SC Risk Management must centre on workforce, product and costs

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Supply Chain risk and resilience are topics that need immediate attention as many businesses have not yet come up with an efficient approach to deal with Supply Chain Risk Management (SCRM.)

Leaders must focus their SCRM responds on the workforce, products and cost to mitigate the disruptions caused by COVID-19. Most companies evaluate the after-crisis impacts and react on an hourly or daily basis to cope with complicated issues that make business never be the same.

We are experiencing an escalating SC disruption due to the current consumer’s expending behaviour; the suppliers’ limited access to customers due to authorities’ mandatory quarantine dispositions, relented production, and little access to logistics distribution of goods.

Workforce Area

Local governments have instructed industries, employers, employees, and the public to stay at home to restrain the virus propagation. Employers have as well set up a restriction on business-travelling and of site visitors. It brings about reducing production or changing manufacturing processes to alternative sites, the exportation to more reliant markets. Whether these conditions go on, SCs will not operate as projected.

Above all, SC leaders need to figure out the best way to protect workers’ health and support those who might be sick, providing fluent-constant communication through the company Human Resources (HR) division.  This crisis will still last for years, so they have to keep securing business-travelling, likely risking the management team to becoming burned out, not perform to their best, and to make poor decisions.

 Cost Area

The crisis is driving financial consequences to companies in different ways, such as increasing-shipping cost, and mostly, organisations are concern about not meeting their financial purposes. At the same time, they find challenging the compliance of pre-contractually settled-prices, the current number of supplies might no longer be authorised; suppliers could summon pre-agreed clauses or, if not, look to increasing costs across the whole SC.

It would be very convenient for SC leaders and the legal department to analyse all suppliers’ contracts. When it comes time for contract renewal, it is essential to assure companies are financially shielded alongside similar circumstances that might happen in the coming years.

Product Area

COVID-19 has the power to modify the competitive circumstances. Suppliers of commodities are risking a lot, leaving behind market shares, as clients will look for alternative suppliers when they do not obtain their goods on time. Still, products related to high-degree-brand loyalty might be less disturbed in the short-term.  As the pandemic advances, consumers will possibly adopt more moderate spending models, aiming at indispensable products.

SC leaders, forced to make trade-off decisions, must analyse and forecast the pandemic impacts on customer’s demands and product accessibility. Ranking and trade-offs can be made based on high-revenue or high-profit margin on in demand-products.

SC businesses require to repeatedly re-evaluate their supply and demand strategies, according to the pandemic advancing and consumer’s feeling. SCs might also go through a severe escalation in demand for excellent or surprising outcomes such as panic purchasing for crucial articles.

Summing up: for sure, SCs will not be the same after COVID. The focus will be on enhancing resilience, preventing risk exposure and organisations endurance.

Is your Supply Chain Risk Management approach in place?

Dave Food

Prophetic Technology

M: +44 7775 861863