The new coronavirus (Covid-19) is already affecting businesses and their supply chains, and we have just scratched the surface of the full impact. Manufacturers are looking at their production lines with concern, some taking action to reduce the potential spread of the virus among their people – for example, by insisting that supporting functions (HR, legal, marketing) work from home and that production staff alternate their lunch break timing and avoid sitting across from each other.
Impacts on the workforce will be significant, but the pandemic also has the potential to make it more difficult to rely on inbound supplies arriving on schedule, and we may face severe limitations in capacity within logistics networks. Gartner recommends that shippers act now to “enhance supply chain resilience by diversifying sources and routes where possible”.
Steps you can take
Knowing that the situation is changing every day, there are several practical steps that supply chain managers can take to reduce their logistics risks.
- Short term (in the next 30 days): Develop a supply chain risk monitoring and response program. If you already have a Transport Management System, such as Alpega TMS, you have access to relevant KPIs and data trends that will better enable you to assess the situation.
- Medium term (1-3 months): Build a larger safety stock if necessary, keeping in mind that supply will likely be impacted and demand may be volatile. Ensure you have a diverse spread of suppliers in case some of them go out of business or have restricted activity due to local regulations. If you don’t yet manage your inbound and outbound flows using a TMS, now might be the time to get started so that you are able to free up much needed staff time and freight cost.
- Long term (3 months or more): Take a risk-based approach toward your suppliers and look at future action plans. Take a look at your network, with a tool such as Alpega’s network optimization solution, to ensure you have enough capacity, routes, inventory and cash reserves to keep you afloat.
A pandemic brings a lot of unknowns to supply chains that are already very complex.
It’s the job of a Transportation Management System, like Alpega TMS, to help reduce the ambiguity and connect all the relevant stakeholders in your supply chain ecosystem.
Source: Gartner Supply Chain Brief: Global Supply Chains Prepare for Impact From Coronavirus, Published 31 January 2020 by Koray Kose, John Johnson, Sarah Watt