Securing your supply chain in a time of virus-driven uncertainty

16.03.2020

 

Over a very short time span, the COVID-19 outbreak has been officially framed as a pandemic and governments all across the globe are trying to contain, or at least “flatten the curve” and slow the progression of contamination. 

While the implications of the COVID-19 outbreak, and the efforts to stop it, are humanitarian first and foremost, there are side effects from the virus and the efforts to stop it that presents new challenges for supply chain professionals. 

With so much of the goods being produced in China and south east Asia, any disruptions to the flow of goods, let alone an event as big as this one, requires structured, focused efforts to uphold a working supply chain. Already, significant decreases in trucking capacity means that goods transports are facing major delays just to get to departure ports. Now, even more than before, it is important to have a good and transparent relationship with suppliers as well as carriers in order to mitigate the long-term impacts of COVID-19 on your supply chain. 

 In a report on COVID-19 and its global implications, McKinsey & Co have written about a few actions that can help any company manage this and other situations like it. As it pertains to securing the supply chain, these are a couple of highlights. 

Setting up cross-functional response teams

Create a specific work team that has as its focus to manage the virus response and to generate specific goals on a 48-hour planning horizon as well as weekly horizons and to use this foundation to take actionable decisions in line with the company’s planning scenario. 

Stabilize the supply chain

In the short term, companies need to define their level of exposure to exposed areas and to go upstream to tier 1, -2 and -3 suppliers securing inventory levels. Rationing critical parts and pre-booking capacity on exposed lanes based on predictions need to be considered. 
If longer term stabilization is needed, in which case demand planning, network optimization and a search for complementary or new suppliers as well as carriers should be considered. 

Practice the plan

Though it may be too late in regard to COVID-19, any company that has simulated and practiced their crisis response plans will have a significantly higher likelihood of successfully executing the plan. Simulations can clarify roles and decision owners, ensure clarity and expose any holes in the plan before it is needed for real. 

You can find the article in its entirety here.

 

Written by
Jacob Wiklund

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