The coronavirus has severely threatened the business sustainability of many organisations. We look at some steps to reduce the impact of coronavirus in Europe.
Europe has been devastated by the outburst of coronavirus pandemic. With the increasing red dots, Spain is the worst hit with more than 150k cases followed by Italy and Germany1. Normal life is suspended across the continent, and the economy has taken a tremendous hit. Supply chains for all major sectors are crippled, and the whole world is taking a “Whatever it takes” approach. Hope seems to be the only sunshine amidst this dark storm.
Let’s Refresh and Rethink!
The Virus and the Disruption is novel, but the characteristic of the disruption isn’t.
The answer lies in the universality of all pandemics.
We already sustained our supply chain and businesses from events such as the 2002-2003 SARS epidemic, the March 2019 Iceland’s Volcano eruption, Japan’s Earthquake and tsunami in March 2011, and the floods in South East Asia in August 20112. Each event taught us valuable modelling lessons and made us renew our strategies long before COVID -19 originated.
We have to understand that the core problem that Coronavirus poses lies in the rapid acceleration in the disruption rather than the disruption itself.
This rapid rate of change and impact is a novel problem. The COVID -19 outbreak is comparatively more impactful on the supply chain than all these events combined because it hasn’t just disrupted, it stopped production and logistics.
But wait! Aren’t we still working from home while at the same time trying to manage a crumbling business?
So, Let us refresh and rethink our models and procurement strategies rather than restricting our thoughts and cease to make smart decisions.
Do what we do best: Adapt and Respond!
So, sailing the ship to the coast beyond the Corona Storm has 2 phases:
From our previous experiences of unexpected events, companies took careful preventive measures and increased the in-hand inventory levels. The safety stock may vary from 15- 25 days depending upon the forecasting and warehousing models each has implemented.
Meanwhile, China is slowly opening up from the lockdown5, which means some inventory on our shelves. But, because of the tightened transportation and logistics, we would be running close to 10 -12 days of delays in responding to customer demand.
To quickly respond to Coronavirus and hold on to our business, we need to understand the 4 critical factors impacted by Corona:
Now, to sail through, we need to focus on the factors that we can control, i.e., Workforce and Supply.4
To quickly respond, here is the 4 step Tactic approach to pass the Coronavirus Storm:
As the virus already extended globally, supply chain leaders should be looking about the health of the workforce and how to manage the day to day procurement activities like requisitioning, Purchase order, and Invoice management amidst the lockdown. A digital Procurement solution comes in handy with a touchless, paperless, and automated requesting, creating, and paying off abilities. This will ensure smooth continuation as well as easy monitoring and maintenance of the procurement structure, in addition to business sustainability in these times. It enables the teams to focus on finding solutions to the upcoming complex supply chain issues each day.
It will enable us to focus on the right supply group and sustain our supplies for the demand from the current customer base. It will also help in identifying specific supplier risk and help in actively managing them
With the dynamic explosion of the virus to all aspects of the business, a quick analysis of all the possible scenarios on all suppliers, products, and business plans based on the present constraints and historical information will reduce the level of uncertainty of demand and supply.
The whole procurement function needs to collaborate with all the business units, including legal, finance, and IT, to come up with an Integrated business plan which responds, recollects, and adapts.
This will hasten the process of contract reviewing, analyzing data, and tracking costs incurred due to manufacturing shutdown and logistical roadblocks. Due to the integration, there will be an increased focus on resilience, risk exposure, and business continuity plans going forward.
So, with a solid business continuity plan, controlling the supplier uncertainty with risk mitigation techniques, and a team effort at an organisational level, we can stabilize our supply chain, ensure business sustainability and sail through the eye of the Corona Storm.
But not without cracks, holes, and broken parts on our ship, Right?
That’s the reason to plan the next phase: Recovery.
So, to avoid future breakdowns due to extraordinary situations, we can follow 3 critical strategies:
The more stringent the constraints are, the harder the chain. The harder the chain, the easier it breaks.
Well, times are tough, and once COVID-19 is under control, and we all see the coast on the other side, we will create a new, flexible and robust supply chain for the future.
We should learn from the disruption and be ready for the next one with the same spirit of adaptability and resilience.
We need to ask the relevant questions on what and when the supply chain models need a rethink?
Till then, stay safe and healthy!