain extending from supplier to customer(S.Russell and w.Taylor,2019).

Supply Chain Management

Globalization and evolution of Information technology made supply chain management to become more critical to the organizations to manage quality, satisfy customers and to gain competitive advantage (S.Russell and w.Taylor,2019). This is something broader than operations management. A supply chain includes all activities associated with flow of goods and services as well as information flows from the raw material stage to the end user (S.Russell and w.Taylor,2019). Supply chain management can be defined as “efforts involved in producing and delivering final products and services from the suppliers to the customers” (D.Larson and S.Rogers,1998).

The Impact of COVID-19 on Operations and Supply chain management-

The COVID-19 pandemic is already impacting Operations and supply chains of organizations severely (Lin et al.,2020). The Fortune (The Fortune, 2020) in their report stated that 94% of the companies listed in the Fortune 1000 list were facing supply chain disruptions. Even though COVID-19 pandemic originally identified as a health crisis, it is also a food crisis (A.Mollenkopf and K.Ozanne, 2020). The panic buying and expectations and rumors on food shortages lead to this crisis. Further locked downs and restrictions to travel affected the distribution of goods and services. Most of the service organizations introduced “Work from home or work from remote locations”. This affected the efficiency and effectiveness of employees. As mentioned difficulties to get raw materials on time due to the locked downs and getting workers to the factory or office to process the transformation lead to supply chain interruptions thereby affected the operations of the businesses as well. Further organizations forced to change their working methods and the pandemic created a need for digitalisation. Supply chain management as well as operations of the organizations need to be digitalized and virtual innovative methods need to be developed.

Issues related to operations and supply chain management: Sri Lankan Context

As per the Central bank report 2019, which published on 2020 April Sri Lanka is expected to be severely impacted in economical terms due to the pandemic. The economic growth in real terms in the year of 2019 is around 2.3% hence in 2020 and due to the current pandemic it is expected a lower rate or a negative growth rate in the year of 2020. The main contributing sectors for the Sri Lankan economy are tourism industry, apparel industry and agriculture activities. Due the outbreak the tourism industry fully affected and there are so many concessions provided by the government for the industry. Apparel industry also affected severely due to COVID-19 pandemic especially after the second wave that start from Brandix Minuvangoda apparel factory. Even though there are concepts like just in time and make to order most of the organizations in Sri Lanka, having a risk averse attitude hence most of the organizations maintained safety stocks of non perishable items that required for at least two months. Hence bringing the work force to the factory is the real challenge faced by organizations due to the social distancing and curfews. Organizations forced to concentrate more on health and safety measures. After the second wave in Sri Lanka there are so many criticisms raised against Brandix Apparel and it has created a negative image to the organization as well.

In addition to these delivery, transportation, health and safety issues, lack of transparency is another major issue faced by Sri Lankan businesses. The transformation processes used, ingredients used to make the product and source of raw materials, all these factors affecting the quality of the products and affects the business operations in long term well. There are so many cases filed against the organizations for using harmful ingredients. If analyze the supply chains of Sri Lanka clearly we can identify a gap in-between suppliers and businesses. Suppliers used so many ways and use different distribution method to fulfill their orders about which businesses not aware. In a pandemic situation specially where the pandemic is due to a virus and it can spread among people easily, this gap and lack of transparency created more challenges to the businesses.

Sri Lankan government implemented nationwide locked down from March 21st, prior to the locked down there were so many rumors regarding poverty and lack of food and essential items in hand of the country. This rumors and locked down announcement lead to panic buying. This created a pressure in the supply chain management especially to the retail industry of essential goods. The situation created a high demand for essential goods and suppliers started to o business on cash basis and avoided credit periods. This affected and creates pressure to the retail business people, they started to charge higher price from customers. These things observed even when people trying to buy surgical masks during March and April period.

Recommendations

There are so many situations observed that business operations and supply chain interruptions like machine break downs, delays in getting raw materials, defects and so on that lead to customer dissatisfactions. In order to avoid customer dissatisfaction and delays need to introduce new ways and technologies. There are so many situations observed where the products offered at a higher price than the normal days and delivery charges are higher than the normal days. During a pandemic it is evident that businesses affected and cost related to the business operations increasing while revenues declining. The same scenario can be applied to house hold individuals. There are so many announcements regarding salary cuts and layoffs. It is unethical to charge higher prices than the normal market price especially during an emergency situation. What a business is doing during a pandemic going to be remembered by the people over the years and it’s going to affect the sustainability of the business. Hence businesses need to introduce cost control mechanisms and need to find ways to reduce costs there by achieving breakeven. It is a tough year for all the businesses and corporate social responsibility and ethical behavior is more important than achieving profit maximization.

