COVID-19: What Global Supply Chain Leaders Should Do Right Now
There’s no escaping the coronavirus. The virus is dominating our news cycles and affecting businesses, stock markets and supply chains across the world. It’s not a matter of if your organization will be affected, but how much and when.
I can’t remember an event that caused as much disruption to global supply chains as COVID-19. In fact, a recent Dun & Bradstreet study found that at least 51,000 companies worldwide, including 163 of the Fortune 1000, have one or more tier one suppliers in the impacted Chinese region. On top of that, at least 5 million – and 94% of the Fortune 1000 – have one or more tier two suppliers affected.
Of course, this study was conducted a couple of weeks ago, which means the real numbers are likely even higher, especially with the quantity of cases increasing in the U.S., and Italy declaring a country-wide quarantine.
At riskmethods, we’re keeping a close eye on the supply chain impact. As of March 6th, we’ve communicated over 52,000 coronavirus-related alerts to customers. Our goal: effectively enable organizations to assess the impact on their supply chains and start mitigation efforts. To put that in perspective, in the last two months alone, we’ve sent more than half the total amount of pandemic supply chain alerts than we did in all of 2019.
We’re seeing organizations deal with supply shortages of goods and materials. We’re seeing capacity problems and labor shortages caused by quarantines and illness. We’re seeing a limited ability to identify and qualify new suppliers due to travel bans, logistic hub limitations and severe transportation restrictions and delays. The icing on the cake: The change in consumer behavior is only in the early stages. Decreases in spend due to fear will further complicate global supply and demand.
Considering what’s at stake, the time is now to take action to prevent further supply chain disruption. Unfortunately, the interconnectedness and depth of the global supply chain makes identifying core issues, and understanding exactly what needs to happen, extremely difficult.
Here are a few critical questions that procurement and supply chain leaders need to be able to answer today:
- Which of your supply chain partners (shippers, suppliers, etc.) are most affected?
- What parts and supplies are no longer available?
- How have lead times changed and what are the cost ramifications of changing suppliers?
- Can you clearly identify which products and revenue streams will be affected most?
- Are you equipped to orchestrate the appropriate customer communication and mitigation activities in order to minimize or reduce crisis all together?
The idea of looking deep within your supply chain to identify and assess potential threats may sound daunting, but it’s 100% necessary to protect and ensure the overall health of your business. If you lack visibility, it’s impossible to prioritize mitigation and response plans.
Organizations need to proactively implement a comprehensive, ongoing supply chain risk management (SCRM) program, so they will be better equipped to identify, assess and mitigate future threats to the end-to-end supply chain. Only then can organizations achieve full visibility of their risk exposure. Such end-to-end visibility is at the forefront of staying ahead of the competition and maintaining business operations.
When implementing a SCRM program, AI-enabled technology is key. With AI, organizations can capture unstructured risk data from numerous third-party sources – government lists, social media and news outlets – and implement ongoing risk monitoring that will alert organizations to emerging threats in real-time without creating noise. This is critical to effectively managing risk. After all, the only way to address an unpredictable crisis-situation is to make sure you know about it in the first place – the moment it occurs or even in advance by understanding the negative trends and patterns of early-warning indications. When caught early, organizations can assess the impact and implement adequate and targeted measures before a risk event turns into a crisis
To help, our team has been hard at work developing a special emergency Coronavirus Supply Chain Visibility KitTM, which provides immediate insight into how and where the virus is impacting global supply chains. The new Kit, which can be up and running within 48 hours, tracks coronavirus related risk and provides instant visibility and ongoing monitoring of supplier, port, airport, country and border disruptions related to COVID-19.
The bottom line: this crisis is constantly changing and for now, getting worse by the day. We’re far from understanding the total impact on our economy, the supply chain and the world. Regardless of where this ends up, effectively navigating this disruption will require reliable and real-time intelligence and visibility. We’re aiming to make that accessible to as many organizations as possible.