Top 3 impact areas from COVID-19 and the response from Supply Chain Planners

The covid-19 outbreak is affecting supply chains and disrupting manufacturing operations around the world. The impact of Covid-19 on global supply chains has started by forcing thousands of companies to throttle down or temporarily shut down the assembly and manufacturing plants all over the world. It’s a public health emergency and brought the product flows to a halt.

Organizations should focus on three main areas to reduce disruption from the Covid-19.

Impact Area 1: Employees

• Due to quarantine, the Government has ordered people to stay at home. This has made organizations put measures in place around travel and site visitors.
• In the case of supply chain organizations, goods are not being produced and exported to dependent markets to meet the demand of the product or other factories.
• Organizations and supply chain leaders need to take preventive measures on how to protect the health of workers and supporters who are already ill. Providing clear and consistent communications and updates through human resources and travel security is essential.

Impact Area 2: Manufactured goods

• The Covid-19 could transform the competitive landscape. Manufacturing companies who export their products are at risk of losing market share, as the client will look for other suppliers when they don’t receive goods in time.
• Products associated with brand loyalty will be less impacted because the customer is more willing to wait.
• Organizations must analyze and forecast the impact of Covid-19 on their products and customer demands and product availability.
• Some organizations may have a sharp increase in demand or unexpected drop in sales, such as panic buying for essential items.

Impact Area3: Price

• The extra cost incurred due to Covid-19 should be credited to entire organizations, not to individual departments.
• This will make it easier to assess the cost against the organization’s ability to achieve its strategic objectives and manage stakeholder expectations.
• Organizations and supply chain managers should think about how to get protected financially against similar situations that might occur in the future.
• The supply chain will not be the same after this event. There should be an increased focus on risk exposure and business continuity plans.

Response from supply chain managers:

1. The most important thing supply chain managers should do is to protect Employees and avoid the spread of covid-19.
2. Prepare production schedules by considering the availability of raw materials and capacity.
3. Make sure you get the demand and supply information from key customers and suppliers as input for overall planning. The more transparent the supply chain members behave the less supply chain disruption.
4. Perform forecast revision considering the global scenarios and disruption in the supply chain.
5. Prepare a demand plan considering the capacity constraints especially manpower.
6. Make sure that the supply chain facilities are in a hygienic situation and ensure that COVID-19 is not spread through the products.  This is very important if required additional packaging could be done to ensure protection.
7. There is a high possibility that the payments get disturbed.  Protect yourselves with the best possible short-term loans to cover up a working capital cushion.
8. Finally, make sure that the key customers are notified of the situation so that they understand and support it.