13 Mar The Supply Chain and COVID-19: Managing the Disruptions
COVID-19 is now a pandemic and countries around the globe are implementing drastic measures to protect citizens, communities and commerce. Those of us working in any area of supply chain are no strangers to disruption—it’s just one of the daily risks that we live and breathe in our chosen field. However, COVID-19 and the existential threat it represents is bigger than any other disruptor we’ve faced in decades.
On March 11, the Institute for Supply Chain Management (ISM) released the results of a preliminary survey on COVID-19’s impact on business and supply chain. It’s startling. Seventy-five percent of companies have already experienced some disruption to their supply chain related to COVID-19, and 80% anticipate more to come. And get this—16% have already adjusted their revenue targets down by an average of 5.6%. We anticipate the impact could be even more severe and will be watching for future updates to these trends.
Here are a few important ways supply chain leaders can act TODAY to help their enterprises manage the uncertainty:
- Eliminate blind spots: Talk to your procurement teams, suppliers, manufacturing partners and 3PLs to get a good idea of where they are and how they are being affected. You should also engage with freight providers to assess freight lanes, since airfreight costs may rise as emergency shipments increase. Keep in mind that the situation is fluid, so constant communication is critical. Your goal should be to figure out what you can’t see, and how you can gain line of sight into these areas
- Analyze Changing Demand Patterns: Go beyond historical data, since we’re dealing with an unprecedented situation. We all need to be on our toes in formulating a picture of changing demand patterns and the potential implications they may have on your supply chain. If toilet paper has gone missing at your local supermarket, you’re experiencing this firsthand. Profits on low-margin products like toilet paper are driven by keeping stock low and turnover high. There’s currently not enough backup stock in the supply chain to meet the drastic change in demand.
- Map Your Supply Chain: If you don’t have a clear understanding of the flow of product, information, decision making and supplier locations, NOW is the time to formulate one. This will help you better anticipate potential risks and future disruptions as the situation changes.
- Revisit Decision-making: Decisions determine performance. Companies that perform optimally are those that make better decisions faster and execute more effectively. Make sure your decision-making structure is clear in the new environment. Are our priorities clear? Is everyone in the organization aligned on the priorities? Are our decision-making roles clear? These questions must be answered and made clear to everyone involved in managing the supply chain. This is no time for business-as-usual.
- Communicate, Communicate, Communicate: Proactively communicate across the entire supply chain. Solicit feedback from anyone in the organization and throughout the supply chain to keep lines of communication open and respond quickly to problems that come up. The people closest to doing the actual work will have the best ideas to tackle the challenges.
Supply chain management is not specific to a department or an organization. It is about effectively managing one of if not the most complex integrated business processes that exist in any organization. Right now, it’s more important than ever.
At Navigate, we’re with you during these challenging times. Reach out to me if you’re facing a particularly daunting challenge around your supply chain or any other function within your organization that may be experiencing disruption due to COVID-19.