A supply chain is only as strong as its weakest link. Supply chain leaders need to alleviate disruption to supply networks, with COVID-19 causing closures to factories in China.
Companies in the automotive and tech industries have been hit hardest by this new strain of coronavirus – companies including Apple, Jaguar Land Rover, and JCB have been impacted.
According to a report by Dun & Bradstreet, 94% of Fortune 1,000 companies are experiencing supply chain delays, as the coronavirus caught businesses off-guard.
How can you prevent further disruption to your supply chain?
It could take a complete change of mindset and systems to protect your supply chain. This is a good time to develop or discover alternative sources and diversify value chains – try conducting a scenario planning exercise and develop action plans.
Technology – one long-term solution is to consider using a digital supply network to link your business with suppliers, customers, and logistics companies. Although technology can’t fix everything, it can help track the locations of your products – and also allows you to save and share information on the current situation. If you do go down the technological route, you must always still have a back up in case of any disruption.
Ensure your business is protected – this is definitely worth checking with your legal and HR departments. You must understand the financial implications of not being able to supply customers, and to advise anyone in your chain located in the affected areas. You will need professionals in your procurement function who are well-versed in risk management and business continuity.
Stockpiling – the government has advised customers not to stockpile, but businesses have been doing so for a while, since the Brexit referendum. This is the kind of emergency that calls for the use of that inventory. At this time, with less demand, you can produce less and still have enough for customers.
Avoid certain areas – move your inventory outside the infected areas. You could even consider localising your supply chain – factories in Britain are seeing an increase in business since the coronavirus outbreak started, which could save your business shipping costs.
Personalise the process – having someone who can speak to health inspectors personally, in China and other affected countries, will help when it comes to reopening factories. You could smooth the process and become a priority, as they see you as a human, rather than a number.
What are others doing?
In any country affected by the virus, ensure you are monitoring the situation in as much detail as you can. Customer spending and demand should be assessed as well: Apple’s sales in China, which was once its biggest market, have noticeably decreased as a result of the virus.
Jaguar Land Rover has reportedly chosen to ship its parts in suitcases as a quick fix in order to reduce disruption. This alternative is not a long-term solution, but it could help until you have new systems in place.
JCB is cutting its production, including reducing staff hours from 39 to 34. Staff will then make up the hours later in the year, once production is back on track. This will mitigate the pressure on workers, and they won’t be too overworked when the outbreak is over.
Businesses may be impacted even after the epidemic ends. Preparing your supply chain for the eventuality of a pandemic is crucial, as the coronavirus continues to spread and cause disruption.
If you’re looking for your next supply chain opportunity, or a capable candidate, find your nearest Reed Procurement and Supply Chain office.