As the old saying goes, “necessity is the mother of invention.”
Like all clichés, there's a considerable element of truth to the above notion. That's mostly clear when looking at COVID-19's impact on all businesses, and more specifically, supply chains.
Given the day and age, there should be available methods and tools available to manage risk. Still, there wasn't enough impetus for companies to entirely rethink and transform their global supply chain models.
With the challenges presented by the pandemic, it’s now more important than ever for organizations to assess and streamline their practices and procedures.
Read below as this blog investigates supply chain risks due to COVID-19 and some management methods that could mitigate those issues:
When China Slows Down, the World Slows Down
As many know, Wuhan, China, is viewed by many as ground zero for COVID-19.
A critical problem has arisen from this situation—Wuhan plays a pivotal role in many global supply chains. Beyond that, it has a large part in high tech and modern manufacturing.
Furthermore, 200-plus of the world’s Fortune 500 firms have a direct presence in Wuhan. On top of that, 163 of the Fortune 1000 have Tier 1 suppliers in the impacted area. Plus, 938 have one (or more) Tier 2 suppliers there.
It’s important to note that lacking any direct suppliers in impacted areas doesn’t offer any security. Tier 1 supplier visibility won’t be enough for most companies trying to offset risks. And very few companies can track supply chains other than the first tier.
In a nutshell, when there are plant closures and supply shortages, it commonly has a chain reaction. The extended supply network scarcity often leads to heightened disruption.
Advanced digital solutions seem to be the only way that multi-tiered supply chains can be reliably traced. This will help organizations grasp supply-side risk.
COVID-19’s Current Impact on Industries
Most industries, at a high level, should experience limited medium-to-long-term economic impact. In fact, economists seem to believe that overall growth trends – fundamentally – won’t be altered.
The damage done will primarily occur during the short term due to a hampered consumer sector, which holds the most weight with economic growth.
It doesn’t take an expert to know that catering, retail, and travel services have taken tremendous losses because of plummeting sales and high fixed costs. Unfortunately, this shortfall in cyclical consumption won't make up the difference once the epidemic has ended.
Compared to the consumer-based market, manufacturing has remained relatively unscathed. Right now, the main focus should be on the following supply chain obstructions and challenges with recovering production:
Time is of the essence with these issues—the longer they persist, the more extended the recovery. It’ll be even more difficult if other manufacturing hubs become affected by the pandemic. However, as time passes, the industry will recover.
How to Handle Supply Risks When Partnered with Impact Suppliers:
Improve Workforce and Labor Planning:
Offset Tier 1 Supplier Risk:
Shed Light on the Extended Supply Network:
This is also important for proactively altering supply chain plans and maintaining maximum efficiency despite supply-side constraints.
The tips provided to offset supply chain risk during COVID-19 are only scratching the surface. There’s a litany of solutions required.
However, none of these solutions mean anything without recruiting top-performing talent to successfully execute strategies to get things back on track.
Struggling to find the talent your business needs to navigate through uncertain times? Bear Staffing is here to help.
Our team of industry experts has substantial experience connecting organizations with top-tier talent across multiple industries. Call us today to learn more.