By Grainger Editorial Staff 1/18/21
Being prepared for emergencies helps ensure supply chain continuity, but disruptions can still happen. Having an emergency response plan in place is a critical part of immediately responding and effectively managing supply chain disruptions. Here are some steps to take to help address short-term disruptions and long-term changes to your supply chain.
Achieving extended supply chain visibility may require a more digitized approach than many companies have used. Business leaders and supply chain managers should examine how new tools and technologies can provide greater intelligence and greater end-to-end visibility and supply chain collaboration. Real-time data and greater supply chain visibility can help companies to take bigger risks with an agile mindset, using customer feedback to adapt to ever-changing buyer demands.
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Unexpected disruptions and downtime often highlight supply chain dependencies that companies may be unaware of when operations are running smoothly. Could the pandemic caused by the coronavirus disease of 2019 (COVID-19), be the major event that forces many companies, and even entire industries, to rethink and transform their global supply chain models?
The term supply chain refers to the network between a company and its suppliers to produce, distribute and transport a product to end customers. Disruptions in the supply chain create uncertainty and unpredictability for businesses and customers alike. Sometimes the issues are less impactful and more localized, like transportation failures or product issues. Other times, natural disasters and outbreaks can send lasting ripple effects throughout the entire global supply chain.
The COVID-19 global pandemic caused significant disruptions in many businesses’ supply chains in the United States and North America. The COVID-19 outbreak has exposed vulnerable areas in many organizations, particularly those that depend on China for raw materials or product fulfillment. China has largely become the “world’s factory,” therefore any major disruption there can put global supply chains at risk. In fact, according to Deloitte, more than 200 of the Fortune Global 500 firms have a presence in Wuhan—the highly industrialized province where the outbreak is believed to have originated.
A recent study by the Institute for Supply Management found almost 75% of the 628 businesses surveyed experienced supply chain disruptions due to the COVID-19 outbreak. In the same survey, 57% of respondents said they were facing longer lead times for orders with suppliers in China. Companies whose supply chain depends on Tier 1 (direct) or Tier 2 (secondary) suppliers in China have been experiencing significant disruptions.
The COVID-19 outbreak will likely result in longer-lasting reconfigurations of supply chains to help build resilience. For decades, many companies have primarily focused on supply chain optimization to minimize costs, reduce inventory, and drive asset utilization. Now the supply chain is in the middle of digital disruption, with new technology and tools that help increase efficiency, accuracy and collaboration. Today’s global supply chains must be able to react effectively to unforeseen demands and disruptions.
Thankfully, new supply chain technologies have emerged in recent years that dramatically improve visibility across the end-to-end supply chain, helping to support companies’ ability to resist such global supply chain shocks. The following steps outline some of the ways companies can prepare for and manage supply chain disruptions.
The information contained in this article is intended for general information purposes only and is based on information available as of the initial date of publication. No representation is made that the information or references are complete or remain current. This article is not a substitute for review of current applicable government regulations, industry standards, or other standards specific to your business and/or activities and should not be construed as legal advice or opinion. Readers with specific questions should refer to the applicable standards or consult with an attorney.