COVID-19: Dealing with Supply Chain Disruption | Blue Ocean Academy
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Supply chain disruption

A disease that began in the Chinese city of Wuhan became a global threat in no time and the economic growth is plunging day by day. While the pandemic called Corona Virus or COVID-19 has disrupted the whole world, every industry is facing unprecedented challenges. As the global economy will undoubtedly have a big impact as a result of the disease, all businesses are fighting hard to overcome the hurdles.

Though Coronavirus is graver than any other threat in recent human history, it is also a lesson for the businesses to become equipped with the right tools to manage the instances of global supply chain disruption. Reputed brands like Apple, Microsoft and Nissan have shared the challenges they are facing as their factories in China had to close down.

As the medical field strives to contain the virus at the earliest, the supply chain leaders must try to mitigate the negative impact of the virus on global supply chains.

Impact of corona outbreak on supply chain

The supply chain has been a matter of concern since the inception of the corona. The implications of the outbreak on the supply chain are profound given that the disease originated in China, the prominent name in global manufacturing. The complete picture of the consequences is yet to come; however, the following are the major areas where the business will face challenges:

  • Availability of materials: Shortage in the supply of raw materials and finished goods due to travel restrictions in the impacted areas.
  • Labour: Many of the employees won’t be available at work due to quarantine guidelines.
  • Logistics: Transportation of materials in the supply networks will face several limitations. Finding alternative routes and means of transportation will also become tough.  
  • Consumers: There will be changes in the purchasing habits of the consumers as there are restrictions in going to public places and most of them would prefer online shopping. Another result of the crisis is the financial instability due to which they would be reluctant to purchase anything other than the essentials.

Important steps to mitigate risk

The success of all organizations mainly depends on the way it deals with the crisis. Crisis management is an inevitable part of business planning and you should have alternate plans during the crisis. Following are the important ways in which you can manage crisis and mitigate risk on your business:

  • Value your human resources: Employees are the backbone of an organization; hence, the management should start crisis management from them. If they are in panic and pessimistic about the disruption, nothing is going to work. In this instance, the crisis is caused by a pandemic, so the first priority should be ensuring the safety of the employees. As the governments in different parts of the world have directed the population to stay at home, you can provide remote working options to your employees. For those who are not able to work from home, ensure that the office premises adhere to the safety guidelines of the health department.  
  • Map the supply chain: Supply chain mapping is the process of monitoring the different nodes of the supply chain to identify the high-risk sites. It helps in addressing the hurdles, and reliance on single suppliers. The visibility of the supply chain is beneficial in acting fast at the time of crisis.
  • Plan ‘what if’ scenarios: Once the companies have a clear picture of the supply chain, they can make plans for scenarios. For instance, those who rely on the main source for products can keep additional stock of inventory even though it may lead to overstocking. Being proactive is the best practice in supply chain management.
  • Rely on accurate sources for information: Organizations should depend on the authentic sources to get the right information about the disaster. Usually, there is a tendency to hide facts as it can trigger panic in the public. You can develop contacts with people who can provide accurate details of the crisis. Being up-to-date about the on-going developments will help you to meet the emerging needs of the day.
  • Create an emergency operations center: An emergency operations center is the place where a specialized team is assigned to monitor the situations and take prompt decisions during an emergency. They will collect data, make decisions to protect all stakeholders, maintain continuity of the organization and disseminate important information to everyone associated with the organization. Every organization should have EOCs with experts who have specific roles and have emergency action plans.

Be prepared for the next crisis

Once the crisis is over, it is easy to give a sigh of relief as your business is again on the right track. But, you should be prepared for similar events down the road and face the instances of global supply chain disruption bravely. So, it is always better to monitor the supply chain and have risk management policies in place to act promptly during the crisis.

  • Implement a business continuity plan: A business continuity plan (BCP) will help you to manage an unpredictable disaster in the best possible way. It involves creating policies to respond to crisis and recover quickly by mitigating potential risks on the business. Companies should create a separate team to identify the risks, plan recovery requirements and implement recovery strategies.
  • Develop a risk-aware culture: Every employee has the responsibility to mitigate the risks that may affect the company negatively. Employees need risk awareness training to learn what signs they should look for and what steps they should take in order to reduce the adverse consequences.
  • Consistently monitor risk: Once an organization has the right risk mitigation policies in place, it must continuously monitor the supply chain operations to ensure smooth functioning. This not only helps in securing business but also gives insight into the areas which need improvement in order to enhance efficiency.

Though it is impossible to predict a grave crisis like coronavirus outbreak which has stunted the economy like never before, organizations can be prepared so that there is the least harm for the business. They should act at the beginning of the crisis rather than starting from scratch when everything in the world has come into a standstill.

A disruption in the supply chain operations can result in irrevocable losses in your business. COVID-19 is an important lesson for all businesses including global icons like Apple. It is high time that you plan and implement supply chain risk management strategies to ensure business continuity despite supply chain disruption.