This pandemic made us to realize it is important to have a risk and uncertainty management plan. Organizations not only need to have backup documents they need to have alternative working methods and IT infrastructure. Organizations need to have alternative supply chains and supply chain management techniques. When an organization having a risk management plan they can manage disruptions in operations and supply chain easily. Organizations treat customer as gods and concentrate more on customer satisfaction. Customer satisfaction can’t be achieved without proper supply chain management and operations management. Organizations need to maintain good and strong relationship with suppliers. By building a strong relationship organizations can carry out their business operations efficiently while ensuring quality and can avoid delays. Now organizations are forming procurement and operations departments. Hence to what extent we are having qualified professional in the field of operations and supply chain management is questionable. Hence organizations need to focus on recruiting specialists while higher education institutions need to focus on developing specialists in the field of supply chain management and operations management.

Conclusion

COVID-19 pandemic has brought so many unexpected challenges for organizations and affected business operations and supply chains. This pandemic revealed us what we know about the management of organizations, supply chains and operations are somewhat less. Historical norms and theories developed no longer viable and organizations need to prepare themselves to perform in the new normal. Organizations need to focus more on research and development and need to introduce new ways and technologies to carry out business operations without interruptions and manage supply chains without major distractions.

References

A. Mollenkopf, D. and K. Ozanne, L., 2020. Atransformative supply chain response to COVID-19. Journal of Service Management, [online] Available at: < https://www.emerald.com/insight/1757-5818.htm > [Accessed 12 November 2020].

Central Bank Of Sri Lanka, 2020. Annual Report 2020. Colombo: Central Bank.

D. Larson, P. and S. Rogers, D., 1998. Supply Chain Management: Definition, Growth and Approaches. Journal of Marketing Theory and Practice, [online] 6(4), pp.1-5. Available at: < https://www.tandfonline.com/doi/pdf/10.1080/10696679.1998.11501805?needAccess=true > [Accessed 12 November 2020].

Fortune. 2020. 94% Of The Fortune 1000 Are Seeing Coronavirus Supply Chain Disruptions. [online] Available at: < https://fortune.com/2020/02/21/fortune-1000-coronavirus-china-supply-chain-impact/ > [Accessed 5 November 2020].

Lin, Q., Zhao, S., Gao, D., Lou, Y., Yang, S., Musa, S., Wang, M., Cai, Y., Wang, W., Yang, L. and He, D., 2020. A conceptual model for the coronavirus disease 2019 (COVID-19) outbreak in Wuhan, China with individual reaction and governmental action. International Journal of Infectious Diseases, [online] 93, pp.211-216. Available at: < https://www.ijidonline.com/article/S1201-9712(20)30117-X/fulltext > [Accessed 12 November 2020].

S.   Russell, R. and W.Taylor, B., 2019. Operations And Supply Chain Mamagement. 8th ed. New Delhi, India: Wiley

Bibliography

Goldston, J., 2020. Supply Chain Strategies in Virtually Distributed Supply Chain Project Teams During and Post-COVID-19. International Supply Chain Technology Journal, 6(11).

Hoek, R., 2020. Responding to COVID-19 Supply Chain Risks—Insights from Supply Chain Change Management, Total Cost of Ownership and Supplier Segmentation Theory. Logistics, 4(4), p.23.

Jefferson, F., 2020. Impacting at Risk Communities using AI to optimize the COVID-19 Pandemic Therapeutics Supply Chain. International Supply Chain Technology Journal, 06(09).

M. Queiroz, M., Dolgui, A., Fosso Wamba, S. and Ivanov, D., 2020. Impacts of epidemic outbreaks on supply chains: mapping a research agenda amid the COVID-19 pandemic through a structured literature review. Annals of Operations Research, [online] Available at: < https://link.springer.com/article/10.1007/s10479-020-03685-7 > [Accessed 8 November 2020].

External readings

 https://www.hpb.health.gov.lk/en 

 https://www.who.int/srilanka 

 https://www.epid.gov.lk 

 http://www.industry.gov.lk 

 http://caa.gov.lk 

 https://www.cbsl.gov.lk