COVID-19 has transformed the world economy in ways that are still continuing to unfold. The pandemic has exposed the vulnerabilities of the global supply chain, specifically the reliance on China as the world’s manufacturing hub. Savvy business owners are taking notice and reimagining their supply chain planning for a post COVID world. Here are a few tips to help you develop a solid strategy to prevent future disruptions from negatively impacting your business.
According to Deloitte, over 200 of the Fortune Global 500 companies have a presence directly in Wuhan. It’s no wonder that when the pandemic first exploded, some of the biggest corporations were hit the hardest – because supply has been concentrated all in one area. It’s always smart to hedge your risk. Although the current pandemic will eventually subside, there is no guarantee that future disruptions won’t occur. Finding alternative suppliers is one way to prevent total catastrophe if something similar occurs in the future. Although it’s impossible to predict another black swan event like COVID, identifying alternative manufacturers will greatly reduce your risk of total supply chain disruption.
An AI algorithm sent out the first warning signals that a global pandemic was about to explode, over a week before it was officially announced by the World Health Organization. Although a week may seem trivial, in situations like this, one week could mean the difference between avoiding crisis and a total disaster. If you are a business owner or supply chain manager, it’s increasingly important to pay attention to the data and be decisive. This is true for both short term crisis management and long-term forecasting. Data can be your best friend or your worst enemy. If you learn how to harness it correctly, it can save you money and headaches. If you don’t, your competitors will.
Prepare for Future Disruptions
As the world further develops into a global marketplace, periodic disruptions will continue to occur. It’s naïve to think that COVID-19 is an isolated instance that will be remedied by a vaccine. Although the virus itself will eventually be contained, the gaps in the system it’s revealed can never be erased. The next disruption may not be a pandemic, it may be a natural catastrophe, a government action, a nuclear meltdown, or any number of other scenarios that may impact global trade.
As noted by the Harvard Business Review, supply chain disruptions are often not taken into consideration when mapping performance metrics. If you’re a supply chain manager, it’s wise to build an exit strategy into contracts with a supplier. If you are doing business with an international manufacturer, you should have a plan to circumvent restrictions and remap your supply chain in the event of a similar breakdown in trade. Otherwise, you may find yourself enmeshed in another global catastrophe with no way out.