Disruption - COVID-19 vs. Regular Supply Chain DisturbancesSupply chains are experiencing significant disruption as a result of COVID-19, but how does this disruption compare with others? 

If these last few months have shown anything, it’s that COVID-19 has not been a regular disruption for supply chains. Supply chains, even very well prepared ones, are going to face impediments every once in a while. They are something to anticipate and quickly overcome. This pandemic hasn’t simply been a singular obstacles to address.

It’s something supply chains have had to contend with for months and continue to wrestle with now. However, the supply chain fallout from COVID-19 shares many factors from more common disturbances supply chains face. Thus, it’s worth looking at the issues organizations have had these last few months and to compare and contrast them to what issues they’d otherwise face.

This article by Morai Logistics covers several ways in which this pandemic differs in how it impacts supply chains from usual disruptions.

Location Specific vs. Global

An important way in which COVID diverges from more common disruption is that it’s not limited by region. Typically, a single area is impacted by some sort of event. For example, if a supply chain is temporarily stymied by some extreme weather event. Managers of that supply chain can reliably know how great the area being disrupted is. Whether it’s a flooding or a hurricane or an ice storm, the reach of weather events tend to be contained to a city or country or region.

That is not so for COVID-19. Being a pandemic, its harmful effects extend all across the globe. There isn’t a single event or issue for an organization to wait out, address, or work around. COVID-19 is affecting everyone and, as a result, its an ongoing struggle for supply chains to deal with.

Supply and Demand

The next point of difference between this pandemic and other supply chain impediments is how it hits supply and demand. Commonly, when a supply chain breaks down due to whatever reason, it leads to their supply not being able to meet their demand. Their customers want something, but due to some disruption, their supply is damaged and is unable to meet that want. This pandemic has flipped that outcome as it has changed (both increased and decreased) demand.

On one hand, consumers, many of their livelihoods affected, are willing to spend less than before, obviously decreasing demand. On the other, with so much having been closed during various lockdowns around the world, demand for goods online has shot up. Of course, these differences don’t universally hold true, they are simply common enough to be noticeable. Regular disruptions can impact demand and COVID-19 has also hurt supply.

Timeline

Finally, one more considerable distinction between disruption via COVID-19 vs. others is the the timeline around it. Normally, a organization can get a sense of how long the obstacle they’re facing will persist. Or, how long it will take them to work around it. There is no such sense of time with this pandemic. It’s been at play for months and will continue to be for months (if not longer) to come.

As this Supply Chain 24/7 article articulates,

For most disruptions, the term is limited – or is at least quantifiable. For example, most disasters see short-term demand for rescues or emergency services immediately after an event. However, the term for COVID-19 is relatively unknown. We have seen a significant spike in the demand for hospital beds and ventilators, and social distancing is working in some areas to keep the number of infections below the system capacity. While most large disruptions have a defined short- or medium-term that can be fairly accurately predicted, the term for a global pandemic is long and uncertain.

Supply Chain Disruption - 5 Steps to Overcome itWith COVID-19 causing havoc on supply chains the world over, being able to handle disruption has become more important than ever. 

Companies are currently facing unprecedented obstacles with the advent of COVID-19. Not only is it presenting significant issues for warehouses and those working in them but also the ability for companies to utilize their supplies. This is only being exacerbated by the growing demand for delivery by customers as so many of them are limited to their homes at present. As such, COVID-19 has been the greatest source of disruption to supply chains globally in memory. And that, in turn, means companies have to reinforce their supply chains if they’re to survive.

An article by the World Economic Forum highlights the unforeseeable nature of supply chain disruption and the numerous harms it can have,

…the triggers of supply chain disruption are hard to predict, and sometimes neither controllable nor influenceable. The robustness of networks is paramount to ensuring demand can be met with supply even in extraordinary times. COVID-19 and related responses are delivering an extraordinary shock both on supply and demand sides to the global economy – by shuttering production and cutting consumption – even as demand for healthcare materials soars.

This article by Morai Logistics covers 5 steps companies should be taking in order to manage the disruption of their supply chains.

Create an Overview of Your Supply Chain

Immediately, you should map out your supply chain. This is so you can get a better sense of the state of your supply chain and suppliers, as well as its ability to handle impediments. It is only through an overview of your supply chain that you can evaluate the risks it faces and work towards overcoming them. Critically, you need strong visibility throughout your chain in order to do this effectively. Thus, if you struggle with mapping your supply chain, that’s the first issue to address.

Contact Your Procurement Team

Your suppliers are typically hit the hardest with a disruption event. With that in mind, it’s important to reach out to your procurement team and talk about your suppliers. When you do, you should get a good sense of where your suppliers are located and how significantly they’ve been impacted. Through this knowledge you can get a sense of whether you need to diversify your suppliers. Moreover, this knowledge will also prepare you for any further disruption.

Check on Your Suppliers

This may appear to be a redundant step, given the last one, but it isn’t. Both steps are important. The last, to get a general sense of the state of your suppliers. This step, in order to get the finer details you might be missing. So, directly contact your suppliers and get a more precise picture of how they’re doing. Ask any outstanding questions you might have so you can be certain before making any decisions regarding them.

Seek Out New Data to Assess Demand

Due to the nature of a disruption, your preexisting demand data won’t be useful. A disruption, particularly of the scale of COVID-19, will alter the complexion of your demand. With that said, you’ll need to look for new avenues of data in order to accurately ascertain demand.

Focus on Risk Management

Once you have completed all the previous steps, you’ll be in a strong position to elevate your ability to handle risk. Look at all the holes in your supply chain the disruption exposes. Address each risk head on. Make risk management a priority. Ensure that both this disruption and the next are something your company can handle with confidence.