supply chain disruption

You must read our guide to navigate supply chain disruption

The COVID-19 pandemic has tragically cost thousands of lives in nations all over the world. While the contagion is inflicting a tremendous human cost on our society, it’s also causing significant disruption to our economy and underlying infrastructure.

Of most concern is the myriad of global supply chains. Some analysts state that approximately 90% of supply chains are disrupted, resulting in shortages of key goods, which has ground productivity in many businesses to a halt.

To mitigate supply chain disruption, you must consider these six points now:

  • Understand your supply chain – you need to completely understand your supply chain and identify where there could be bottlenecks now, in the medium and long term. You’ll need to know exactly where key components come from and if you can source those parts from alternative suppliers
  • Estimate available inventory along your entire supply chain – take note of how much flex there is in your supply chain – and this includes spare parts and after-sales stock – to maximise available products for your customers to purchase
  • Assess and mitigate demand – identify customer demand, and where possible, mitigate panic-buying behaviour of your customers to ensure there’s enough supply to go around
  • Put in place measures to allow production and distribution to continue – while many businesses shutter because they are deemed non-essential, your business might be considered essential, and you’ll need to do everything you can to ensure your supply chain continues to function properly. Provide personal protective equipment (PPE), imposing social distancing measures, as well as offering working from home options for those that can
  • Secure additional logistics – ensuring your goods are distributed is imperative to maintaining business continuity during the COVID-19 pandemic. Think outside of your regular distribution channels, for instance, in China, medical supplies were delivered via autonomous drones, reducing human contact in line with social distancing policies.
  • Run cash stress tests – figure out exactly where in your supply chain cash flow is going to have the biggest impact on your business.

In addition, our supply chain risk guide contains helpful tips and advice on how to identify known and unknown risks. An excerpt is below:

Identifying known vs unknown supply chain risks

When you start to create your supply chain risk strategy, start by broadly thinking about the known and unknown risks your organisation faces. Without sounding too much like Donald Rumsfeld’s infamous Iraq War-era speech – here’s what you need to do:

Known supply chain risks

Known risks are possible to identify, measure and mitigate over a sustained period. For instance, if a supplier goes out of business because of bankruptcy, and disrupts your supply chain, this is something you’ll be able to anticipate.

You’ll be able to analyse your suppliers’ finances by checking their financial history, which you will have obtained at the initial onboarding phases, as well as other public resources such as business registers. When you’ve got these details, you’ll be able to quantify what impact that would have on your business through considering the products/services your supplier provides and how that would impact your ability to deliver your own products or services.

Later in the supply chain risk management guide, we outline the steps you should take to analyse and act on known risks. However, broadly speaking your approach should consider:

  • creating an organisational-wide team to identify and analyse all the risks and impacts disruption for each supplier could cause;
  • build a risk management framework to score and measure each risk, ensuring you identify and understand which are the most important to your organisation;
  • steps to take to continuously monitor and report on risks;
  • take proactive steps to understand and identify known risks.

Unknown supply chain risks

These are the types of risks that blindside you and your organisation. For many businesses, the COVID-19 is an unmitigated disaster that’s disrupted their supply chains. It’s tricky to predict unknown situations like the coronavirus pandemic, even for the most risk-aware procurement managers, because these types of disasters can come from nowhere.

To tackle unknown risks, agility is key. Training staff internally to spot unknown risks quickly and then developing a contingency framework is vital to tackling these challenges. We’ll detail what your organisation needs to do to manage these challenges in the guide.

Download the supply chain risk guide today

Our supply chain risk management guide is packed full of tips and advice you’ll find useful as the COVID-19 pandemic continues to unfold. You can download yourself a copy by clicking here.

How is your supply chain holding up? Are you seeing serious disruption? How have you managed to mitigate that? Tell us more on our LinkedIn and Twitter accounts.