How is the global supply chain responding to the Corona epidemic?
With the Corona epidemic spreading rapidly and exceeding the SARS outbreak in 2003, supply chain managers need to consider ways to minimize disruptions and immediately plan for them. deal with possible problems in the future.
On December 31, 2019, the World Health Organization (WHO) became aware of several cases of severe pneumonia in Wuhan, China caused by a new strain of Corona virus (Covid-19). Since then, the disease has spread to many provinces of China as well as other countries.
On January 31, 2020, WHO declared the ongoing Covid-19 epidemic in China and cases of this virus in many other countries as a public health emergency. Given the urgency of the situation, it is imperative for supply chain leaders to assess and plan how Corona impacts the global supply chain.
Challenges of globalization before the Corona epidemic
Although the outbreak is being compared to the 2003 SARS epidemic, the current situation in China is very different. At present, China is developing and integrating deeply into the global economy. Compared to 17 years ago, the country has significantly improved its transport network, especially air and sea transport. This means that the impact of the supply chain will go beyond regional concerns.
Labor shortages, limited transportation and materials, as well as logistics difficulties due to strict controls, transportation centers and borders are closed, causing goods to have to be layered waiting for customs clearance. Thus, the impact from the Corona epidemic is much larger than the SARS epidemic in 2003.
Supply chain effects caused by Corona
While exact numbers on the consequences of the Corona epidemic are not yet available, organizations are already beginning to see its effects on the entire supply chain, including:
Materials: Lack of raw materials and finished products to or from logistics centers located in affected areas.
Labor: There is a shortage of both knowledge and manual workers due to quarantine or disease.
Logistics: It will be difficult to find alternative routes and means of transport. Supply centers and networks may experience capacity and availability constraints.
Consumers: Consumers are becoming more cautious when purchasing because of concerns that contact with others may lead to the risk of Corona infection. Many units have begun to pay attention and move to online sales. However, that only makes the logistics network more challenging.
Prepare your supply chain for disruptions
When disruptions occur, economic organizations based on the supply chain will use advanced risk management processes that include multiple systems such as: continuously measure key risk indicators, then prepare Scenarios to deal with instability to control for financial factors, labor resources, materials and productivity.
The impact of the Corona epidemic has made the supply chain less accessible to human resources, reduced productivity and created a change in consumer behavior. And, while we may not see the full impact of the coronavirus on the supply chain in the next few months or so, leaders should take the initial steps now to deal with it. effectively deal with all impacts affecting the value chain.
The solution suggested by industry experts is a scenario with 3 action steps:
Immediately implement programs to monitor and respond to supply chain disruptions with countries affected by the Corona epidemic (focusing on identifying risks to provide appropriate business solutions). The next step is to ensure all inventory is within reach, under control, or outside of affected areas and logistics centers.
Supply chain managers should work with the legal department and human resources department of the business to understand the financial impact of not being able to deliver goods to customers because of the epidemic, and at the same time guide employees in different locations. affected area in terms of response plan.
At this step, it is necessary to focus on balancing supply and demand as well as building buffer warehouses, and then evaluate opportunities to diversify suppliers. Next, work with stakeholders and strategic suppliers. Most importantly, establish an appropriate risk management approach to monitor and prepare for material and production capacity shortages.
Once the initial impact of the coronavirus has subsided, the next step is to have long-term plans to deal with its consequences with the supply chain. This is the time to seek and develop alternative sources and diversify the value chain, preparing in advance for similar risk scenarios.
Besides, it is necessary to address strategic supply and focus on valuable sources at risk. Also ensure alternative sources, shipping routes or inventories and sufficient cash reserves to minimize any further disruptions.
Source: Saigon celebrities