Coronavirus Is a Wake-Up Call for Supply Chain Management

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Coronavirus Supply Chain Management

Coronavirus Supply Chain Management- As procurement teams struggle to cope with the Covid-19 global pandemic, most have been trying to keep up with the news about global response measures and have been working diligently to secure raw materials and components and protect supply lines. However, vital information is often not available or accessible across their global teams. As a result, their response to the disruption has been reactive and uncoordinated, and the impact of the crisis is hitting many of their companies full force.

In contrast, a small minority of companies that invested in mapping their supply networks before the pandemic emerged better prepared. They have better visibility into the structure of their supply chains. Instead of scrambling at the last minute, they have a lot of information at their fingertips within minutes of a potential disruption. They know exactly which suppliers, sites, parts, and products are at risk, which allows them to put themselves first in line to secure constrained inventory and capacity at alternate sites.

Despite numerous supply-chain upheavals inflicted by disasters in the last decade — including the eruption of a volcano in Iceland, the Japanese earthquake and tsunami, Thailand floods, and Hurricanes Maria and Harvey — most companies still found themselves unprepared for the Covid-19 pandemic. Seventy percent of 300 respondents to a survey conducted by Resilinc in late January and early February, immediately following the Covid-19 outbreak in China, said they were still in data collection and assessment mode, manually trying to identify which of their suppliers had a site in the specific locked-down regions of China. There are a number of reasons for this problem — and potential solutions.

The required resources for supply network mapping are expensive.

Many companies and leaders talk about the need to do supply network mapping as a risk-mitigation strategy, but they have not done so because of the perceived large amount of labor and time required. Executives of a Japanese semiconductor manufacturer told us that it took a team of 100 people more than a year to map the company’s supply networks deep into the sub-tiers following the earthquake and tsunami in 2011. This explains why most companies are like a major South Korean consumer goods company, which recently told us it had known that it should have mapped its supply networks but has not done so because of the difficulties involved.

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Article Credit: HBR

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