How to Manage Coronavirus Risk in the Supply Chain (3 steps)
With the current outbreak of coronavirus disease (COVID-19), many industries are in flux. The supply chain is currently impacted at all levels, international ocean and air as well as US ground transportation. Many business owners are unsure of what to do or how to proceed.
At MVP Logistics, we want to assure our customers that we’re proactively planning to address any disruptions as they emerge. For our customers who are concerned about the outbreak and unsure what steps they should take, here are some steps to mitigate the risk for the supply chain:
- Understand supply and demand risk
Right now, the supply side is of great concern since the outbreak originated in China. China represents 30% of global manufacturing, With the outbreak, the ability to procure and ship out of China is impacted, and may be impacted further should a second wave of COVID-19 hit China.
As the outbreak has spread across countries, US businesses with global suppliers have been heavily impacted on their supply sources. The global and local supply chain are on a complete stand still for some business while others are benefitting significantly from the situation as consumers are allocating spending to categories that have products available and sales channels that can deliver.
Both supply and demand are impacted significantly by the COVID-19 situation. With many consumers under quarantine, demand for some physical products has been reduced.
While supply risk can be mapped and predicted to some extend demand risk does not have the same geographic constraint, but it is impacted by local legislature.
- Map the supply chain
In general, it’s best practice to map out your supply chain. If you haven’t already completed a supply chain analysis, it’s critical to do so now. Mapping out your supply chain identifies your points of contact as well as visibility up several tiers of suppliers.
Beyond just knowing where your products are coming from, it’s important to know your sources of distribution as well. With this knowledge, you can identify current or potential sources of distribution.
- Plan ‘what-if’ scenarios
Do not wait for disaster to strike before you make a plan – during this time, it’s critical to anticipate the worst-case scenario and plan for it. Some strategies could be:
Re-evaluate your inventory positioning, investing in additional inventory may benefit if you are reliant on a single source, although there is the risk of overstocking.
On the other hand, supply chains that are largely diversified will have a larger swath of options to select from as back-up plans. Spread out the risk but continue to manage each supplier as a critical part of your supply chain.
Scenario planning will aid you during this current crisis, but also help you in the future. Ideally, risk management should be status-quo. But if you’re still tweaking your strategy, now is the time to sit down and get a plan together.
During this difficult time, MVP Logistics is here to answer all your questions about your supply chain and what steps we are taking to plan for and address the outbreak. For a breakdown of your supply chain, contact us virtually.
MVP Logistics is your logistics partner for supply chain project management, logistics, warehousing and fulfillment, LTL and other supply chain needs. Both our Minneapolis and Houston warehouses provides local, national and international shipping services. Find your solution today.