The outbreak in China is abating even as New Jersey is dealing with its first cases of COVID-19, and its first fatality. For businesses, keeping employees safe and healthy should be their top priority, but the impact the disease is having on the supply chain is probably going to demand attention as well.
As Senior Editor Shefali Kapadia reports at SupplychainDive.com, businesses should be doing three things to manage supply chain disruptions—understanding the risk to client demand, mapping the supply chain, and planning for “what if.” Her information comes from a panel discussion at the MODEX 2020 supply chain conference going on this week in Atlanta.
Understanding Impact on Demand
Businesses that rely on trade with China to any degree have already seen the supply-side impact of coronavirus as a number of Chinese manufacturers shut down or cut back on operations to try to contain the outbreak. The inability to get enough products or parts impacted a wide array of companies, including Costco and Apple.
As impacts spread beyond China, however, it’s the other end of the supply and demand formula that is of concern. Kapadia writes that “retailers and other consumer-facing companies should expect reduced demand if citizens are under quarantine. Effects can also be psychological as people opt to change behaviors to avoid spread of the disease.”
Mapping the Supply Chain
This one falls under the heading of something businesses should do anyway, coronavirus or not. In short, managers armed with a map can pinpoint an exact source of disruption to their supply chains and assess how to react to it.
“Panelists said successful mapping often relies on hyperlocal information and requires data- and information-sharing between partners” Kapadia writes. The goal is to know where inventory is, including at the distribution level.
“What if” Scenarios
If you have a map and data, you can plan out what to do under different scenarios, which is nothing new. Supply chain stakeholders have talked about risk management and diversification for years, but the viral outbreak pushed the strategies forward and made them top-of-mind issues, with many firms realizing they should have placed greater focus on such strategies in the past, Kapadia said.