Developing a cogent supply chain response to the coronavirus outbreak is extremely challenging, given the scale of the crisis and the rate at which it is evolving.
The best response, of course, is to be ready before such a crisis hits, since options become more limited when disruption is in full swing. However, there are measures that can be taken now even if you’re not fully prepared. And although its long-term consequences have yet to fully play out, the coronavirus outbreak already provides some lessons about how you can better prepare your company to deal with future large-scale crises.
What You Can Do Now
Let’s first look at some actions that can be taken to mitigate the impacts of the crisis on supply chains.
Start with your people. The welfare of employees is paramount, and obviously people are a critical resource. The companies that recovered the fastest after Hurricane Katrina in 2005 were those that tracked down all their employees who dispersed across the southeastern United States. Procter & Gamble even went so far as to create a local employee village on high ground with housing, foodstuffs, and cash advances for employees and their families.
It may be necessary to rethink work practices. When an ice storm shut down Louisville, Kentucky, in 2009, local workers could not get to UPS’s sorting hub. But workers could still travel by air, so the company flew in personnel from other cities to keep the hub running. This interchangeability depended on job and equipment standardization.
Coronavirus, supply-chain issues raise fears in California manufacturers
The spread of the coronavirus, questions over how bad it could get and what authorities should do to fight back are casting shadows across the manufacturing sector.
The crisis has become a double-edged sword for Paulson Manufacturing, a Temecula company that makes protective face shields.
As the novel virus spread from country to country, the company upgraded its production capabilities to make as many as a million medical shields a month.
“We had to move heaven and earth to get that done,” said President and CEO Roy Paulson. “We have a lot of orders and have given quotes to many other companies.”
But the downsides are adding up. Paulson said that while he does buy materials from U.S. vendors, some of those products are made with components from China and while Chinese entities have ordered his face shields, air transport companies have limited their flights, making it harder to deliver them.
It’s been a sales boom for Paulson, but he has empathy for other manufacturers. “There’s not a lot of good information coming out of China,” he said. “A lot of my other friends in this industry are dead in the water.”
Avoiding Coronavirus supply chain snarl-ups
As Coronavirus (Covid-19) gallops around its bruising world tour, business, government, and civil society are realizing that the virus has a way to run before it is brought under control.
The speed at which the virus has traveled and its rate of infection (though not of mortality) is likely to bring unimagined consequences to the world. For one, it is clear that when you shut down the world’s biggest factory – even temporarily – it will mess with global supply chains. And in this globally networked world, no country is immune.
While some factories in China have reopened, notably Apple’s manufacturing operations; the East Asian region is still not operating at full capacity.
Companies looking to secure their supply chains have realized that while they may deal with a supplier in Germany, or India or even Vietnam, the chances are that that supplier sources products from China, and indeed, that supplier could source products from another factory in another region of China. It takes just one small bottleneck in one part of the chain to grind up the system.
How Coronavirus Could Impact the Global Supply Chain by Mid-March
Reports on how the Covid-19 outbreak is affecting supply chains and disrupting manufacturing operations around the world are increasing daily. But the worst is yet to come. We predict that the peak of the impact of Covid-19 on global supply chains will occur in mid-March, forcing thousands of companies to throttle down or temporarily shut assembly and manufacturing plants in the U.S. and Europe. The most vulnerable companies are those which rely heavily or solely on factories in China for parts and materials. The activity of Chinese manufacturing plants has fallen in the past month and is expected to remain depressed for months.
Many analyses compare the current epidemic with the 2002-2003 SARS epidemics, which created just a blip in the global financial markets. This comparison is dangerous because the relative importance of China in the worldwide economic ecosystem has increased tremendously in the past 18 years: China has more than doubled its share of trade with the rest of the world between the SARS epidemic today and many more industries are now heavily dependent on China.
In Times of Coronavirus, Maturity in Supply Chain Management Really Matters!
Maturity management is one of the most important aspects to be considered by supply chain managers. Supply chain management in higher levels of maturity takes supply chains to a better level of performance as well as more resilient against potential disruptions due to risks occurrence.
In the case of a surge of coronavirus is likely that more mature supply chains will be able to minimize possible disruptions to be caused by the effect of this virus in comparison with less mature ones. But how maturity management can improve resiliency in supply chains? First, it is important to understand what maturity in supply chain management means.
Maturity in supply chain management can be defined as the level of development in which supply chains are in terms of their management dimensions. When we talk about maturity, it is important to understand the characteristics of each level of maturity for each dimension of supply chain management in order to understand the stage of development in which that dimension is classified. These levels can vary from the basic stage up to an advanced stage.