Supply Chain Disruption Management During COVID-19 Situation

The COVID-19 catastrophe generates budget pressures for enterprises across the world. Leaders across the enterprise need to balance short-term cost-cutting while permitting long-term growth. Supply chain disruptions ascend due to external and internal factors. Addressing these factors necessitates cross-functional partnerships between enterprise risk management (ERM), procurement, supply chain and other managers.  As the coronavirus outbreak spreads swiftly and exceeds the SARS outbreak in 2003, supply chain leaders must alleviate instant disruption and plan for future incidents. As global leaders and health officials track the strain and make choices concerning restraint, supply chain leaders need to measure and plan for how the virus will impact global supply chains. 

Though the outbreak is being compared to the 2003 SARS outbreak, China is now much more established and integrated with the global economy, and the country has meaningfully improved its transportation networks. Travel restrictions, shortages in labor and materials, as well as logistical challenges through constricted controls, and hub and border closures will cascade and supplement the impact much further than it did few years ago. 

However, it is difficult to forecast the exact significances of coronavirus, organizations might begin to see influences across the supply chain which includes:  

  • Materials: Supply scarcities of materials or finished goods coming from or routed through logistical hubs in impacted areas.
  • Labour: White- and blue-collar labor may not be available due to isolation procedures or illness. 
  • Sourcing: Travel may be constrained to certain areas, limiting the ability to learn, qualify and certify new business or programs and to manage business. 
  • Logistics: Established hubs and supply systems may experience limitations in capacity and accessibility so that even if materials are available, they would be held elsewhere. Discovery of alternate routes and means of transportation will become problematic.
  • Consumers: Consumers may be more cautious in their purchasing habits due to fears about being in public and potential exposure to the virus. Many may turn to online sales, challenging logistics networks.

Interferences happen and foremost supply chain organizations apply enhanced risk management processes which include a framework to incessantly measure key risk indicators and to prepare scenarios for manageable and foreseeable uncertainties such as compliance, labor, material, capacity and financial issues.

Epidemics and pandemics present a different scenario and the main influence is a lack of access to staff, decreased productivity and a change in public behavior in terms of shopping practices and spending. The full impact of coronavirus on supply chains might not become obvious until sometime in the next few months and beyond.

The subsequent step is to make assured that all inventories are within reach and outside impacted areas and logistical hubs. Moreover, supply chain leaders should work with their legal and HR departments to understand any financial implications of not being able to deliver supply to customers and provide guidance to employees located in the impacted areas.

Economic turns are common in business, but there are many other types of turns, or unexpected changes, that force decisions. Turns can also be geopolitical, environmental, social or competitive. Unexpected turns may be extreme, and the time to impact may be short due to digital capabilities. They often come in combinations and increase the need to react on different business vectors and require a high-performing executive team.

In the mid-term, the focus should be on balancing supply and demand as well as building buffer stock. Assess opportunities to diversify the supplier ecosystem and review or create the organization’s overall risk management approach. Work with internal stakeholders and strategic and critical suppliers to establish a congruent risk management approach to monitor and prepare for potential material and manufacturing capacity shortages.

Once the initial impacts of the crisis are mitigated, it’s all about foreseeing the next “when” and supply chain leaders and their teams can plan to conduct a scenario planning exercise and develop action plans considering the time to discover or develop alternative sources and diversify value chains. 

Confronting strategic and concerted supplies with high value at risk where internal risk capabilities to absorb, such as substitute sources, routes, inventory and cash reserves are not adequate enough to mitigate any major disruption. However, better preparedness than the competition might even open fresh opportunities when the next disruption comes around. 

In the present context, remaining agile through disruptions always demands opposing measures around cost, strategy and talent. It is to be noted that top performers challenge conventional thinking during disruptions and the most successful take risks during these turns. Supply chain leaders prepare for turns and lead by building suppleness into systems, processes and decision making.

Humans are naturally inclined to make decisions based on emotions. In fact, subconscious pathways and emotional stimuli are many times faster to trigger decision making than conscious cognitive processes. The key is to appeal to both the heart and the mind of the audience. Communicate the critical data, but in a way that inspires trust, confidence and action. 

Moreover, successful narrators are very clear about the purpose of the communiqué and the onlookers they intended it for: 

  • Seize attention: Stories/narrations involve people emotionally and motivate the heart and engage the mind and so use personal experiences to create a trusting, warm message.  
  • Facilitate understanding: It is easier to learn via a story than simply from data points as stories break down complex ideas into concepts that are easier to understand and frequently appeal to emotions. People are also more likely to share a story with someone else, sharing the lesson as well. This is the technique the podiatrist used to explain flattening the curve.  
  • Allow listeners to recall the message for longer period: Increase retaining of main message by using a story that has information, emotions and sounds as people incline to recall stories more easily than pure facts. 
  • Fill an emotional requirement: Merely telling employees to do something is not enough as realizing organizational change is about emotions, relationships and gaining the commitment of people. 
  • Support people link ideas with earlier experiences: Storytelling helps employees personalize their own messages because a story may retell them of a similar experience or a challenge, enabling them to apply their previous experiences to the current event. Moreover, this enables the audience to hear the coherent and emotional aspects of the story plot points and improves communication. 

Epidemics and pandemics present a diverse scenario, as the main influence is an absence of access to staff, decreased productivity, and a change in public behavior in terms of shopping practices and spending. Primary indications are that the economy in China is already being impacted, as millions are forced to remain in their homes, and events planned around the Chinese New Year have been canceled. This means that the global supply chain will be wedged next as inventories deplete with missing refills due to labor shortages and other potential logistical impediments, such as the mentioned hub closures or travel and material flow limitations most likely to be instated by local and regional governments.