In this time of unprecedented uncertainty and chaos, organizations are determined to keep their supply chains operational, which means navigating major shipping delays, panic-buying and factory closures. Here are five steps supply management professionals can take to protect their supply chains.
Step 1: Keep your team safe. As governments around the world execute increasingly draconian measures to keep their citizens inside, there’s simply no excuse for employers to not prioritize the safety of their teams. Anyone that possibly can, should be working at home. Travel must be restricted to the absolute minimum. Take extra health and safety precautions in the workplace to best protect those who do have to come in. This could include segregating employees, more frequent and thorough cleaning, or introducing a rota to control the number of people being in the office at any one time. Enable a smooth transition to remote working with collaborative platforms such as Monday.com or Slack.
Step 2: Set up a disaster response team. Supply chain management has always been a profession that thrives on collaboration and innovation. Now, more than ever, it’s important to harness the collective brainpower of your organization to respond and adapt to today’s ever-changing landscape. Supply chain professionals need to establish and lead a disaster response team, which that reports directly to the C-suite, to discuss crucial factors affecting the supply chain and what to do about it. The team should be an agile, cross-functional, decision-making command center.
Step 3: Know your weak spots and implement contingency strategies. Manufacturers in China are currently operating with 56% of their normal staffing numbers at 50% capacity, although there are signs that the Chinese economy will be the first to recover. As a result, lead times are increasing to almost double their 2019 average and organizations face the prospect of losing some critical suppliers altogether. To mitigate this risk, identify both the most critical and most at-risk links in your supply chain — particularly where products or services are procured from a single-source supplier. Identify new suppliers in alternate locations, at least for the coming months. Note: Before selecting a new vendor, clarify if you would be in breach of an existing contract if you moved. If you do sever ties with an existing supplier, be sure to recover any assets from them such as stock, materials or equipment.
Step 4: Conduct ongoing and thorough risk analyses. The scale and impact of COVID-19 is changing incrementally. This demands ongoing, close monitoring of your supply chain. Stay one step ahead of the next major border closure or city lockdown. Ignoring the early warning signs could be the difference between keeping your organization afloat or not. If your suppliers have requested changes to payment terms, have failed to deliver a service or product on time, are no longer communicating with you openly, or your market intelligence has informed you of a growing crisis in a particular area, now is the time to act. Be sure to forecast the financial impact of different contingencies to understand the long-term consequences of the choices your business makes today.
Step 5: Plan for the future. COVID-19 has given organizations around the world a stark reminder that their existing risk-mitigation strategies are not enough. While this is absolutely a time for agile responsiveness, it’s also an opportunity to take stock and make changes for the future. Consider the benefits of evolving your supply chain to a more fluid, diversified model, driven by factors including cost, demand, production and the likelihood of black-swan events. Digitization and technology have a key role to play: Automation, blockchain and 3D manufacturing can accelerate response time and drive supply chain efficiencies.
In closing, be realistic. Every organization is going to suffer financial and supply chain impacts from the COVID-19 epidemic. Attempting to maintain a business-as-usual supply chain is impractical and will only lead to burnout. Instead, focus on meeting critical business needs and maintaining supplier relationships.