The world is reeling under the COVID-19 crisis. This pandemic has also affected the operations of organizations of all sizes. With the emergence of new-age technologies, global supply chains are becoming longer and increasingly complex. The rapid spread of coronavirus has devastated the global economy at large. In scope, length, and total economic damage, the potential impact of COVID-19 on businesses is staggering. In this recession phase, 99.9% of businesses are facing slowdowns and disruptions in their supply chain. Though supplier auditors are playing an important role in minimizing the expenses of organizations, it is not enough. Companies should better prepare themselves for whatever disasters may occur in the future. New-age companies are incorporating adequate measures to minimize risk factors. At the same time, these strategies are helping businesses to maximize responsiveness. It is enabling organizations to maintain production and protect profits.
The Coronavirus’ Massive Supply Chain Impact
With more than 2 months of lockdown in most countries, the coronavirus has not just affected supply chains but it has also halted the daily lives of individuals. The world was not prepared for this outbreak and more importantly, the nature of this virus and its point of origin are still not deciphered. Chinese factories have been lethargic in their approach to adopt the preventive measures of slowdowns and shutdowns. The extension of the Chinese New Year proved boomerang and as the spread of virus slowed in China, it was spreading elsewhere, creating havoc in supply chains and perpetuating pandemic fears.
Coronavirus has impacted global businesses in more ways than one. The Chinese manufacturing and consumer market are also facing a downturn as several global organizations are shutting their businesses in China. Many reputed firms have closed some or all of their Chinese locations. This has resulted in a cascading economic effect that’s exacerbated by the simultaneous closure of various Chinese malls. Organizations that rely on brick-and-mortar businesses in the Chinese marketplace have also been affected by these mall closures.
Even in the U.K., several manufacturing giants slashed production and labor due to a shortage of available parts caused by the pandemic. The travel industry has suffered as well, with government quarantines, canceled bookings, and suspended flights. The same applies to the cruise ship market.
According to market analysis, the coronavirus outbreak might cut the economic growth of China by more than half a percentage point in 2020.
How to Strengthen the Supply Chain against Disaster
In most cases, businesses consider the biggest risks to supply chains fall into the below-mentioned categories:
- Financial data risk
- Labor risk
- Natural disasters
- Political volatility
When it comes to a disaster like the COVID-19 outbreak, there are challenges from immediate sources as well, e.g., lockdowns, closure of manufacturing facilities, etc. Also, there are human-centered risks that disproportionately affect experimental businesses like cruise lines. The supplier development engineer experts help companies to take adequate measures as it will insulate and inoculate business firms against the risks that come with disease outbreaks and various natural disasters. By implementing a few best practices, companies can effectively tackle these risks. These measures are listed as follows:
Don’t expect the unexpected: Most companies want to keep things moving when a disaster strikes. For this reason, they are keener on investing in two important supply chain management tools: knowledge and contingency planning. However, these tools can be added with an effective supplier relationship management and supplier development. Companies need to formulate supplier engagement teams who can easily detect and organize profiles of first, second, and third-tier vendors. This team should engage with suppliers proactively and develop contingency plans collaboratively.
Protect the staff: Needless to say, employees are the greatest assets of an organization. Disasters of any kind can be frustrating for everyone. Companies should try to develop contingency plans that allow the employees to work from home, flex hours where needed and provide mental and physical health support services for those in need. The managers of organizations should invest in new-age technologies so that the teams can collaborate effectively even if they are working from remote places.
Invest in procurement software: A comprehensive, cloud-based procurement software has several benefits associated with it. The supplier auditors give effective suggestions to organizations regarding the right implementation of this software. In this case, companies don’t need to panic as this software centralizes data collection, organization, and management. The team members of an organization also find it easy to get hold of crucial information at the right time. Procurement software also helps companies to streamline their business processes and develop contingency plans for shifting suppliers and sourcing materials in times of disasters.
Strengthening their supply chains is what organizations need during a crisis. The supplier development engineer experts have a significant role to play in this regard. Implement the above-mentioned approaches if you want to prepare a shield for your firm to tackle disasters.